Birmingham Insights on Asia — (1) The Impact of the Government Policy on the Small and Medium-Sized Enterprises’ (SMEs) Export Activities in China

birmingham-clipart-256This comment is based on Zheng Guan’s Dissertation written under the supervision of Prof. Michael Czinkota at the University of Birmingham, UK.

On a year-to-year comparison of export activities, most of firms surveyed exported more. However due to increased costs caused by various reasons, the gained profit was less. The highly ranked macro factors by respondents are the appreciation of the Chinese currency, increasing prices of raw materials, cancellation and reduction of export rebate tax, increasing labor cost and tightening of monetary policy.

A stable macroeconomic environment will provide a favorable base for export firms. However, the results of this study show that policies can have great impact on SMEs’ export costs.

Increasing price, enhancing internal management, opening up new international markets, increasing domestic sales and settlement in other foreign currencies are the preferred countermeasures by selected companies.

Small and medium-sized firms have been at the forefront of the Chinese government’s agenda. Here are some recommendations for small and medium-sized firms:

1) Adjust product structure actively and improve the added value of the products. Companies should improve the scientific and technological content of export products, enhance innovation and strengthen brand building to raise their product’s international competitiveness.

2) Strengthen internal enterprise management to reduce cost. Companies should enhance cost accounting and try to save expenditure and energy to reduce production costs.

3) Enhance customer relationship management. Good communication with clients is always important especially in an unfavorable environment. Foreign trade personnel should try their best to be understood by foreign clients and share loss and risk with them.

4) Optimize marketing program. a) open up new international markets; b) adjust the ratio of domestic sales and exports according to the nature of the product and market conditions; c) develop E-business.

5) Companies should keep communicating with banks and relevant government sectors to obtain updated export related information.

Stay tuned for more recommendations for the government sector in our next Birmingham Insight!

55 thoughts on “Birmingham Insights on Asia — (1) The Impact of the Government Policy on the Small and Medium-Sized Enterprises’ (SMEs) Export Activities in China

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