The Development Of SMEs And China's Industrial Organization Optimization

SMEs mean small Medium- sized Enterprises. This article is mainly aimed to study the development of SMEs and China's Industrial Organization Optimization. Low industrial concentration and inefficiency in large corporations are two severe problems in the industrial organization structure in China. They become more severe under the Chinese special background-city-countryside separated economic structure and immense unemployment. So developing SMEs in China can at least solve those two problems. There are many research papers on SMEs from different ways. But this article is aimed to study in the way of industrial organization. It analyzes the relationship between large corporations and SMEs from the S-C-P paradigm. It also gives some thoughts on how to improve the industrial organization structure in China.This article is divided into 4 parts. In part one, the author gives the definitions of industry, industrial organization, and industrial organization structure, analyzes the standards of sound industrial organization structure, and discusses the relationship between large corporations and SMEs. It reaches the conclusion that SMEs play an important role in affecting large corporations' behavior and in keeping effective competition in their industry. At the end of part one, the author illustrates the special function that SMEs play in the development of Chinese economy.Part two analyzes the characteristics of Chinese SMEs in the aspects of market structure, market behavior and market performance. It shows the problems of Chinese SMEs. They are: low industrial concentration and high space concentration; product differentiation in the product package, type, function and quality; price-takers; self-promotion; etc. All these behaviors can lead to market performance, which supports the development of Chinese economy and increase the compaction and efficiency in certain industries.Part three is mainly about the historical experience of industrial organization reforms in foreign countries and about the advice we can get.The last part of the article fully discusses the model we can choose to improve Chinese industrial organization. First, it analyzes the characteristics of effective-competition model. Second, it illustrates the target model for Chinese industrial market structure: large and small enterprises develop in a harmonious way; market competition and government cooperate. Third, it emphatically discusses how to develop SMEs and make Chinese industrial organization structure optimistic.