Xinhua News Agency Mid-Year Economic Survey Series | Rising to Challenges and Continuously Pioneering New Frontiers of Development — The SME Chapter of the Mid-Year Economic Survey Series

　　According to the latest data from the China Association of Small and Medium Enterprises, the SME Development Index (SMEDI) has halted its decline and begun to rebound. In June, the index stood at 89.1, up 0.2 points from the previous month, ending a three-month streak of declines and surpassing the level recorded during the same period in 2022.

　　Small and medium-sized enterprises (SMEs) are the capillaries of the economy; only when SMEs remain vibrant can the economy achieve stronger growth. In the first half of this year, amid the real‑world pressures of domestic and external demand falling short of expectations, what has been the actual situation facing SMEs? How are businesses rising to the challenge? And how can we further unleash their dynamism and bolster their confidence? With these questions in mind, reporters recently traveled to Tianjin, Henan, Shaanxi, Zhejiang, Guangdong, and other regions to conduct on‑the‑ground surveys of SMEs.

　　Pressing forward under pressure, with confidence on the rise.

　　The summer sun beats down, and the cicadas’ song never ceases. At the e‑commerce shipping area of Zhongjing Food Co., Ltd. in Henan, the order‑printing machines tirelessly churn out new delivery slips. Pickers sort items, pack them, affix labels—workers bustle along the finished‑goods line, while neatly stacked parcels await shipment to destinations across the country.

　　“E‑commerce channels have been a tremendous help; we’re now ramping up across several major platforms, and the results have been promising,” said a spokesperson for Zhongjing Foods.

　　Orders and sales have increased—this is the tangible outcome for many companies. During our research, we learned that Zhongjing Food is far from an isolated case; numerous small and medium-sized enterprises surveyed believe that their overall performance in the first half of this year has outpaced the same period in 2022.

　　Data from the China Association of Small and Medium Enterprises also confirm a further rebound in business confidence. According to the SME Development Index, in the first half of this year, with the exception of a year-on-year decline in January, the index registered significant year-on-year gains from February through June.

　　Behind the improvement in business confidence lies the sustained strength of policy measures. Since the second half of last year, a series of high‑profile meetings have sent a clear signal of unwavering commitment to the “two unswervings.” From the central level down to local governments, policies and initiatives aimed at addressing the pain points and challenges faced by private enterprises have been rolled out one after another, energizing corporate growth: ensuring that preferential policies are delivered precisely and efficiently; resolutely tackling the issue of overdue payments to businesses; continuing to dismantle unreasonable market‑access restrictions and hidden barriers; and stepping up efforts to provide relief and support. These concerted measures have steadily alleviated the concerns and eased the difficulties of private firms.

　　“The relevant government departments promptly notify enterprises of all new support policies and project subsidy applications, and we proactively communicate with the government whenever we encounter challenges. This smooth two-way communication gives us greater peace of mind,” said Ji Baofeng, President of Tianjin Aisida Aerospace Technology Co., Ltd.

　　During the interviews, some small and medium-sized enterprises also acknowledged that their growth fell short of expectations. Cao Bin, head of Fit (Tianjin) Testing Technology Co., Ltd., noted that, given the favorable effects of the smooth transition in epidemic prevention and control, the company had set rather optimistic targets at the beginning of the year. However, in practice, achieving the full-year goals still poses considerable challenges.

　　What is the reason? According to our reporter, on the one hand, overseas customers’ inventory destocking has weakened international market demand, putting pressure on companies’ overseas orders; on the other hand, some firms, faced with uncertainties, are adopting a wait-and-see approach to investment, leading to a reduction in orders from both upstream and downstream clients.

　　A company that primarily exports and specializes in the R&D and manufacturing of wireless smart home security devices has seen a decline in its export volume during the first half of this year. The company’s head told reporters that, during the pandemic, overseas customers built up substantial inventories, and now the company is working to reduce those stockpiles. Moreover, with supply chains in Southeast Asia and other regions resuming production, international market competition has become even fiercer.

　　“Economic recovery is a process, and it takes time for businesses to rebound as well,” said Li Lianzhu, Chairman of Guangzhou Shangpin Home Collection Co., Ltd.

　　Liu Yuanchun, President of Shanghai University of Finance and Economics, believes that as epidemic prevention and control transitions smoothly to a new phase and a series of policies are introduced and implemented, business confidence has begun to recover. However, sustained efforts are still needed to stabilize expectations and bolster confidence. In particular, for small, medium, and micro enterprises that have been hit hardest by the pandemic, targeted measures must be taken to address their concerns.

　　Squatting to build momentum, opening up a new chapter.

　　“The moment when the market is under pressure is also an excellent opportunity to crouch and gather momentum.”

　　This remark by Chen Wei, Deputy General Manager of Guangzhou Seagull Housing Industry Co., Ltd., captures the challenges currently faced by the vast majority of small and medium-sized enterprises, while also revealing their determination to transform and adapt, as well as their hopes for the future.

　　For Tianjin Langyu Robot Co., Ltd., now is the critical moment to persevere through tough times. According to Dan Chenxi, the company’s director of overseas sales, prolonged payment cycles have placed significant financial strain on the business. “However, we still need to accept orders—this is also an excellent opportunity to seize market share.”

　　When international markets weaken, they turn to domestic markets; when offline sales struggle to grow, they launch a full-scale online expansion; and when established sectors near saturation, they blaze new trails, forging ahead through obstacles. Faced with mounting market pressures and challenges, many small and medium-sized enterprises are leveraging their strengths, swiftly recalibrating their business strategies, and going all-in to fight for survival and growth.

　　According to the latest data from the Ministry of Industry and Information Technology, in the first half of the year, the value added of industrial enterprises above designated size increased by 3.8% year on year, with the growth rate accelerating by 0.8 percentage points compared with the first quarter. Month-on-month year-on-year growth rates for May and June were 3.5% and 4.4%, respectively, showing a steady month‑by‑month rebound.

　　New products and new customers have opened up fresh markets for enterprises. New technologies and advanced equipment have created favorable conditions for corporate transformation and upgrading.

　　Affected by their first-half performance, many companies have postponed the investment plans they had set at the beginning of the year. Although large‑scale expansion projects have been delayed, steady, long‑term investments in R&D and technological upgrades continue to grow.

　　When the reporter met Fan Xiang, the head of Nanyang Wanhexiang Food Co., Ltd. in Henan, he was already planning a trip to Liuzhou, Guangxi, to “seek advice.” Despite facing the pandemic shortly after its establishment, Wanhexiang managed to get off to a difficult start—yet it also caught the fast track of e‑commerce sales. With the transition to a more stable phase of epidemic control, Fan Xiang wasted no time in upgrading his equipment to boost labor productivity and align with industry‑leading levels of automated production, thereby increasing output.

　　During the调研, a corporate CFO ran some numbers for the reporter: R&D and technological upgrade investments can be tailored to each company’s circumstances, and R&D spending is tax‑deductible. “Digital and automated upgrades to production lines can be implemented one line at a time, giving both the company and its employees ample time to adapt and learn,” the CFO said candidly.

　　Cut costs and increase revenue—saving money is making money.

　　In the face of new developments in both domestic and international markets, Fu Shuangli, Chairman of Zhejiang Yingfeng Technology Co., Ltd., believes that it is imperative to pursue cost reduction and efficiency gains, as well as transformation and upgrading, through multidimensional, multi‑pronged approaches—leveraging digital technologies, optimizing management, and cutting financial costs.

　　To this end, Yingfeng Technology Co., Ltd. has invested 1 billion yuan to build a “smart factory,” achieving near‑complete automation of the entire dyeing and printing process—from production equipment to environmental protection systems. “Our group generates roughly 3 billion yuan in annual sales; if we can cut costs by just 1% across dozens of operational steps, that would translate into savings of 30 million yuan,” said Fu Shuangli.

　　Policy Support, Corporate Efforts

　　When businesses thrive, the economy thrives.

　　Addressing the pain points and challenges faced by small and medium-sized enterprises (SMEs) in their development, local governments and relevant departments have stepped up their support for SMEs, with a marked enhancement in service-oriented approaches.

　　The government provides the platform, and enterprises take center stage. In Tianjin, the Leading Group for Promoting the Development of Small and Medium‑Sized Enterprises has outlined key priorities for 2023, setting forth 24 specific tasks across seven areas. In Henan, efforts are being accelerated to advance relevant legislative initiatives, conduct assessments of the business environment for SMEs, and foster fair competition and a rule‑of‑law framework. Meanwhile, in Shaanxi, the government has launched a special financing campaign—“Ten Industries, Hundreds of Billions, Benefits for Ten Thousand Enterprises”—aiming to channel no less than RMB 200 billion in dedicated credit funding each year.

　　During this survey, reporters observed that the principles of “letting the water flow to nurture the fish” and “preserving our green mountains” are steadily taking root. “Over the years, we have genuinely benefited from favorable policies,” said Ren Yubao, head of Zhiheng (Tianjin) Industrial Co., Ltd. He added that corporate growth hinges on scientific research and skilled workers; each year, tax deductions for R&D investments alone save the company nearly 4 million yuan, a tangible boost to its operations.

　　The vast majority of small and medium-sized enterprises are privately owned, playing a vital role in stabilizing growth, fostering innovation, and creating jobs, and serving as a key driver of sustained, healthy economic development.

　　The “Opinions of the CPC Central Committee and the State Council on Promoting the Development and Growth of the Private Sector,” released on July 19, set forth 31 measures across eight areas to optimize the business environment for the private sector and bolster market expectations and confidence.

　　In accordance with the State Council’s arrangements, the National Development and Reform Commission has recently established a mechanism for communication and dialogue with private enterprises and convened a symposium with private-sector entrepreneurs to hear firsthand accounts of their business operations and development, the challenges they face, and their policy recommendations.

　　“This has given businesses a much‑needed reassurance,” Fan Xiang told reporters. During the pandemic, companies received diverse support and assistance from the government and benefited from favorable policies. After the transition to a more stable phase of epidemic control, he had worried that policy direction might shift; however, the recently announced package of 31 measures across eight key areas has allayed those concerns and bolstered his confidence.

　　“These 31 measures are closely tied to our production and operations; issues such as financing support, digital transformation and technological upgrading, and the protection of entrepreneurs’ legitimate rights and interests are precisely what we care about most,” said Fan Xiang.

　　In the view of Liu Guanhong, Deputy Director of the Tianjin Port Free Trade Zone Management Committee, supporting the development of the private sector requires providing excellent services to small and medium-sized enterprises.

　　The Tianjin Port Free Trade Zone has implemented standardized, market‑oriented reforms to its government‑equity investment guidance fund, aiming to support and steer the growth of high‑quality small and medium‑sized enterprises within the zone through government‑led equity investments. “If we don’t even invest in the region’s top companies ourselves, how can we expect others to trust us?” Liu Guanhong said with a smile.

　　Vitality is a manifestation of confidence, and confidence, in turn, further enhances vitality.

　　According to the latest data from the State Administration for Market Regulation, in the first half of this year, China saw the establishment of 4.67 million private enterprises, a 16.4% increase compared with the same period last year, reflecting steadily growing dynamism among private firms.

　　At the Port‑Side Industrial Park in the Xi’an International Trade & Logistics Park, Xi’an Tongchuangda Communication Equipment Co., Ltd., which officially began production during this year’s Spring Festival, posted a strong performance in the first half of the year. “Our revenue for the first six months exceeded 40 million yuan, and we’re still ramping up production,” said Ni Longgang, the company’s head. He added that the number of workers in the workshop has grown from just over 40 in the first quarter to more than 100.

　　“With policies continuing to deliver strong support, we must also work hard ourselves,” said Ni Longgang with full confidence. In the second half of the year, the company plans to expand its TV‑export‑related business, and the China–Europe Railway Express service, operated by the Chang’an train, will help the company reach even farther markets. (Reporters Liu Kaixiong, Li Yanxia, Wang Yuxiao, Zhao Wenjun, Lei Xiaoxiao, and Guo Fangda)

[Editor-in-charge: Zhou Chuqing]

Source: Xinhua Net