A System Research On Factors Affecting SMEs In China

Along with the reform-open policy continuously performance, China’s small and medium enterprises have been continuously developing and enriching in the market economy after thirty years of development. As a product of commodity economy, China’s SMEs can adapt to the changing of the market, with strong vitality, has become the half part or national economy. By the end of 2013, the number of registered SMEs in China reached totally more than 4200 million, accounted for more than nine of the total number of all enterprises, which create nearly 60% of the total economic output. SMEs are the basic power to promote economic development, to construct the main structure of market economy and to promote social stability. They are playing an increasingly important role on ensuring appropriate growth of the national economy, easing the employment pressure, achieving through science and education and optimizing the economic structure, etc.Practice of economic development shows that this is a general existence of the phenomenon there is a large number of SMEs regardless of the area and stage of development. It is the inherent requirements and the inevitable result of economic development. It is premise and condition to ensure the formation of normal and reasonable price, to maintain competition in the market dynamic, to ensure stable economic operation and to guarantee full employment. Both in highly developed market economy countries and developing countries in institutional changing, small and medium-sized enterprise’s important role and status has increasingly revealed.However, there were also some problems on the development of SMEs in China:The policy unfair, more preferential treatment to big business but less consideration to SMEs; More preferential treatment for public enterprises, but less consideration to non-public ownership enterprises; Serious brain drain, many of Small and Medium businesses struggle to retain a high level of talent; There are two reasons for that they have difficulties on financing like nowhere to borrow money, one is short supply, there is no specifically for SME lending in China’s financial institutions, The second is lack of assurance, there are less guarantee institutions for SMEs in China; The phenomenon of uneven development is particularly serious in different provinces.We can see that SMEs have played an important part in economic development. It is a key to economic development that how vigorously supports the development of SMEs. Of course, the research on this issue is very much, but the majority is qualitative theory research as the empirical research partial less. So, the article does not only discuss the abstract properties, but constitute a system simulation model to analyze number of SMEs and its influence factors and the relationship between them. Learn the method of system dynamics to predict numbers of SMEs in China over the next some years. Deeply analyze which way and how deep the factors impact and affect the number. Thus adds a new perspective for theoretical study of SMEs in China. Support some effective analysis and practical recommendations on policies for government to develop SMEs.From the outset the object of study directed at SMEs, starting from the definition of SMEs, carry out a comparative study on the definition of SMEs between the developed countries (regions), and developing countries (regions). Detailed described the different definition methods in the different backgrounds, combined with the development process of definition standard of China’s SMEs. In view of the standard definition of SMEs in the United States, Japan and Germany, SMEs should be defined by a complex combination of quantitative and qualitative definition. One hand, quantitative definition is fit for statistical research, and convenient for legislation. The other hand, Qualitative definition can be more clearly response the nature of SMEs, to give guidance for the government to adjust the strategies and tactics for economic development. From the development of SMEs’s definition standards by India, Russia, China Taiwan province, we should set different segments standard for the different industries, which can more accurate describe the reality of various types of SMEs, to prevent the sweeping, to avoid not efficient policy and improper coverage. Whether qualitative or quantitative whether subdivided standards or unity standards, the definition of SMEs should be appropriate to the environment. SMEs should be defined in different ways in different regions and different time.After clear about definition of SMEs, given a detailed carding about the development of SMEs in China In the paper. Divided the development of SMEs in China into three stages, which was after the founding. The initial stage of development is from 1949 to 1965; the steady rise is from 1966 to 1977; the phase of change in transition is from 1978 to now. Then the paper compared a variety of existing classification methods for SMEs. In accordance with the technical resources enterprises owned, tentatively divided SMEs in China into three categories:traditional small and medium enterprises, high-tech SMEs and characteristic SMEs. Then, discussed on the three main features of development of SMEs in China: diversification of enterprise ownership, unbalanced regional development and short life cycle of Enterprise. Finally, made a proven and display of the Role of SMEs in China, which can accelerate economic development, ease employment pressure, promote the innovation, expand exports and regulate the market mechanisms.After research from every part of the contents of the above, determined what kind of enterprises are SMEs, how difficult SMEs in China walked through, the current status, the role and of the classification features of SMEs, the paper supplied the theoretical study and description of the factors that affect the founding of small and medium enterprises. Then author used "STEEPL" analysis methods to analyze each factor. First divided the factors of small and medium enterprises set up, development, and demise into six parts:social, technology, economic, environment, political and Legal. And then segmented and analyzed of each factor which is associated with survival and development of SMEs. Demonstrated whether significant positive correlation or negative correlation. Social factors were divided into demographic, educational and labor market factors. It was found that population, education and labor market supply had a significant positive correlation with new SMEs birth though analysis. Technical factors were divided into technological innovation and R&D investment factors factors, and it was found that technological innovation and R&D investment had a significant positive correlation with new SMEs birth though analysis. Economic factors were divided into Economic growth factors and corporate competition factors, by analysis, it was found that Economic growth had a significant positive correlation with new SMEs birth, but corporate competition shows two-way effect, both to accelerate burst of new enterprises and to make the SMEs with no core competitive advantages collapse and demise. Environmental factors investigated the dependence on resources, it was found that the birth rate for SMEs is as lower as the higher degree of resource dependence, coincide with the "resource curse" theory. Political factors mainly investigated on government macro-control policy-oriented about SMEs. It impacted on the survival and development of SMEs though access policy, industrial policy, income distribution policy, fiscal policy, technology policy, information policy and financial policy, etc. Legal factors mainly referring to laws and regulations, different laws and regulations and its efforts to implement all have a very important influence on small and medium enterprises.Through the theoretical analysis on influencing factors for number of SMEs, create a system model about SMEs in China, include subsystem of human resources, technical innovation Subsystem and macro-economic subsystem, environmental resources subsystem and SME subsystem, combined them into the total system for SMEs. After studied on the relationship between more than thirty variables like GDP, business volume, business students rate the level of human resourcees, technical innovation, and resource dependence index, do linear regression and multiple linear regressions to calculate the value of each parameter between the various variables, to establish Equation about the relationship between variables. Measurement about the level of human resources used in years of education law, and resource dependence index used evaluation of resource dependence, but in order to adapt the original method of this study have done some correction. Innovative proposed a concept of small and medium enterprises birth rates, refers to make the characteristics number of new small and medium enterprises in some time, is the equivalent calculated the ratio of the number of SMEs in other times from it. Take it as the dependent variable, Level of human resources, technical innovation, resource dependence index as explanatory variables, to do multiple linear regression. Found it is was a positive correlation between the level of human resources, the level of technical innovation and SMEs birth rate, but negatively correlated with the resource dependence index. Linked birth rate of SMEs with technology innovation, human resource levels and resource dependence index by this equation, explore the impact mechanism of various factors on small and medium enterprises and the Influence degree. Finally, used the simulation tool "Vensim" to simulate the system model and given results:it was expected in 2020 the number of SMEs in China will reached to 181.13 million, increased 138,21 million than 42.92 million in 2009, compound annual growth rate is 12.7485%; GDP will reach 171.65 trillion yuan, increased 137.60 trillion yuan than 34.0506 trillion yuan in 2009, compound annual growth rate is 14.43%; In the next decade, because level of human resources will be affected by the slowdown of the population growth, the growth rate of the number of new SMEs will be slowing down. It will have indirect effects to the number of R&D investment through the feedback loop, format a slight hinder effect. At the same time, by the level of human resources, growth rate of investment in education also appears a downward trend, but not obviously; Compared with the original state, the floating rate will lead to that the growth of the number of SMEs will have a early rising trend and lower late. Then, calculated error through comparing the model simulation data obtained with historical data, found that there is a good agreement, the error is in the acceptable range.Finally, by the adjustment of the model control variables, explore the intrinsic relation ship between the total number of SMEs and various impact factors. Then paper proposed effective policy recommendations for the Government to support the promotion reasonable and high-speed development of SMEs in aspects of education, research and development, resource dependence and other aspects. Improve the level of human resources in disadvantaged areas, such as University Park transferring to the third-tier cities, changing the significant difference of production rate of small businesses between the provincial capital and non-capital cities. Provide the appropriate policy to make the labor transfer from highly intensive areas like Beijing, Shanghai to other Low-density cities, resolved the conflicts of difficulty to start a business between the labor idle in big cities due to competition for jobs and the shortage of labor in small cities. "Full support, focus on training", reduce the threshold established, provide policies to encourage small enterprises to be established and continue enthusiasm for technology innovation, improve intellectual property protection, suggest that government establish a integrated nature network information platform for improving the social services for SMEs.