SMEs need more help: official

Asia-Pacific Economic Cooperation (APEC) economies should combat trade protectionism to create a favorable environment for small and medium-sized enterprises (SMEs), which are vulnerable to the global economic slowdown, a top commerce ministry official said over the weekend.

SMEs, especially small and micro-enterprises, are vulnerable to fluctuations in commodity prices, turbulence in the global financial markets, and growing trade protectionism, Assistant Minister of Commerce Yu Jianhua said Saturday at the 2012 APEC SME Summit, co-hosted by the China Council for the Promotion of International Trade, the People's Government of Hainan Province and APEC Business Advisory Council.

More than 20 World Trade Organization members have launched over 800 trade restriction measures since the global financial crisis began in October 2008, according to Yu.

APEC economies, which include China and its major trading partners such as the US, Canada and Japan, should develop multilateral trade mechanisms and combat trade protectionism to create a favorable environment for SMEs, Yu said.

Domestic export-oriented SMEs have also been hit hard by the recent dramatic appreciation of the Chinese currency, Wei Jianguo, secretary-general of the China Center for International Economic Exchanges, said at the summit.

Wei warned that the US Federal Reserve might launch a fourth round of quantitative easing, known as QE4, in March or April 2013, which would put further pressure on the yuan's exchange rate. China's currency has already appreciated by more than 2 percent against the US dollar since September.

The yuan will continue to appreciate by 2-3 percent against the US dollar in 2013, said Stephen Green, head of China research at Standard Chartered Bank.

"We have turned to the domestic market because of sluggish external demand and increasing trade barriers in recent years, but the Chinese government's curbs on the property market have affected domestic demand for furniture," Liao Jiancheng, owner of a furniture company in Hainan, told the Global Times.

Liao's business is also facing increasing competition from foreign counterparts such as Swedish firm Ikea, which has adopted a low-price strategy to explore the Chinese market.

"Ikea has lowered its product prices by 50 percent since 2000 in China," Martin Hansson, retail president of Ikea Asia-Pacific, told the Global Times.

Other problems that have beset SMEs include financing difficulties, rising labor costs and heavy taxation, experts said at the summit.

For instance, there are more than 380,000 SMEs in Shenzhen, Guangdong Province, but only about 10,000 of them have succeeded in getting bank loans, said Gu Shengzu, a member of the Standing Committee of the National People's Congress.