Chinese SMEs in Industry 4.0: Analysis and Future Trends

Chinese SMEs in Industry 4.0: Analysis and Future Trends

Hu Shi (Universiti Sains Malaysia, Malaysia) and Qaisar Iqbal (Universiti Sains Malaysia, Malaysia)
Copyright: © 2020 |Pages: 11
DOI: 10.4018/978-1-7998-2577-7.ch001

Abstract

Small and medium enterprises (SMEs) play a vital role in the economic development of the People's Republic of China. SMEs contribute to the total of 60% gross domestic product (GDP) and 80% employment. Chinese SMEs contribute to the more than 50% of the country tax. In 2015, China released the Made-in-China 2025 plan to response to the German Industry 4.0, which focuses on knowledge-, innovation-, and quality-intensive manufacturing for cutting-edge technology, new materials, key parts of major products. The chapter aims to explore the challenges and opportunities faced by SMEs in China in the context of Industry 4.0 and Made-in-China 2025. This chapter has used SWOT analysis to explore the challenges and opportunities of Chinese SMEs. Presently, SMEs are facing limited credit facilities, low innovative human capital, sustainable performance as a challenge, and ineffective performance appraisal. This chapter has presented as internationalization, coastal outsourcing, rising middle-class (high consumption), ‘one belt, one road' opportunities for SMEs in Industry 4.0 context.
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The Definition Of Smes In China

SME is a crucial part of the Chinese economy. SMEs comprise 99.81% of total firms in China. The definition of SME varies with the category of the industry in China. SME is defined based on the number of employees, total assets, and total annual revenue of an enterprise. The SME Promotion Law of China (2003) has provided guidelines to define Small and medium-sized enterprises (SMEs) by replacing the old criteria of 1998 and the supplementary criteria of 1992.

Table 1.
Definitions of SMEs in China
Size categoryIndustriesEmployment-basedTotal assetsBusiness revenue
SmallIndustry<300< ¥ 40 million< ¥ 30 million
Construction< 600< ¥ 40 million< ¥ 30 million
Hotel & Restaurant<400< ¥ 30 million
MediumIndustry300-2000¥ 40 million-400 million¥ 30 million-300 million
Construction600-3000¥ 40 million-400 million¥ 30 million-300 million
Hotel & Restaurant400-800¥ 30 million-150 million

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