*The Department of Industries may be contacted for more accurate information as well as for Registration.Letter of Intent (LOI) / Registration of IT Unit:
The State Government has announced and is considering various Fiscal and nonfiscal incentives to give an impetus to IT sector in the State, so as to consolidate the State's leading position. The concessions and incentives will be applicable to IT Units registered as Small Scale Industry (SSI) /Small Scale Service/Business Enterprises (SSSBE) /Maharashtra Small Industries (MSI)/Maharashtra Small Scale Service/Business Enterprises (MSSSBE) or holding Industrial Entrepreneurs Memorandum (IEM) on the strength of separate Letter of Intent (LOI) /Registration granted by the designated agencies mentioned below in para 3. The procedure for grant of such LOI /Registration has been finalised under the aegis of the High Powered Committee on Information Technology.
2. CLASSIFICATION OF IT UNITS:The Information Technology (IT) units are classified into three groups depending upon their activities, namely (a) IT Hardware unit, (b) IT Software unit, (c) IT Service (IT enabled service) unit. In some cases the benefits flowing under IT policy to each of these categories are different.
2.1 IT HARDWARE UNIT:IT hardware would basically comprise the items indicated in the list of 'Primary Products' and ' Priority Intermediate Products'' mentioned in the Report of Panel of the National IT Task force on Development. Manufacture and Export of IT Hardware. A list indicating the items to be recognized as IT hardware products is enclosed (Annexure - A and Al). Categorization as IT Hardware unit also requires that the unit's annual turnover of IT Hardware should exceed 75% of its total annual turnover in value terms.
2.2 IT SOFTWARE UNITS:IT software includes a wide range of products and it is not possible to draw up a comprehensive list in view of its nature and continuing developments in this sector. It has, therefore, been decided that the software units, whether in small scale or large scale sector, which are certified as such by the following competent agencies would be considered for registration as IT Software units. Categorization as an IT Software unit also requires that the unit's annual turnover of IT Software should exceed 75% of its total annual turnover in value terms.
more
Wednesday, July 9, 2008
Wednesday, July 2, 2008
Definition of Micro, Small and Medium Enterprises
As per MSMED Act-2006, following enterprises whether Proprietorship, Hindu Undivided Family, Association of persons, Co-operative Society, Partnership, Undertaking or any other legal entity by whatever name called -
in case enterprise engaged in the Manufacturing or Production of Goods pertaining to any industry as per First Schedule to the Industries (Development & Regulation) Act 1951as-
*
Micro Enterprises: in which the investment in fixed assets in plant and Machinery does not exceed Rs. 25 Lacs (Rupees Twenty Five Lacs Only)
*
Small Enterprises : in which the investment in fixed assets in plant and Machinery is more than Rs. 25 Lacs (Rupees Twenty Five Lacs Only) but does not exceed Rs. 5 Crore.
*
Medium Enterprises : in which the investment in fixed assets in plant and Machinery is more than Rs. 5 Crore. but does not exceed Rs. 10 Crore.
In case of Enterprises engaged in providing or Rendering Services as-
*
Micro Enterprises: in which the investment in fixed assets in plant and Machinery does not exceed Rs. 10 Lacs (Rupees Ten Lacs Only)
*
Small Enterprises : in which the investment in fixed assets in plant and Machinery is more than Rs. 10 Lacs (Rupees Ten Lacs Only) but does not exceed Rs. 2 Crore.
*
Medium Enterprises : in which the investment in fixed assets in plant and Machinery is more than Rs. 2 Crore. but does not exceed Rs. 5 Crore.
more
in case enterprise engaged in the Manufacturing or Production of Goods pertaining to any industry as per First Schedule to the Industries (Development & Regulation) Act 1951as-
*
Micro Enterprises: in which the investment in fixed assets in plant and Machinery does not exceed Rs. 25 Lacs (Rupees Twenty Five Lacs Only)
*
Small Enterprises : in which the investment in fixed assets in plant and Machinery is more than Rs. 25 Lacs (Rupees Twenty Five Lacs Only) but does not exceed Rs. 5 Crore.
*
Medium Enterprises : in which the investment in fixed assets in plant and Machinery is more than Rs. 5 Crore. but does not exceed Rs. 10 Crore.
In case of Enterprises engaged in providing or Rendering Services as-
*
Micro Enterprises: in which the investment in fixed assets in plant and Machinery does not exceed Rs. 10 Lacs (Rupees Ten Lacs Only)
*
Small Enterprises : in which the investment in fixed assets in plant and Machinery is more than Rs. 10 Lacs (Rupees Ten Lacs Only) but does not exceed Rs. 2 Crore.
*
Medium Enterprises : in which the investment in fixed assets in plant and Machinery is more than Rs. 2 Crore. but does not exceed Rs. 5 Crore.
more
Saturday, February 9, 2008
how to apply for SSI Registration in India
SSI Registration
Small Scale and ancillary units (i.e. undertaking with investment in plant and machinery of less than Rs. 10 million) should seek registration with the Director of Industries of the concerned State Government.
Registering your SSI Unit
The main purpose of Registration is to maintain statistics and maintain a roll of such units for the purposes of providing incentives and support services.
States have generally adopted the uniform registration procedures as per the guidelines. However, there may be some modifications done by States. It must be noted that small industries is basically a state subject. States use the same registration scheme for implementing their own policies. It is possible that some states may have a 'SIDO registration scheme' and a 'State registration scheme'.
Benefits of Registering Objectives and Features Provisional Registration Permanent Registration Procedure De-registration
Download Registration Forms & Related Documents (Proformas)
Application for Provisional Registration Provisional Registration Certificate Application for Permanent Registration Certificate of Registration
Additional Sheet-1 (for Additions/Deletions) Appendix "A" (Production Details Appendix "B" (Details of Plant and Machinery Affidavit
more
more
Small Scale and ancillary units (i.e. undertaking with investment in plant and machinery of less than Rs. 10 million) should seek registration with the Director of Industries of the concerned State Government.
Registering your SSI Unit
The main purpose of Registration is to maintain statistics and maintain a roll of such units for the purposes of providing incentives and support services.
States have generally adopted the uniform registration procedures as per the guidelines. However, there may be some modifications done by States. It must be noted that small industries is basically a state subject. States use the same registration scheme for implementing their own policies. It is possible that some states may have a 'SIDO registration scheme' and a 'State registration scheme'.
Benefits of Registering Objectives and Features Provisional Registration Permanent Registration Procedure De-registration
Download Registration Forms & Related Documents (Proformas)
Application for Provisional Registration Provisional Registration Certificate Application for Permanent Registration Certificate of Registration
Additional Sheet-1 (for Additions/Deletions) Appendix "A" (Production Details Appendix "B" (Details of Plant and Machinery Affidavit
more
more
Friday, February 8, 2008
SSI Policy Statement
Date : 6th August, 1991
A. SMALL AND TINY ENTERPRISES
1.0 INTRODUCTION
1.1 The Small Scale Industrial Sector has emerged as a dynamic and vibrant sector of the economy during the eighties. At the end of the Seventh Plan period, it accounted for nearly 35 percent of the gross value of output in the manufacturing sector and over 40 percent of the total exports from the country. It also provided employment opportunities to around 12 million people.
1.2 The primary objective of the Small Scale Industrial Policy during the nineties would be to impart more vitality and growth-impetus to the sector to enable it to contribute its mite fully to the economy, particularly in terms of growth of output, employment and exports. The sector has been substantially delicensed. Further efforts would be made to deregulate and debureaucratise the sector with a view to remove all fetters on its growth potential, reposing greater faith in small and young entrepreneurs.
more
A. SMALL AND TINY ENTERPRISES
1.0 INTRODUCTION
1.1 The Small Scale Industrial Sector has emerged as a dynamic and vibrant sector of the economy during the eighties. At the end of the Seventh Plan period, it accounted for nearly 35 percent of the gross value of output in the manufacturing sector and over 40 percent of the total exports from the country. It also provided employment opportunities to around 12 million people.
1.2 The primary objective of the Small Scale Industrial Policy during the nineties would be to impart more vitality and growth-impetus to the sector to enable it to contribute its mite fully to the economy, particularly in terms of growth of output, employment and exports. The sector has been substantially delicensed. Further efforts would be made to deregulate and debureaucratise the sector with a view to remove all fetters on its growth potential, reposing greater faith in small and young entrepreneurs.
more
End of an era: SSI list pruned to 35
Reservation era nears an end for small units
9 Feb 2008, 0116 hrs IST,TNN
NEW DELHI:
Almost 17 years after the process of reforms began in India, one of the last remaining legacies of the licence-permit raj era is now almost obliterated. The commerce and industry ministry on Friday ended the monopoly of small-scale units on 79 items, leaving just 35 on the reserved list that once had as many as 873 items. While industrial policy reforms began with the new industrial policy statement of PV Narasimha Rao in July 1992, governments remained wary of intruding on the politically sensitive issue of reservation for small-scale industry (SSI) till the end of the 1990s. Thus, while at the turn of the millennium the number of items reserved for SSI units had come down from its peak of 873 in 1984, well over 800 items remained on the list. Since 2002, the scenario has changed dramatically. In these last seven years, around 790 items - including things like farm equipment, toothpaste, ice cream, footwear, detergents and even garments - have been knocked off the list.
Thus, for the first time in over 40 years, there are today as few as 35 items reserved for SSI units. When the policy of reservation was first introduced in 1967, there were just 47 items reserved for small-scale manufacturers. However, what was till then an administrative decision was given legal backing by an amendment enacted in 1984 to the Industries (Development and Regulation) Act, 1951. That year also saw the number of items reserved reaching a peak of 873. The policy of reservation meant that it was routine in the late 1990s and early years of the millennium for visitors to Nirman Bhavan to see flocks of anxious businessmen clustering in a narrow corridor on one of the upper floors, waiting to plead with babus in the SSI ministry to ensure that their sector was kept within the ambit of reservation so that they could escape competition from large industrial houses.
Friday's announcement effectively reduces this to a fringe show. Reservation means that units producing the reserved items cannot go beyond a stipulated cap on investment in plant and machinery. In the old days, therefore, it was standard practice for mass consumption items covered by the reserved list to be farmed out by large marketing companies to dozens of small units, thereby negating economies of scale.
What it also meant was that some companies resorted to manufacturing completely new class of products. So, if ice cream was reserved for small scale units, a large player could always produce, say, 'frozen desserts'. Apart from the steady trickle of de-reservation over the last decade, one of the measures taken to get over this problem without confronting the political problems involved was to allow foreign investment even in reserved items with the caveat that such units would have to fulfill an export obligation.
For players who were already manufacturing items that were suddenly reserved in 1967, the government came up with what was carry-on-business licence which capped their capacity, and fixed the location of the plant and the goods produced. Friday's de-reservation means that pastries, hard boiled sugar candy and tooth powder can be manufactured by large units too. Similarly, buckets, paper bags, paper cups, envelopes, letter pads, paper napkins might not be manufactured only in small units but also in specialised factories. The same for sesame and rapeseed oil, which are not solvent extracted, a host of chemicals and dyes paints be it distempers.
Electrical goods, which include geysers, hot air blowers and toasters, too are out of the reserved list, as are ballpoint and fountain pens. What about the remaining 35 items? The government is keeping its fingers crossed. "If industry is willing, we will do away with the reserved list altogether," said a senior official in the ministry.
more
Govt Lifts Monopoly On 79 More Items
TIMES NEWS NETWORK
New Delhi: Almost 17 years after the process of reforms began in India, one of the last remaining legacies of the licencepermit raj era is now almost obliterated. The commerce and industry ministry on Friday . ended the monopoly of smallscale units on 79 items, leaving just 35 on the reserved list that once had as many as 873 items.While industrial policy reforms began with the new industrial policy statement of P V Narasimha Rao in July 1992, governments remained wary of intruding on the politically sensitive issue of reservation for small-scale industry (SSI) till the end of the 1990s.Thus, while at the turn of the millennium the number of items reserved for SSI units had come down from its peak of 873 in 1984, well over 800 items remained on the list.Since 2002, the scenario has changed dramatically. In these last seven years, around 790 items, including things like farm equipment, toothpaste, ice cream, footwear, detergents and even garments, have been knocked off the list.Thus, for the first time in over 40 years, there are today as few as 35 items reserved for SSI units. When the policy of reservation was first introduced in 1967, there were just 47 items reserved for smallscale manufacturers.However, what was till then an administrative decision was given legal backing by an amendment enacted in 1984 to the Industries (Development and Regulation) Act, 1951. That year also saw the number of items reserved reaching a peak
of 873. The policy of reservation meant that it was routine in the late 1990s and early years of the millennium for visitors to Nirman Bhavan to see flocks of anxious businessmen clus· tering in a narrow corridor on one of the upper floors, waiting to plead with babus in the SSI ministry to ensure that their sector was kept within the amqit of reservation so that they could escape competition from large industrial houses. Friday's announcement effectively reduces this to a fringe show. Reservation means that units producing the reserved items cannot go beyond a stipulated cap on investment in plant and machinery.In the old days, therefore, it was standard practice for mass consumption items covered by the reserved list to be farmed out by large marketing companies to dozens of small units, thereby negating economies of scale.What it also meant was that some companies resorted to manufacturing ·completely new class of products. So, if ice cream was reserved for small scale units, a large play-
·
.
·
·
·
er could always produce, say;.'frozen desserts'.Apart from the steady trickle of dereservation over the last decade,· one of the measures taken to get over this problem without con· fronting the political problems involved was to allow foreign investment even in reserved items with the caveat that such units would have to fulfil an export obligation.For players who were already manufacturing items that were suddenly reserved in 1967, the government came up with what was carry-on-business licence which capped their capacity; and fixed the location of the plant and the goods produced. Friday's derservation means pastries, hard boiled sugar candy and tooth powder can be manufactured by large units too. Similarly;buckets, paper bags, paper cups might be manufactured in specialised factories too. What about the remaining 35 items? The government is keeping its fmgers crossed. "If industry is willing, we will do away with the reserved list altogether," said a senior official.
The India ModelJuly 10, 2006 on 4:18 pm In Magazine, Foreign Affairs
AN ECONOMY UNSHACKLED
Although the world has just discovered it, India’s economic success is far from new. After three postindependence decades of meager progress, the country’s economy grew at 6 percent a year from 1980 to 2002 and at 7.5 percent a year from 2002 to 2006 — making it one of the world’s best-performing economies for a quarter century. In the past two decades, the size of the middle class has quadrupled (to almost 250 million people), and 1 percent of the country’s poor have crossed the poverty line every year. At the same time, population growth has slowed from the historic rate of 2.2 percent a year to 1.7 percent today — meaning that growth has brought large per capita income gains, from $1,178 to $3,051 (in terms of purchasing-power parity) since 1980. India is now the world’s fourth-largest economy. Soon it will surpass Japan to become the third-largest.
more
·
9 Feb 2008, 0116 hrs IST,TNN
NEW DELHI:
Almost 17 years after the process of reforms began in India, one of the last remaining legacies of the licence-permit raj era is now almost obliterated. The commerce and industry ministry on Friday ended the monopoly of small-scale units on 79 items, leaving just 35 on the reserved list that once had as many as 873 items. While industrial policy reforms began with the new industrial policy statement of PV Narasimha Rao in July 1992, governments remained wary of intruding on the politically sensitive issue of reservation for small-scale industry (SSI) till the end of the 1990s. Thus, while at the turn of the millennium the number of items reserved for SSI units had come down from its peak of 873 in 1984, well over 800 items remained on the list. Since 2002, the scenario has changed dramatically. In these last seven years, around 790 items - including things like farm equipment, toothpaste, ice cream, footwear, detergents and even garments - have been knocked off the list.
Thus, for the first time in over 40 years, there are today as few as 35 items reserved for SSI units. When the policy of reservation was first introduced in 1967, there were just 47 items reserved for small-scale manufacturers. However, what was till then an administrative decision was given legal backing by an amendment enacted in 1984 to the Industries (Development and Regulation) Act, 1951. That year also saw the number of items reserved reaching a peak of 873. The policy of reservation meant that it was routine in the late 1990s and early years of the millennium for visitors to Nirman Bhavan to see flocks of anxious businessmen clustering in a narrow corridor on one of the upper floors, waiting to plead with babus in the SSI ministry to ensure that their sector was kept within the ambit of reservation so that they could escape competition from large industrial houses.
Friday's announcement effectively reduces this to a fringe show. Reservation means that units producing the reserved items cannot go beyond a stipulated cap on investment in plant and machinery. In the old days, therefore, it was standard practice for mass consumption items covered by the reserved list to be farmed out by large marketing companies to dozens of small units, thereby negating economies of scale.
What it also meant was that some companies resorted to manufacturing completely new class of products. So, if ice cream was reserved for small scale units, a large player could always produce, say, 'frozen desserts'. Apart from the steady trickle of de-reservation over the last decade, one of the measures taken to get over this problem without confronting the political problems involved was to allow foreign investment even in reserved items with the caveat that such units would have to fulfill an export obligation.
For players who were already manufacturing items that were suddenly reserved in 1967, the government came up with what was carry-on-business licence which capped their capacity, and fixed the location of the plant and the goods produced. Friday's de-reservation means that pastries, hard boiled sugar candy and tooth powder can be manufactured by large units too. Similarly, buckets, paper bags, paper cups, envelopes, letter pads, paper napkins might not be manufactured only in small units but also in specialised factories. The same for sesame and rapeseed oil, which are not solvent extracted, a host of chemicals and dyes paints be it distempers.
Electrical goods, which include geysers, hot air blowers and toasters, too are out of the reserved list, as are ballpoint and fountain pens. What about the remaining 35 items? The government is keeping its fingers crossed. "If industry is willing, we will do away with the reserved list altogether," said a senior official in the ministry.
more
Govt Lifts Monopoly On 79 More Items
TIMES NEWS NETWORK
New Delhi: Almost 17 years after the process of reforms began in India, one of the last remaining legacies of the licencepermit raj era is now almost obliterated. The commerce and industry ministry on Friday . ended the monopoly of smallscale units on 79 items, leaving just 35 on the reserved list that once had as many as 873 items.While industrial policy reforms began with the new industrial policy statement of P V Narasimha Rao in July 1992, governments remained wary of intruding on the politically sensitive issue of reservation for small-scale industry (SSI) till the end of the 1990s.Thus, while at the turn of the millennium the number of items reserved for SSI units had come down from its peak of 873 in 1984, well over 800 items remained on the list.Since 2002, the scenario has changed dramatically. In these last seven years, around 790 items, including things like farm equipment, toothpaste, ice cream, footwear, detergents and even garments, have been knocked off the list.Thus, for the first time in over 40 years, there are today as few as 35 items reserved for SSI units. When the policy of reservation was first introduced in 1967, there were just 47 items reserved for smallscale manufacturers.However, what was till then an administrative decision was given legal backing by an amendment enacted in 1984 to the Industries (Development and Regulation) Act, 1951. That year also saw the number of items reserved reaching a peak
of 873. The policy of reservation meant that it was routine in the late 1990s and early years of the millennium for visitors to Nirman Bhavan to see flocks of anxious businessmen clus· tering in a narrow corridor on one of the upper floors, waiting to plead with babus in the SSI ministry to ensure that their sector was kept within the amqit of reservation so that they could escape competition from large industrial houses. Friday's announcement effectively reduces this to a fringe show. Reservation means that units producing the reserved items cannot go beyond a stipulated cap on investment in plant and machinery.In the old days, therefore, it was standard practice for mass consumption items covered by the reserved list to be farmed out by large marketing companies to dozens of small units, thereby negating economies of scale.What it also meant was that some companies resorted to manufacturing ·completely new class of products. So, if ice cream was reserved for small scale units, a large play-
·
.
·
·
·
er could always produce, say;.'frozen desserts'.Apart from the steady trickle of dereservation over the last decade,· one of the measures taken to get over this problem without con· fronting the political problems involved was to allow foreign investment even in reserved items with the caveat that such units would have to fulfil an export obligation.For players who were already manufacturing items that were suddenly reserved in 1967, the government came up with what was carry-on-business licence which capped their capacity; and fixed the location of the plant and the goods produced. Friday's derservation means pastries, hard boiled sugar candy and tooth powder can be manufactured by large units too. Similarly;buckets, paper bags, paper cups might be manufactured in specialised factories too. What about the remaining 35 items? The government is keeping its fmgers crossed. "If industry is willing, we will do away with the reserved list altogether," said a senior official.
The India ModelJuly 10, 2006 on 4:18 pm In Magazine, Foreign Affairs
AN ECONOMY UNSHACKLED
Although the world has just discovered it, India’s economic success is far from new. After three postindependence decades of meager progress, the country’s economy grew at 6 percent a year from 1980 to 2002 and at 7.5 percent a year from 2002 to 2006 — making it one of the world’s best-performing economies for a quarter century. In the past two decades, the size of the middle class has quadrupled (to almost 250 million people), and 1 percent of the country’s poor have crossed the poverty line every year. At the same time, population growth has slowed from the historic rate of 2.2 percent a year to 1.7 percent today — meaning that growth has brought large per capita income gains, from $1,178 to $3,051 (in terms of purchasing-power parity) since 1980. India is now the world’s fourth-largest economy. Soon it will surpass Japan to become the third-largest.
more
·
Thursday, February 7, 2008
the Enterpreneur
Steps on starting a new enterprise
Market Survey
Size of market in crores
competitors
market share expected
location of markets
competitors pricing
raw material suppliers
present technology
product life
ROI
Plant
Location/ Area
Budgets
Machinery
Selection of machinery
sources for machinery
Working Capital
estimation for raw material and finished goods stocks
debtors
Sources of funding
equity
borrowings
Purchase of Plant and Machinery
Plant Layout
Organization Chart
Manpower recruitment
Training
Prototype design and development
Prototype testing
Field trials
Securing Orders
Purchase of Raw Materials
Commercial production start
Market Survey
Size of market in crores
competitors
market share expected
location of markets
competitors pricing
raw material suppliers
present technology
product life
ROI
Plant
Location/ Area
Budgets
Machinery
Selection of machinery
sources for machinery
Working Capital
estimation for raw material and finished goods stocks
debtors
Sources of funding
equity
borrowings
Purchase of Plant and Machinery
Plant Layout
Organization Chart
Manpower recruitment
Training
Prototype design and development
Prototype testing
Field trials
Securing Orders
Purchase of Raw Materials
Commercial production start
Tuesday, January 8, 2008
SMEs - opportunities and challenges
Small and medium enterprise
Small and medium enterprises or SMEs, also called small and medium-sized enterprises and small and medium-sized businesses or small and medium businesses or SMBs are companies whose headcount or turnover falls below certain limits.
The abbreviation SME occurs commonly in the European Union and in international organizations, such as the World Bank, the United Nations and the WTO. The term small and medium-sized businesses or SMBs has become more standard in a few other countries.
EU Member States traditionally had their own definition of what constitutes an SME, for example the traditional definition in Germany had a limit of 500 employees, while, for example, in Belgium it could have been 100. But now the EU has started to standardize the concept. Its current definition categorizes companies with fewer than 50 employees as "small", and those with fewer than 250 as "medium".[1] By contrast, in the United States, when small business is defined by the number of employees, it often refers to those with less than 100 employees, while medium-sized business often refers to those with less than 500 employees. However, the most widely used American definition of micro-business by the number of employees is the same of that of European Union: less than 10 employees.
As of 2005, Germany will use the definition of the European Commission.
Business enterprises of fewer than 10 employees often class as SOHO (for Small office/home office).
In most economies, smaller enterprises are much greater in number. In the EU, SMEs comprise approximately 99% of all firms and employ between them about 65 million people. In many sectors, SMEs are also responsible for driving innovation and competition.
Providing SME finance and support is thus an important area of economic policy.
See also
National Federation of Independent Business
References
^ European Commission (2003-05-06), Recommendation 2003/361/EC: SME Definition, <http://europa.eu.int/comm/enterprise/enterprise_policy/sme_definition/index_en.htm>. Retrieved on 2007-05-24
External links
Small Business at the Open Directory Project
OECD Centre for Entreprenuership, SMEs and Local Development
SMB Segmentation White Paper
more
Micro and small enterprises (MSEs) constitute an important segment of the Indian economy. contributing around 39% of the country's manufacturing output and 34% of its exports in 2004-05. It provides employment to around 29.5 miilion people in the rural and urban areas of the country according tothe Ministry of Finance.
ortu i' hallenges for SMEs in India,Major policy reforms aimed at substantially deregulating the industrial sector and liberalizing foreign investments as well as technology imports have enhanced opportunities and challenges for the small industries sector. The following factors put Indian SMEs in a favorable position:
'-ji9h contribution to domestic production Significant export earnings ~ow investment requirements ·""""'---Operational flexibility '-""Location wise mobility '---{ow intensive imports ·-.../'Capacities to develop appropriate indigenous technology .Jmport substitution r-Contribution towards defense production '----Technology-oriented industries vCompetitiveness in domestic and export markets
By the very nature of their operations, industrial units in the small-scale sector enjoy certain inherent advantages over their larger counterparts. The free economy ushers in accessibility to bigger markets, greater linkages for SMEs with larger companies and marketing outfits, improved manufacturing techniques and processes. Various measures adopted by Government of India, Reserve Bank of India and SIDBJ have attemptecl to alleviate the problems of SME sector. These initiatives, coupled with other developments in the economic environment, are expected to enhance the prospects of SMJ;.s.
With increasing globalization and entry of multinationals, immense opportunities have been created for outsourcing, sub contracting and ancillarisation of the products manufactured by corporates, particularly in non-core sectors like automobiles, engineering and consumer
Employment I Exports in lakh (Rs crore
86,013 (20.7) 97,644 (13.5) 1,24,417 (27.4) N.A.
Entrepreneur
electronics. A vibrant SME sector can drive maximum benefit of these developments.
However, the SMEs in India. whi 90% of the total number of indws~ enterprises and form ---u=le backbone of industrial deve;c:~er:' continue to be in technological backwaters vis-a-·.s ac .·a~ces in science and technology. These suffer fror- :-;:;: ers of sub optimal scales of operations and techno,~ ::a :=50'esce~ While 'most large corrtpames, even Il"'CS:S ::'-; countries, have financial as well as techr::.G ::.G::::::':-J to identif' technological sources and eva~a:= =. ==-=':5 ~echnologi,--s for their requirements, this CG:.c:ii~ 5 :xnspicuously missing in most SMEs. It is this 's.a=-= := ~' '::5 ::.a: makes them an ideal target fouec:hno'o: :,GJ C::C'~:=~~ :,....rough technoloqical cooperation with I;:;-:=~ ~J".:.,r-:-~s "'''':.~ R&D institUtTOns-l. academic institutions a::: D=..:.":", =5 '::= ==:.-~ology
~
Limitations of SMEs vLow capital base ~Concentration of functions in or.e ~"'::, p '-./ Inadequate exposure to internat:c-.a~ ,=-----Inability to face impact of WTO r&; -...':' --inadequate contribution towards::; s..::......-Lack of professionalism
Besides these, the mostformidace :-:.::2.:-..has been it) accessing techr-::'=~ ;= comp'etitive~s. The reasons identify their technology needs a
......... Poor financial situation and low Ie. s ~ -:f ,=- ,/ Poor adaptability to changing trace ;:2-t"./ Desire to avoid risk ..- Non-availability of technically tra::-&: ....-/Emphasis on production and no ~Lack of management skills t./lack of access to technologica consultancy services \../I'solation from technology hubs
In order to enable SMEs overcome :.- S :::i enhance their access to new teer - : :3';:'= their competitiveness in the in:e-:::::::---imperative to give them a cond..,c .:: I?includes:
./ (1) Formulation of appropriate na-, .programmes;<>-12) Building up technological capeCL", /(3) Knowledge flows and technOlO;-!'-:=~= <./(4) R&D and inter firm linkages. The potential of SMEs is often ~:;, [problems commonly related to s~::opportunities, standards/ quality, s_:::_ and technology innovation. To prese-. = margins, small-scale entrepreneurs - ::do not opt to innovate products an tactics that deters their growth in April, 2001Opportunities and Challenges for Hong Kong SMEs in the Chinese Mainland Content provided by:
China's accession to the World Trade Organization is bound to usher in a new development stage for Hong Kong economy and especially, for Hong Kong companies' operations in the Mainland. However, for most Small and Medium Enterprises (SMEs), a double-edged sword scenario has loomed up.
SME's Pivotal Role
The economic ties between Hong Kong and Mainland China have been greatly strengthened in the recent decades. As of 1985, Chinese Mainland has become Hong Kong's largest trade partner, accounting for nearly 40% of its total trade. In particular, the growth of re-export has been most spectacular. Nowadays, Hong Kong is the next-to-none entreport for the Chinese mainland, which handles about 40% of the mainland's foreign trade. While on the other hand, 95% of Hong Kong's total re-exports (US$ 160 Billion in 2000) are either originated from or destined for the Chinese mainland. At the same time, Hong Kong has become the most important source of foreign direct investment (FDI) of the Mainland. By the mid-2000, the cumulative capital flows from Hong Kong had amounted to US$ 162 Billion on the utilized basis, accounting for nearly on half of the national total inbound FDI.
A salient feature of Hong Kong's economy is the existence of a large multitude of SMEs. There are more than 300 thousand SMEs in Hong Kong, representing over 98% of the total establishments and providing job opportunities to over 1.4 million persons, about 60% of the workforce.
Hong Kong SMEs have played the lead in exploring the Mainland market. Since the mid-1980s, an increasing number of Hong Kong SMEs have established operations in the hinterland, mainly in the form of Foreign-funded Enterprise (FFE) or Outward Processing Trade (OPT). According to a latest survey conducted by the Chinese Manufacturers' Association of Hong Kong, about 86% of CMA members have investments in the Mainland, of which more than 80% are SMEs.
By making use of Mainland's advantages in respect of land, manpower and other resources, Hong Kong SMEs have managed to reduce operating costs, greatly enhancing their competitiveness in the world marketplace. On the other hand, they have contributed to foster an externally-oriented economy and increase job opportunities in the mainland, thus serving as a bridge integrating China and the world economy. More recently, Hong Kong SMEs have begun to set foot on areas other than manufacturing, including services sectors like catering, hotel, transportation, and tourism. It is self evident that SMEs have not only constituted the backbone of our local economy, but also acted as a catalyst for Mainland's economic take-off.
Opportunities Arising from China's WTO Accession
China's membership with the World Trade Organization will uncover a new page in the annals of economic cooperation between Hong Kong and China. By virtue of their flexibility, agility and efficiency, as well as the experience and connections accumulated in the long-time exposure to the Mainland market, Hong Kong SMEs should not fail to take a head-start and achieve unprecedented development.
Trading Opportunities
To meet the requirements of WTO, China has promised to reduce tariff and other trade barriers. Such moves will greatly conduce to the growth of imports, while enabling FFEs to save the expense on imported materials and parts. As of the start of this year, the Central Government has trimmed the tariff on 3,462 goods items, making the general tariff level drop from 16.4% to 15.3%. Two other immediate benefits of China's entry to WTO are the entitlement to multilateral, extensive MFN (Most Favored Nation) treatments and the availability of a well-functioned arbitration mechanism for settling trade disputes, whereby China can somewhat ward off the rampant discriminations imposed by some industrialized nations. This will pave the way for products made in China, including those churned out by Hong Kong SMEs, to make inroad into the developed markets. Beyond doubt, with the accelerated expansion of China's external trade, Hong Kong's established status as international trade center and transportation center will be further strengthened and SMEs specializing in trade-supporting businesses, e.g., I&E, banking, forwarding, warehousing and insurance, will be greatly benefited.
On the other hand, in its run-up to WTO entry, China is pressing ahead with the liberalization of domestic markets. Recently, the Foreign Investment Enterprises Laws have been revised and the stipulations on export obligations have been abolished. These changes allow for a greater degree of autonomy for Hong Kong SMEs to extend their sales outlet to Mainland's market.
Investment Opportunities
Hong Kong services SMEs are renown for their internationalization experience and professional competence. Capitalizing on China's new initiatives in liberalizing services sector, these SMEs will have bright prospects of expanding business scope into the Mainland, especially in retailing, wholesales, international trade, telecommunication and Internet industries. The increasing presence of Hong Kong-based services firms could, in turn, bodes well for manufacturers, enabling them to upgrade efficiency and maximize synergy.
China's regulatory system towards foreign investment has often invited complaints because of its ambiguity, inconsistency, lack of transparency, red tape, and onerous sub-charges and levies. WTO has provided a strong incentive for China to come up with institutional arrangements that are rule-based, in line with the international practices, and more friendly to foreign investment. It is reported that more than 700 Chinese laws are now under review in regard to the compliance with WTO rules, and such institutional realignment is being translated into a boost on Hong Kong SMEs' confidence in China's investment environment. According to the CMA's survey, most Hong Kong manufacturers are expecting a sounder regulatory framework in the Mainland, and they have rated this as the most important benefit that they are expecting from WTO. Much noteworthy is that 47% of the respondents have indicated interest in expanding investment scale, with another 41.9% choosing to stay put. Needless to say, China's accession to WTO will set a new stage for the division of labor between Hong Kong and its motherland, enkindling a new round of tide wave of cross-border investment.
Techno-economic Cooperation
China's accession to WTO will inexorably put a lot of indigenous enterprises under increasing pressure of international competition. In particular, many SOEs (State-owned Enterprises) and traditional industries, e.g., agriculture, automobile, chemicals, will bear the brunt. These local companies, in their struggle to re-structure, are in desperate need of capital, technology, managerial skills and market channels __ in which Hong Kong SMEs generally have an edge. Based on complimentaries, there is vast room for Hong Kong SMEs to develop various collaborations with Mainland companies, so as to join forces in taping the integrating domestic and international markets.
Hong Kong SMEs could also establish partnership with Western MNCs (Multi-national Companies) and Taiwanese enterprises that have an eye to China business. For instance, tripartite alliances consisting of Hong Kong SMEs, international venture capitalists and Mainland research institutions can be forged to facilitate the development and commercialization of high-end technologies.
Challenges Ahead
As often as not, challenge is the twin of opportunity. Now that China is speeding up its pace in market liberalization, it is bound to turn into a battlefield teemed with market-seeking players from all over the world, including Western companies, which are generally superior in size, strength and technology. Thus far, Hong Kong SME have mostly been confined to labor-intensive, relatively low-end and export-oriented Outward Processing Trade in the Mainland, and many of them are still short of the right ability and motivation as well to pursue technologic innovation and to snatch domestic market share. With more and more big players flocking into Mainland and domestic enterprises picking up, Hong Kong SMEs could be thrust into deep water. For instance, they might encounter graver difficulties in scraping up market outlets, and also have to brace up for fierce competition when securing operational resources, e.g., raw material and especially, high-quality manpower in the Mainland.
The Mainland is now in the process of implementing National Treatments on FIEs, which have resulted in the reduction or phasing out of some preferential treatments previously enjoyed by Hong Kong enterprises, such as tax holiday, tax refunds, trading rights for import and export goods. Owing to their meager profit margin, Hong Kong SMEs have generally exhibited a higher degree of dependence on tax or fiscal incentives and are relatively sensitive to related policy changes. The implementation of National treatment, though beneficial in the long run, could cause backfire among some SMEs in the short term.
In the recent years, the priority of China's foreign investment policy has shifted form the growth of quantity to the quality of investment. While MNCs and hi-tech investors are gaining importance, SMEs have seen erosion in their bargaining position in relation to the Chinese Governments. This trend, very likely, will become even palpable in the post -WTO Era.
Moreover, since China has adopted a gradual, selective approach to pursue its liberalization initiatives, SMEs investors might not be benefited to the same degree as their bigger counterparts could. For example, the Pilot Scheme for Foreign-funded Commercial Firms, which was promulgated in 1998 to relax restrictions on foreign participation in China's distribution business, still stipulates rigorous requirements on the qualification of the applicants. For instance, foreign companies with an intention to invest in retails should have the tack record of over US$ 2 billion average annual turnover in 3 consecutive years before the filing of application, and their asset value should not be less than US$ 200 million. These criteria could be sky-high, if not prohibitive, for Hong Kong SMEs, and similar phenomena have also been found in other arenas, such as finance and international trading. Owing to exorbitant thresholds of market entry, many Hong Kong SMEs have factually lost to their big competitors at the starting post.
Implication and Suggestions
In order to rise to the challenges ahead and to maximize the opportunities available, Hong Kong SMEs should, first of all, keep up the "first-mover" advantages. Along with branching out into newly-opened investment areas, Hong Kong SMEs could also consider venturing into the Great West, where a far-reaching development campaign is now unfolding.
Meanwhile, it is imperative for Hong Kong SMEs to gear towards activities of higher value, thereby upgrading the division of labor between Hong Kong and Mainland China from the vertical pattern to horizontal paradigm. For example, by capitalizing on Mainland's fast growing domestic market, SMEs can step up their efforts to build up their own brand-names or even cultivate world-class labels; and by leveraging on China's strength in research forces and talents, Hong Kong SMEs can improve R&D ability, so as to move up the ladder of value adding from OEM stage (Original Equipment Manufacturing) towards ODM (Original Design Manufacturing).
Another strategy that deserves of pursuit is inter-firm collaboration. Hong Kong SMEs, especially those engaged in correlated product lines, can team up under certain kind of networking arrangements. Such team working could not only enhance synergy and efficiency, but also enable SMEs to conduct group investment so as to be eligible for the participation in some projects in the nature of capital-intensiveness, long payback period or high entry barriers.
Like Hong Kong, SMEs also dominate Mainland's economic landscape. There are 398 million SMEs in the Mainland, a growing portion of which are private enterprises, the pioneers of China's market economy. On the basis of complementarities and to mutual benefits, Hong Kong SMEs can establish partnership and strategic alliances with their Mainland counterparts. In particular, they can work hand-in-hand to explore domestic market, promote brand names, develop and commercialize new technology, and even take part in the reform of Mainland's State-owned Enterprises (SOEs).
more
SMEs in Global Market
AGRICULTURE
AUTO ANCILLARY INDUSTRY
AMERICAN CHAMBER OF COMMERCE
THE KPO SECTOR
WTO Membership NEPAL
OPPORTUNITIES and CHALLENGES for SMEs
Small and medium enterprises or SMEs, also called small and medium-sized enterprises and small and medium-sized businesses or small and medium businesses or SMBs are companies whose headcount or turnover falls below certain limits.
The abbreviation SME occurs commonly in the European Union and in international organizations, such as the World Bank, the United Nations and the WTO. The term small and medium-sized businesses or SMBs has become more standard in a few other countries.
EU Member States traditionally had their own definition of what constitutes an SME, for example the traditional definition in Germany had a limit of 500 employees, while, for example, in Belgium it could have been 100. But now the EU has started to standardize the concept. Its current definition categorizes companies with fewer than 50 employees as "small", and those with fewer than 250 as "medium".[1] By contrast, in the United States, when small business is defined by the number of employees, it often refers to those with less than 100 employees, while medium-sized business often refers to those with less than 500 employees. However, the most widely used American definition of micro-business by the number of employees is the same of that of European Union: less than 10 employees.
As of 2005, Germany will use the definition of the European Commission.
Business enterprises of fewer than 10 employees often class as SOHO (for Small office/home office).
In most economies, smaller enterprises are much greater in number. In the EU, SMEs comprise approximately 99% of all firms and employ between them about 65 million people. In many sectors, SMEs are also responsible for driving innovation and competition.
Providing SME finance and support is thus an important area of economic policy.
See also
National Federation of Independent Business
References
^ European Commission (2003-05-06), Recommendation 2003/361/EC: SME Definition, <http://europa.eu.int/comm/enterprise/enterprise_policy/sme_definition/index_en.htm>. Retrieved on 2007-05-24
External links
Small Business at the Open Directory Project
OECD Centre for Entreprenuership, SMEs and Local Development
SMB Segmentation White Paper
more
Micro and small enterprises (MSEs) constitute an important segment of the Indian economy. contributing around 39% of the country's manufacturing output and 34% of its exports in 2004-05. It provides employment to around 29.5 miilion people in the rural and urban areas of the country according tothe Ministry of Finance.
ortu i' hallenges for SMEs in India,Major policy reforms aimed at substantially deregulating the industrial sector and liberalizing foreign investments as well as technology imports have enhanced opportunities and challenges for the small industries sector. The following factors put Indian SMEs in a favorable position:
'-ji9h contribution to domestic production Significant export earnings ~ow investment requirements ·""""'---Operational flexibility '-""Location wise mobility '---{ow intensive imports ·-.../'Capacities to develop appropriate indigenous technology .Jmport substitution r-Contribution towards defense production '----Technology-oriented industries vCompetitiveness in domestic and export markets
By the very nature of their operations, industrial units in the small-scale sector enjoy certain inherent advantages over their larger counterparts. The free economy ushers in accessibility to bigger markets, greater linkages for SMEs with larger companies and marketing outfits, improved manufacturing techniques and processes. Various measures adopted by Government of India, Reserve Bank of India and SIDBJ have attemptecl to alleviate the problems of SME sector. These initiatives, coupled with other developments in the economic environment, are expected to enhance the prospects of SMJ;.s.
With increasing globalization and entry of multinationals, immense opportunities have been created for outsourcing, sub contracting and ancillarisation of the products manufactured by corporates, particularly in non-core sectors like automobiles, engineering and consumer
Employment I Exports in lakh (Rs crore
86,013 (20.7) 97,644 (13.5) 1,24,417 (27.4) N.A.
Entrepreneur
electronics. A vibrant SME sector can drive maximum benefit of these developments.
However, the SMEs in India. whi 90% of the total number of indws~ enterprises and form ---u=le backbone of industrial deve;c:~er:' continue to be in technological backwaters vis-a-·.s ac .·a~ces in science and technology. These suffer fror- :-;:;: ers of sub optimal scales of operations and techno,~ ::a :=50'esce~ While 'most large corrtpames, even Il"'CS:S ::'-; countries, have financial as well as techr::.G ::.G::::::':-J to identif' technological sources and eva~a:= =. ==-=':5 ~echnologi,--s for their requirements, this CG:.c:ii~ 5 :xnspicuously missing in most SMEs. It is this 's.a=-= := ~' '::5 ::.a: makes them an ideal target fouec:hno'o: :,GJ C::C'~:=~~ :,....rough technoloqical cooperation with I;:;-:=~ ~J".:.,r-:-~s "'''':.~ R&D institUtTOns-l. academic institutions a::: D=..:.":", =5 '::= ==:.-~ology
~
Limitations of SMEs vLow capital base ~Concentration of functions in or.e ~"'::, p '-./ Inadequate exposure to internat:c-.a~ ,=-----Inability to face impact of WTO r&; -...':' --inadequate contribution towards::; s..::......-Lack of professionalism
Besides these, the mostformidace :-:.::2.:-..has been it) accessing techr-::'=~ ;= comp'etitive~s. The reasons identify their technology needs a
......... Poor financial situation and low Ie. s ~ -:f ,=- ,/ Poor adaptability to changing trace ;:2-t"./ Desire to avoid risk ..- Non-availability of technically tra::-&: ....-/Emphasis on production and no ~Lack of management skills t./lack of access to technologica consultancy services \../I'solation from technology hubs
In order to enable SMEs overcome :.- S :::i enhance their access to new teer - : :3';:'= their competitiveness in the in:e-:::::::---imperative to give them a cond..,c .:: I?includes:
./ (1) Formulation of appropriate na-, .programmes;<>-12) Building up technological capeCL", /(3) Knowledge flows and technOlO;-!'-:=~= <./(4) R&D and inter firm linkages. The potential of SMEs is often ~:;, [problems commonly related to s~::opportunities, standards/ quality, s_:::_ and technology innovation. To prese-. = margins, small-scale entrepreneurs - ::do not opt to innovate products an tactics that deters their growth in April, 2001Opportunities and Challenges for Hong Kong SMEs in the Chinese Mainland Content provided by:
China's accession to the World Trade Organization is bound to usher in a new development stage for Hong Kong economy and especially, for Hong Kong companies' operations in the Mainland. However, for most Small and Medium Enterprises (SMEs), a double-edged sword scenario has loomed up.
SME's Pivotal Role
The economic ties between Hong Kong and Mainland China have been greatly strengthened in the recent decades. As of 1985, Chinese Mainland has become Hong Kong's largest trade partner, accounting for nearly 40% of its total trade. In particular, the growth of re-export has been most spectacular. Nowadays, Hong Kong is the next-to-none entreport for the Chinese mainland, which handles about 40% of the mainland's foreign trade. While on the other hand, 95% of Hong Kong's total re-exports (US$ 160 Billion in 2000) are either originated from or destined for the Chinese mainland. At the same time, Hong Kong has become the most important source of foreign direct investment (FDI) of the Mainland. By the mid-2000, the cumulative capital flows from Hong Kong had amounted to US$ 162 Billion on the utilized basis, accounting for nearly on half of the national total inbound FDI.
A salient feature of Hong Kong's economy is the existence of a large multitude of SMEs. There are more than 300 thousand SMEs in Hong Kong, representing over 98% of the total establishments and providing job opportunities to over 1.4 million persons, about 60% of the workforce.
Hong Kong SMEs have played the lead in exploring the Mainland market. Since the mid-1980s, an increasing number of Hong Kong SMEs have established operations in the hinterland, mainly in the form of Foreign-funded Enterprise (FFE) or Outward Processing Trade (OPT). According to a latest survey conducted by the Chinese Manufacturers' Association of Hong Kong, about 86% of CMA members have investments in the Mainland, of which more than 80% are SMEs.
By making use of Mainland's advantages in respect of land, manpower and other resources, Hong Kong SMEs have managed to reduce operating costs, greatly enhancing their competitiveness in the world marketplace. On the other hand, they have contributed to foster an externally-oriented economy and increase job opportunities in the mainland, thus serving as a bridge integrating China and the world economy. More recently, Hong Kong SMEs have begun to set foot on areas other than manufacturing, including services sectors like catering, hotel, transportation, and tourism. It is self evident that SMEs have not only constituted the backbone of our local economy, but also acted as a catalyst for Mainland's economic take-off.
Opportunities Arising from China's WTO Accession
China's membership with the World Trade Organization will uncover a new page in the annals of economic cooperation between Hong Kong and China. By virtue of their flexibility, agility and efficiency, as well as the experience and connections accumulated in the long-time exposure to the Mainland market, Hong Kong SMEs should not fail to take a head-start and achieve unprecedented development.
Trading Opportunities
To meet the requirements of WTO, China has promised to reduce tariff and other trade barriers. Such moves will greatly conduce to the growth of imports, while enabling FFEs to save the expense on imported materials and parts. As of the start of this year, the Central Government has trimmed the tariff on 3,462 goods items, making the general tariff level drop from 16.4% to 15.3%. Two other immediate benefits of China's entry to WTO are the entitlement to multilateral, extensive MFN (Most Favored Nation) treatments and the availability of a well-functioned arbitration mechanism for settling trade disputes, whereby China can somewhat ward off the rampant discriminations imposed by some industrialized nations. This will pave the way for products made in China, including those churned out by Hong Kong SMEs, to make inroad into the developed markets. Beyond doubt, with the accelerated expansion of China's external trade, Hong Kong's established status as international trade center and transportation center will be further strengthened and SMEs specializing in trade-supporting businesses, e.g., I&E, banking, forwarding, warehousing and insurance, will be greatly benefited.
On the other hand, in its run-up to WTO entry, China is pressing ahead with the liberalization of domestic markets. Recently, the Foreign Investment Enterprises Laws have been revised and the stipulations on export obligations have been abolished. These changes allow for a greater degree of autonomy for Hong Kong SMEs to extend their sales outlet to Mainland's market.
Investment Opportunities
Hong Kong services SMEs are renown for their internationalization experience and professional competence. Capitalizing on China's new initiatives in liberalizing services sector, these SMEs will have bright prospects of expanding business scope into the Mainland, especially in retailing, wholesales, international trade, telecommunication and Internet industries. The increasing presence of Hong Kong-based services firms could, in turn, bodes well for manufacturers, enabling them to upgrade efficiency and maximize synergy.
China's regulatory system towards foreign investment has often invited complaints because of its ambiguity, inconsistency, lack of transparency, red tape, and onerous sub-charges and levies. WTO has provided a strong incentive for China to come up with institutional arrangements that are rule-based, in line with the international practices, and more friendly to foreign investment. It is reported that more than 700 Chinese laws are now under review in regard to the compliance with WTO rules, and such institutional realignment is being translated into a boost on Hong Kong SMEs' confidence in China's investment environment. According to the CMA's survey, most Hong Kong manufacturers are expecting a sounder regulatory framework in the Mainland, and they have rated this as the most important benefit that they are expecting from WTO. Much noteworthy is that 47% of the respondents have indicated interest in expanding investment scale, with another 41.9% choosing to stay put. Needless to say, China's accession to WTO will set a new stage for the division of labor between Hong Kong and its motherland, enkindling a new round of tide wave of cross-border investment.
Techno-economic Cooperation
China's accession to WTO will inexorably put a lot of indigenous enterprises under increasing pressure of international competition. In particular, many SOEs (State-owned Enterprises) and traditional industries, e.g., agriculture, automobile, chemicals, will bear the brunt. These local companies, in their struggle to re-structure, are in desperate need of capital, technology, managerial skills and market channels __ in which Hong Kong SMEs generally have an edge. Based on complimentaries, there is vast room for Hong Kong SMEs to develop various collaborations with Mainland companies, so as to join forces in taping the integrating domestic and international markets.
Hong Kong SMEs could also establish partnership with Western MNCs (Multi-national Companies) and Taiwanese enterprises that have an eye to China business. For instance, tripartite alliances consisting of Hong Kong SMEs, international venture capitalists and Mainland research institutions can be forged to facilitate the development and commercialization of high-end technologies.
Challenges Ahead
As often as not, challenge is the twin of opportunity. Now that China is speeding up its pace in market liberalization, it is bound to turn into a battlefield teemed with market-seeking players from all over the world, including Western companies, which are generally superior in size, strength and technology. Thus far, Hong Kong SME have mostly been confined to labor-intensive, relatively low-end and export-oriented Outward Processing Trade in the Mainland, and many of them are still short of the right ability and motivation as well to pursue technologic innovation and to snatch domestic market share. With more and more big players flocking into Mainland and domestic enterprises picking up, Hong Kong SMEs could be thrust into deep water. For instance, they might encounter graver difficulties in scraping up market outlets, and also have to brace up for fierce competition when securing operational resources, e.g., raw material and especially, high-quality manpower in the Mainland.
The Mainland is now in the process of implementing National Treatments on FIEs, which have resulted in the reduction or phasing out of some preferential treatments previously enjoyed by Hong Kong enterprises, such as tax holiday, tax refunds, trading rights for import and export goods. Owing to their meager profit margin, Hong Kong SMEs have generally exhibited a higher degree of dependence on tax or fiscal incentives and are relatively sensitive to related policy changes. The implementation of National treatment, though beneficial in the long run, could cause backfire among some SMEs in the short term.
In the recent years, the priority of China's foreign investment policy has shifted form the growth of quantity to the quality of investment. While MNCs and hi-tech investors are gaining importance, SMEs have seen erosion in their bargaining position in relation to the Chinese Governments. This trend, very likely, will become even palpable in the post -WTO Era.
Moreover, since China has adopted a gradual, selective approach to pursue its liberalization initiatives, SMEs investors might not be benefited to the same degree as their bigger counterparts could. For example, the Pilot Scheme for Foreign-funded Commercial Firms, which was promulgated in 1998 to relax restrictions on foreign participation in China's distribution business, still stipulates rigorous requirements on the qualification of the applicants. For instance, foreign companies with an intention to invest in retails should have the tack record of over US$ 2 billion average annual turnover in 3 consecutive years before the filing of application, and their asset value should not be less than US$ 200 million. These criteria could be sky-high, if not prohibitive, for Hong Kong SMEs, and similar phenomena have also been found in other arenas, such as finance and international trading. Owing to exorbitant thresholds of market entry, many Hong Kong SMEs have factually lost to their big competitors at the starting post.
Implication and Suggestions
In order to rise to the challenges ahead and to maximize the opportunities available, Hong Kong SMEs should, first of all, keep up the "first-mover" advantages. Along with branching out into newly-opened investment areas, Hong Kong SMEs could also consider venturing into the Great West, where a far-reaching development campaign is now unfolding.
Meanwhile, it is imperative for Hong Kong SMEs to gear towards activities of higher value, thereby upgrading the division of labor between Hong Kong and Mainland China from the vertical pattern to horizontal paradigm. For example, by capitalizing on Mainland's fast growing domestic market, SMEs can step up their efforts to build up their own brand-names or even cultivate world-class labels; and by leveraging on China's strength in research forces and talents, Hong Kong SMEs can improve R&D ability, so as to move up the ladder of value adding from OEM stage (Original Equipment Manufacturing) towards ODM (Original Design Manufacturing).
Another strategy that deserves of pursuit is inter-firm collaboration. Hong Kong SMEs, especially those engaged in correlated product lines, can team up under certain kind of networking arrangements. Such team working could not only enhance synergy and efficiency, but also enable SMEs to conduct group investment so as to be eligible for the participation in some projects in the nature of capital-intensiveness, long payback period or high entry barriers.
Like Hong Kong, SMEs also dominate Mainland's economic landscape. There are 398 million SMEs in the Mainland, a growing portion of which are private enterprises, the pioneers of China's market economy. On the basis of complementarities and to mutual benefits, Hong Kong SMEs can establish partnership and strategic alliances with their Mainland counterparts. In particular, they can work hand-in-hand to explore domestic market, promote brand names, develop and commercialize new technology, and even take part in the reform of Mainland's State-owned Enterprises (SOEs).
more
SMEs in Global Market
AGRICULTURE
AUTO ANCILLARY INDUSTRY
AMERICAN CHAMBER OF COMMERCE
THE KPO SECTOR
WTO Membership NEPAL
OPPORTUNITIES and CHALLENGES for SMEs
LIST OF RESERVED ITEMS
LIST OF RESERVED ITEMS
Exclusive Purchase from SSI
Policy of Reservation
Exclusive Manufacture in Small Scale Sector
List of Industries for which Licensing is compulsoryExclusively reserved for Public Sector
Schedule I :List Of Industries To Be Reserved For manufacture Of Items Exclusively in the Public Sector
Arms and ammunition and allied items of defence equipment
Defence aircraft and warships.
Atomic Energy.
Coal and lignite
Mineral oils.
Mining of iron ore, manganese ore, chrome ore, gypsum, sulphur, gold and diamond.
Mining of copper, lead, zinc, tin, molybdenum and wolfram.
Minerals specified in the Schedule to the Atomic Energy (Control of production and use) Order, 1953.
Railway transport.
Schedule II :List Of Industries In Respect Of Which Industrial
Licensing Is Compulsory (In ITC (HS) Classification)
Note 1: This list is based on the Indian Trade Classification, which follows the Harmonised Commodity description and Coding system, Govt. of India, Ministry of Commerce, Directorate General of Commercial Intelligence and Statistics, Calcutta. The code specified for the item description relates to this classification.
Note 2: Other items in respect of which industrial licensing is not exempted are:-
A. For large and medium industries.
- The items reserved for the Small Scale Sector listed in Schedule-III
B. For all industries
- All items of electronic aerospace and defence equipment, Whether specifically mentioned or not, in this list.
- All items related to the production or use of atomic energy including the carrying out of any process, preparatory or ancillary to such production or use, under the Atomic Energy Act, 1962.
Note 3: The authentic description will be treated as specified in the item description given below.
1. Coal and lignite
27.01 Coal
27.02 Lignite
2. Petroleum (other than crude) and its distillation products.
27.10 Petroleum oils, other than crude.
27.11 Petroleum gases and other gaseous hydrocarbons.
27.12 Petroleum waxes and other similar products obtained through distillation of petroleum.
27.13 Petroleum coke and other residues of petroleum oils.
3. Distillation and brewing of alcoholic drinks.
22.03 Beer made from malt.
22.04 Wine of fresh grapes including fortified wines.
22.05 Vermouth and other wine of fresh grapes flavoured with plants or aromatic substances.
22.06 Other fermented beverages (for example, cider, perry, mead).
22.08 Indentured ethyl alcohol of an alcoholic strength by volume of less than 80% vol. spirit, liquors and other spirituous beverages, compound alcoholic preparations of a kind used for the manufacture of beverages.
4. Sugar
170199.02 Cane sugar, refined.
170199.09 Other sugar, including centrifugal sugar.
5. 151610.00 Animal fats and oils, partly or wholly hydrogenated.
15.17 Edible mixtures or preparations of animal fats and oils.
151800.11 Inedible mixtures or preparations of animal fats and oils.
6. Cigars and cigarettes of tobacco or of tobacco substitute.
24.02 Cigars, cheroots, cigarillos and a cigarettes of tobacco or of tobacco tobacco substitutes.
7. Asbestos and asbestos-based products.
68.11 Articles of asbestos-cement of cellulose fibre-cement or the like.
68.12 Fabricated asbestos or with a basis of a asbestos and magnesium carbonate: articles thereof.
681390.01 Asbestos friction materials.
8. Plywood, decorative veneers, and other wood-based products such as particle board, medium density fibre board, and block board.
44.08 Veneer sheets, plywood and other wood sawn lengthwise of a thickness not exceeding 6mm.
44.10 Particle board and other similar board of wood or other ligneous materials.
44.11 Fibre board of wood or other ligneous materials.
44.12 Plywood, veneered panels and similar laminated wood.
44.13 Densified wood, in blocks, plates strips and other profile shapes.
9. Raw hides and skins, leather chamois and patent leather.
41.04 Leather of bovine or equine animals, without hair on, other than leather of heading No. 41.08 or 41.09.
41.05 Sheep or lamb skin leather, without wool on, other than leather of heading No. 41.08 or 41.09.
41.06 Goat or kid skin leather, without hair on, other than leather of heading No 41.08 or 41.09.
41.07 Leather of other animals, without hair on, other than leather of heading No.41.08 or 41.09.
41.08 Chamois (including combination chamois) leather.
41.09 Patent leather and patent laminated leather; and matalised leather.
10. Tanned or dressed furskins.
43.02 or dressed furskins.
11. Motor cars.
12. Paper and Newsprint except bagasse-based units (i.e. except units based on minimum 75% pulp from agricultural residues, bagasse and other non-conventional raw materials).
47.01 Mechanical wood pulp
47.02 Chemical wood pulp, dissolving grades.
47.03 Chemical wood pulp, soda or sulphate, other than dissolving grades.
47.04 Chemical wood pulp, sulphite, other than dissolving grades.
47.05 Semi-chemical wood pulp.
48.01 Newsprint, in rolls or sheets.
48.02 Uncoated paper of a kind used for writing, printing or other graphic purposes, in rolls or sheets.
48.03 Paper of a kind used for household or sanitary purposes, inrolls or sheets.
48.04 Uncoated kraft paper, in rolls or sheets.
48.05 Other uncoated paper, in rolls or sheets.
48.06 Vegetable parchment, grease proof papers, tracing papers and the like, inrolls or sheets.
48.07 Composite paper, in rolls or sheets.
48.08 Paper, corrugated, creped, crinkled, embossed or perforated, in rolls or sheets.
48.09 Carbon paper, self-copy paper and other copying or transfer papers in rolls or sheets.
48.10 Paper coated with Kaolin or other inorganic substances, in rolls or sheets.
48.11 Other coated or impregnated paper, in rolls, or sheets.
48.12 Filter blocks, slabs and plates, of paper pulp.
48.13 Cigarette paper.
13. Electronic aerospace and defence equipment: all types.
87.10 Tanks and other armoured fighting vehicles.
88.01 Defence-aircraft, spacecraft, and parts to thereof.
88.05 8906.01 Warships - all kinds.
93.07 Arms and ammunition; parts and accessories to thereof.
14. Explosive including detonating fuses, safety fuses, gun powder, nitro cellulose and matches.
36.01 Explosives; pyrotechnic products; to matches; pyrophoric alloys; certain
36.06 combustible preparations.
15. Hazardous chemicals.
22.07 Indentured ethyl alcohol of an alcoholic strength by volume of 80% vol. or higher, ethyl alcohol and other spirits, denatured, of any strength (Industrial alcohol.)
280110.00 Chlorine
281119.01 Hydrocyanic acid and its derivatives.
281210.01 Phosgene and its derivatives.
2815.11 Sodium Hydroxide (Caustic soda): Solid.
2815.12 Sodium Hydroxide (Caustic soda): In aqueous solution.
290121.00 Ethylene
290122.00 Propene (propylene).
290124.01 Butadienes
290220.00 Benzene
290230.00 Toluene
290241.00 O-xylene
290242.00 M-xylene
290243.00 P-xylene
290244.00 Mixed xylene isomers
290531.00 Ethylene glycol (ethanediol)/ethylene oxide.
29.05 Industrial alcohol
292229.02 Meta amino phenol.
292910.09 Isocyanates and disocyanates of hydrocarbon, not elsewhere specified (example, Methyl isocyanate).
380810.02 Aluminium Phosphide.
380810.16 Dimethoate
380810.21 Guinalphos
380810.29 Carbaryl, phorate and fenitorphion
390110.00 Polyethylene having a specific gravity of less than 0.94.
16. Drugs and Pharmaceuticals (according to Drug Policy)
29.36 Provitamins and vitamins, natural or reproduced by synthesis (including natural concentrates), derivatives thereof used primarily as vitamins, and inter-mixtures of the foregoing. (subject to the Drug Policy).
29.37 Hormones, natural or reproduced by Synthesis; derivatives thereof, used primarily as hormones; other steroids used primarily as hormones (subject to the Drug Policy).
29.38 Glycosides, natural or reproduced by synthesis and their salts, ether, esters and other derivatives, (subject to the Drug Policy).Antibiotics. (subject to the Drug Policy).
29.39 Vegetable alkaloids, natural or reproduced by synthesis and their salts, ethers, esters and other derivatives. (subject to the Drug Policy.)
29.41 Antibiotics. (subject to the Drug Policy).
29.42 Other synthetic drugs, not elsewhere specified or included (subject to the Drug Policy).
30.01 Pharmaceutical products (Subject to the to Drug Policy).
Now only six items fall under Schedule II
1. Distillation and brewing of alcoholic drinks.
2. Cigars and cigarattes of tobacco and manufactures tobacco substitutes.
3. Electronic Aerospace and defence equipment: all types.
4. Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches.
5. Hazardous chemicals.
6. Drugs and Pharmaceuticals (according to modified Drug Policy issued in September, 1994).
17. Entertainment electronics (VCRs, colour TVs, CD players, tape recorders).
85.19 Compact disc players.
852031.00 Tape recorders, cassette-type.
8520.39 Tape recorders, other than cassette-type.
85.21 Video recording or reproducing apparatus.
8528.10 Colour television receivers.
18. White goods (domestic refrigerators, domestic dishwashing machines, programmable domestic washing machines, microwave ovens, air conditioners).
84.15 Air conditioning machines.
84.18 Refrigerators and other freezing equipment, of the household type.
842211.00 Dishwashing machines, of the household type.
84.50 House hold washing machines of the programmable type.
851650.00 Microwave ovens.20.
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SCHEDULE I: List of Industries Reserved for the Public Sector
Atomic energy.
The substances specified in the scheduled to the notification of the Government of India in the Department of Atomic Energy number S.O.212(E), dated the 15th March, 1995.
Railway transport.
SCHEDULE II: List of Industries for which Industrial Licensing is Compulsory
Distillation and brewing of alcoholic drinks.
Cigars and Cigarettes of tobacco and manufactured tobacco subsitutes.
Electronic Aerospace and Defence equipment: all types.
Industrial explosives including detonating fuses, safely fuses, gun powder, nitrocellulose and matches.
Hazardous chemicals.
Drugs and Pharmaceuticals (according to modified Drug Policy issued in September, 1994 as amended in 1999).
SCHEDULE III :
List Of Items Reserved For Exclusive Manufacture In Small Scale Sector
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