Historical Development of Chinese SMEs

Historical Development of Chinese SMEs

Fenfang Lin (University of Southampton, UK), Alasdair Marshall (University of Southampton, UK) and Wendy Wu (Edinburgh Napier University, UK)
DOI: 10.4018/978-1-5225-9377-5.ch005

Abstract

The importance of the SME is well established in the literature. These account for the majority of economic contribution in many economies. In the case of emerging markets, SMEs make significant contributions to the local income generation, employment support, and innovation development. The aim of this chapter is to provide an overview of how the world's largest emerging economy—China—helps promote its SMEs. This chapter provides a brief history of Chinese SMEs throughout the Great Economic Reform that started in 1978. Next, the SMEs' achievements and current constraints are outlined. Last, this chapter discusses how the SMEs in China upgrade through innovation and branding to embark on future pathways. Through this timeline approach, the experience of Chinese SMEs development will provide some insights for other emerging regions.
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History Of Enterprise Development In China

This section introduces the contemporary history of Chinese SMEs’ development to understand how the modern Chinese enterprises formed and developed. The discussion follows the important historical cornerstone of the launch of China’s Open Door Policy in 1978 led by the great economic reformer Deng Xiaoping, when China opened up to foreign investment and encouraged the development of regional small enterprise. This has transformed the Chinese economic system from a central-planned economy to a market-based economy and brought great changes to Chinese SMEs’ developmental system (Ahlstrom & Ding, 2014). Since the introduction of the policy, China has transformed from a poor country to the world’s second largest economy (behind the USA). Two sub-sections follow: the situation pre-1978 and the situation since the introduction of the Open Door Policy.

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