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Botswana SMMEs can benefit from the Chinese experience

The Chinese ambassador to Botswana, Liu Huanxing, says Small, Medium and Micro Enterprises (SMMEs) in Botswana can benefit from his country's experience.

Speaking at a Botswana National Productivity Centre (BNPC) stakeholder consultative forum in Gaborone last week, Huanxing said since China's reforms and opening up in 1978, that country's private sector had grown and become an important part in the Chinese economy.

"The private sector, in particular small and medium enterprises, has become a big driving force behind the growth of the economy," he said.

The ambassador said by the end of 2008, there were over 42 million SMMEs in China, which represented more than 99 percent of all companies registered. These companies contributed more than 60 percent of China's GDP, 70 percent of its import and export volumes, 70 percent of new employment and 50 percent of tax revenues.

Huanxing said the rapid development of China's SMMEs could be attributed to their comparative advantage in that China's SMMEs had a good understanding of their own abilities and that they were eager to grow into "super big" companies. "But they know they have to develop the enterprise step by step," he said. "They focus on the market to meet the daily requirements of ordinary people."

Most Chinese SMMEs produced low or medium cost but good quality products, thus avoiding strong competition from state-owned companies or joint venture and reducing risk. Chinese SMMEs also aimed at low and medium income families in both developed and developing countries.

"Consumers in those countries welcome good quality but cheaper products from SMMEs in China," Huanxing said. "That is why in some countries, even if they take a lot of measures to restrict Chinese imports, they are hard to resist because of the strong needs of consumers. Besides that, the labour cost is relatively low in China, which also helps SMMEs to cut costs."

He pointed out that the internationalisation of China's economy had accelerated the development of SMMEs. Another reason was their investment in innovation. He said as China penetrated the information society, more and more SMMEs paid great attention to innovation. The Chinese government also encouraged the SMMEs to add more scientific value to their products.

Over time, Chinese SMMEs established many forms of cooperation with universities and laboratories in China and achieved great progress through innovation. He said today, three percent of all Chinese SMMEs created 66 percent of patents, 75 percent technology creation and 82 percent new products.

He said the SMME Promotion Law of China came into effect in 2003, noting that it provided the government with a legal basis for the management of small and medium enterprises while enabling the SMMEs to operate with protected legitimate rights and interests.

"Many other laws were made for the purpose of human resource mobilisation and labour interests," the ambassador said. "From China's experience, I believe SMMEs in Botswana will also have a bright future."

(11 Nov 2009, Mmegi)

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