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SME sees growth rebound despite struggle to survive (2)

By Li Qiaoyi (Global Times)

08:33, January 29, 2013

The average profit margin of many of the country's small businesses stands at around 1-3 percent in the current context; however, the figure was roughly 8-12 percent prior to the global financial crisis in 2008, according to Zhou, also director of the Wenzhou Council for the Promotion of Small and Medium-sized Enterprises.

"Unlike businesses above certain sizes, SMEs face more volatility, as they are more likely to die out amid stiffer competition," Lu Ting, China economist at Bank of America Merrill Lynch in Hong Kong, told the Global Times Monday.

"Rising labor costs are unavoidably a trend in the country, and thus for SMEs the way ahead is either to resort to mechanization or to steer toward high value-added businesses," Lu remarked, pointing to longer-term difficulties confronting the SME sector.

But Zhou still believes small businesses would have a bright future if the government could create policies that effectively improve the business climate for SMEs.

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