Experts applaud latest supportive measures targeting smaller firms

China's latest measures to help micro, small and medium-sized enterprises, or MSMEs, tide over difficulties will strengthen their ability to overcome challenges and promote the high-quality development of these firms, experts said.

The comments came after the State Council recently unveiled 15 targeted measures assisting MSMEs to stabilize growth and improve their competitive edge.

Some measures seek to assist MSMEs through policy support, easier financing and demand expansion, among others, according to the Ministry of Industry and Information Technology, the nation's top industry regulator.

In particular, large enterprises and platform institutions are encouraged to release procurement lists targeting MSMEs and carry out cross-border matchmaking activities, in order to create more business opportunities for these enterprises.

Wang Peng, associate professor at the Hillhouse Research Institute at the Renmin University of China in Beijing, said China's economy will have good momentum if private and small businesses remain sound, given that many are increasingly being recognized for their role as leaders in new concepts and business models.

"But in reality, they tend to become vulnerable to external pressures. Thus, targeted efforts are needed to help them overcome short-term challenges," he added.

In China, small and medium-sized enterprises, or SMEs, are responsible for nearly 50 percent of the nation's tax revenue and 60 percent of GDP. They also contribute to 70 percent of the nation's technology innovation and 80 percent of urban employment, according to the Ministry of Industry and Information Technology.

Zhou Hongyi, founder of cybersecurity company 360 Security Group, said it is of great importance to push forward the digital transformation of MSMEs, as they still face mounting pressures and challenges from the shortage of capital, talent and technology.

More efforts are needed to leverage digital technologies to help such enterprises, which play a critical part in narrowing the income gap and bolstering the development of the real economy, Zhou said, adding that the company has launched a SaaS — or software as a service — platform and is helping drive the digitalization push of MSMEs.

Chinese MSMEs are facing increasing data security risks according to a report jointly released by 360 Dipper Research, the company's think tank, and organizations including the China Association of Small and Medium Enterprises.

More than 85 percent of MSMEs surveyed by the report have encountered digital security problems and have suffered more cyberattacks in recent years. About 77 percent said they could not effectively deal with digital security risks by themselves.

By 2025, China aims to grow 10,000 "little giant" companies, according to a government guideline on the development of SMEs during the 14th Five-Year Plan period (2021-25).

To be labeled a little giant, a Chinese firm must see a minimum 5 percent year-on-year average growth rate of its main business income or net profit in the past two years. More importantly, it must have two valid invention patents or other similar proof of its innovation capabilities and at least 3 percent of its top line must be dedicated to R&D, among other financial and operational criteria.

All this comes as innovative SMEs have sprung up and gained greater visibility for their increasingly important role in cementing the country's industrial strength amid the COVID-19 pandemic.

"If you randomly look into an industrial chain in China, you'll find countless dynamic small players," said Xu Xiaolan, vice-minister of industry and information technology.

Yang Yuanqing, chairman and CEO of Lenovo Group, said established companies such as the information technology giant should play a bigger role in driving the joint innovation and development of SMEs in the upstream and downstream segments of industry and supply chains.

According to Lenovo, SMEs account for 44.5 percent of the company's industry chain and it will assist in areas such as financing and marketing resources, especially for those with core technologies.