SME classification in China
The classification of SMEs in China is quite complex with specific criteria for different industries. According to the SME Promotion Law of China, SMEs are classified based on the number of employees, annual revenue and total assets. For example, a medium-sized agricultural enterprise is required to hire a minimum of five hundred people. A small-sized construction enterprise can have a maximum business revenue of 8.5 million U.S. dollars. Compared to the SMEs in other economies which often employ below 100 or 500 people, SMEs in China are relatively quite big.
Contribution to the economy and outlook
SMEs are an important impetus to the economic development in China. Currently, SMEs represent more than 90 percent of the enterprises in the country. They also contribute over 60 percent to the GDP, over 70 percent to patents, and account for 80 percent of nationwide jobs in the country. However, the lifecycle of SMEs in China is often impeded by rising costs, financing difficulties, and limited innovation capacity. To support the growth of SMEs, the Chinese government decided to reduce the targeted reserve requirement ratio and readjust tax policies in early 2019. This could probably attract more investors on the SME board. With a booming e-commerce economy in China, some SMEs have developed their B2B e-commerce platforms to expand their revenue sources. The revenue of these e-commerce platforms was expected to reach 6.4 billion U.S. dollars in 2020.