Small and micro-enterprises to get more policy support

China has issued a new classification standard for small and medium-sized enterprises (SMEs) and introduced the concept of micro-enterprises for the first time, a move signaling more policy support to small and micro-enterprises.

Companies with less than 20 employees in sectors including manufacturing and transportation or no more than 10 employees in retail, catering and IT sectors are classified as micro-enterprises, the Ministry of Industry and Information Technology said in a notice on its website on Monday.

Self-employed people are also included in the new classification under  small or micro-enterprises, the ministry said.

The old classification standard, which was implemented in 2003, no longer reflects the current level of economic and enterprise development, and the re-classification will help small and micro-enterprises get more policy support in financing, tax benefits and public procurement, the ministry said.

Earlier figures from the ministry show that about 15.8 percent of China’s SMEs reported losses in the first two months of this year, 0.3 percent higher than a year earlier, and SME revenues during the same period declined 22.3 percent year-on-year, drawing the government’s attention to the difficulties they face.
“With the increasing raw material and labor costs, small enterprises urgently need financing to conduct industrial upgrade, but banks are reluctant to lend to them due to their low credibility and profitability,” Li Youhuan, a professor at Beijing Jiaotong University, told the Global Times on Monday.

Li said an increasing number of small enterprises are facing shutdown or drop in production. “Some economists have suggested the government allow small enterprises to go bankrupt instead of bailing them out,” he said. “But in China, small enterprises help solve unemployment problems and maintain social stability.”

Chinese Vice Premier Wang Qishan said financial institutions should provide more services to small enterprises, and a close eye should be kept on the private lending market.

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