A Report on Support Measures for Small and Medium Enterprises
The Committee's philosophy and consensus
Definition of SMEs
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 :
|2.3||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
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.
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.
|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.|
|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.|
|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.|
|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.|
|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.