APEC economies vow closer ties to boost SME development

Small and medium sized enterprises have contributed more than 50 percent to China's annual economic growth over the past years. And yet, the global economic crisis is putting the squeeze on the profitability and overall outlook for SMEs, especially in the foreign trade sector.

The 2012 APEC SME Summit wrapped up in Chengmai in China's island province of Hainan today. Participants are vowing to step up their cooperation and meet the challenges ahead.

China's small and medium sized enterprises account for 95 percent of the total number of companies in China.

But over the past two years, the majority of Chinese SMEs have been struggling to survive. They suffered from shrinking profits, as China's exports were hit by the ongoing global economic downturn.

During the three-day 2012 APEC SME Summit that gathered thousands of entrepreneurs and economists from the Asia-Pacific region, experts warned that the challenges haunting SMEs this year will continue in 2013.

Zuo Xiaolei, chief economist of Galaxy Securities, said, "SMEs in the processing industry trade sector are going to face tremendous challenges next year, as their traditional competitive edge will continue to vanish. SMEs in neighbouring countries such as Vietnam and Malaysia are growing in this sector. So we're suggesting that it's urgent for China's SMEs to speed up their transition and upgrading process."

China's slower export-driven economic growth this year has urged the government to speed up the transition of the traditional economic development model, and to rely more on the domestic market.

Betty Ku, Regional Head of China & North East Asia SME Banking, Standard Chartered, said, "Firstly, we expect that the recovery of the world economy will be slow. So particularly for SMEs, they need to find their new operation space. China will continue to focus on its domestic consumption. This provides chances for SMEs. They should also focus more on innovation."

Officials and participants at the summit also suggest that SMEs in the region should combat trade protectionism to create a more favourable environment for the smaller businesses which are vulnerable to the global economic slowdown.