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A
Report on Support Measures for Small and Medium Enterprises
Chapter
2
The
Committee's philosophy and consensus
| 2.1 |
During the course
of its deliberation on specific proposals to provide further support
to SMEs' development, the Committee discussed in detail certain fundamental
issues and principles. The consensus reached is set out in the ensuing
paragraphs. |
Definition of SMEs
| 2.2 |
Having considered
the definitions of SMEs adopted by the Government and other economies,
the Committee decided to follow the Government's current definition
of SMEs when studying possible support measures(Note
1). In other words, SMEs are defined
as :
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Manufacturing
firms which employ fewer than 100 persons in Hong Kong;
or
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Non-manufacturing
firms (including firms engaged in construction; mining; quarrying;
electricity and gas; import and export; wholesaling; retailing;
catering; hotel; transport; warehouse; insurance; real estate;
business service; community, social and personal service)
which employ fewer than 50 persons in Hong Kong.
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| 2.3
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The Committee
notes that it is common international practice to use the number of
employees to define SMEs. For example, in the US, firms employing
fewer than 500 persons are regarded as SMEs; in Australia, SMEs are
defined as non-manufacturing firms employing fewer than 20 persons
and manufacturing firms employing fewer than 100 persons. Most other
APEC member economies also use employee number as the criterion for
defining SMEs. This criterion is simple, clear and easy to understand.
Unlike other possible criteria such as turnover, profit or gross output,
it is more stable and less susceptible to price fluctuations. |
Philosophy
and consensus
| 2.4 |
The Committee
agrees that in supporting the development of local SMEs the Government's
role is to create a favourable business environment, including a
stable macro economy, a simple and clear tax regime with low tax
rate, good infrastructure, ample supply of human resources, a culture
which encourages the application of technologies, as well as a sound
legal system to protect individual rights and intellectual properties.
With a favourable business environment, and with minimum necessary
regulation, SMEs will be able to operate freely and realise their
full potentials. Under the principle of market economy, the Government
should also assist SMEs to exploit their established advantages
to the full, and to overcome their limitations in economies of scale,
resources, technology, manpower and marketing. The aim is to strike
a balance between maximum support and minimum intervention.
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| 2.5 |
The Committee
believes that it is SMEs' own efforts, capabilities and perseverance
which ultimately determine whether they can successfully start,
build and expand their businesses. On this basis, the Committee
recommends that, in addition to enhancing SMEs' capabilities through
support services, SMEs should be encouraged to strive for continuous
self-improvement to enhance their versatility. To cope with the
ever-changing economic environment, SMEs should lay greater stress
on corporate governance, and strengthen their capabilities in cost
control, market knowledge, competitiveness, risk management, adapting
to changes, and the use of flexible strategies.
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| 2.6 |
The Committee reckons that SMEs must move with the times and adapt
their mindset accordingly. They need to be aware that they will be
facing many different challenges in the days ahead. Some of the challenges
are caused by technological development, others by ups and downs in
global or regional economic cycles. Faced with these challenges, SMEs
must not only secure the necessary financial resources, but also upgrade
human resources, step up the application of technologies, foster creativity,
develop specific market niches, and strengthen corporate governance.
The Committee will set out with specific support proposals for each
of the areas mentioned above. At the same time, SMEs must understand
the importance of these areas and be prepared to actively commit resources
to them. |
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| 2.7 |
The Committee supports the continuation of the current multi-channel
approach in providing support services for SMEs. That is to say, various
Government departments and support organizations should work together
and complement one another in flexibly providing different specialised
services for SMEs. The Committee further encourages trade and industrial
organizations, professional bodies and research institutes to provide
SMEs with support services in different areas and at different levels.
Since the various support services are not provided by one single
organization, the Committee attaches great importance to the coordination
among Government departments and support organizations, including
in areas such as resource deployment, inter-departmental liaison,
information exchanges, and publicity. The Committee recommends that
the Government strengthen such coordination work in the future. |
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| 2.8 |
In addition, the Committee members agree that they should come up
with proposals in response to difficulties and challenges which are
common to the many SMEs in Hong Kong, so that the Government and various
support organizations could suitably focus their attention and channel
their resources. The Committee is further of the view that the Government
should prompt and encourage trade and industrial organizations, professional
bodies and research institutes to provide support in response to the
specific needs of SMEs. |
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| 2.9 |
Finally, the Committee would like to stress that the proposed new
support measures are meant to be implemented together with existing
measures. In other words, they are to complement, rather than replace,
existing measures. The Committee hopes that when considering how they
might make use of the new support measures, SMEs will also reflect
on how they could make the most of the existing measures. |
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| 2.10 |
With the aforesaid principles and philosophies in mind, and having
taken into account the current status of SMEs, the challenges faced
by them, as well as the existing support services, the Committee recommends
a set of concrete support measures. These recommendations are set
out in Chapter 4. |
(Note
1) : There have been suggestions that criteria other than the number
of employees, such as turnover or capital, may be used to define SMEs
in a more comprehensive way. However, not all enterprises are currently
required by the law to disclose their turnover or capital. Furthermore,
the existing definition of SMEs is mainly for statistical and analytical
purposes. Aiming to facilitate trade, the Government and various support
organizations will try to serve enterprises to the best of their ability
and only impose eligibility requirements on individual support services
when necessary. The Committee therefore sees no need to adjust the existing
definition of SMEs.
Chapter
3 : Present situation of SMEs and their challenges
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