International Competitiveness of Small and SME in China

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Introduction

Background

The concept of competitiveness permeates every aspect of all businesses. It is an issue that concerns large corporations and small enterprises alike. However, while established companies with vast resources and connections can use them to expand and develop further dominance over the market, small and medium enterprises (SMEs) do not have the same tools (Żmuda, 2017). Thus, the conversation about factors influencing SMEs’ competitiveness and ability to survive on the market is one of the major topics in business research. The question of what makes firms competitive is not unique to one industry or region. Moreover, it is not limited to viewing companies’ success as limited to their city or country. The idea of global or international competitiveness can be considered for SMEs as well. At present, business relations between nations and increasing connectedness of the world allow small companies to operate overseas (Wu and Parkvithee, 2017). Therefore, current research studies consider what impacts the success of SMEs from various countries on the global market.

Purpose of the Study

The purpose of this quantitative research is to explore the factors that positively and negatively impact the international competitiveness of SMEs, focusing on the information and case studies from China and Zhejiang province, in particular. Thus, various factors identified in the literature review are used as control variables, and the measures developed by Zoe and Stan (1998) are employed to measure SMEs’ international competitiveness. The target population under investigation is SMEs operating in Zhejiang province. The study will focus on factors outlined in secondary sources due to the current restrictions of personal meetings or communication (Huiyao, 2020). As many businesses do not operate in their usual ways because of the COVID-19 related changes, secondary data is preferable for exploration.

Significance

The research surrounding the competitiveness of firms often does not consider SMEs in particular. Studies by Nasiri, Sultan and Alleyne (2018) and Peña-Vinces et al. (2017) show the gap in knowledge about factors that are particular to small businesses. However, these investigations focus on other regions, using European firms as the main source of information. While these studies can provide Chinese entrepreneurs with some valuable data, they do not cover the unique aspects of Chinese markets and business principles. This is the first area of the significance of the present research. Second, the exploration of Chinese SMEs’ competitiveness is valuable because of the role such small firms play in the national economy. According to UHY (2013), SMEs are responsible for almost 80% of all jobs in the country, and their industrial input is about 60%. These numbers demonstrate the significant contribution of SMEs’ to China and raise the question of how these companies can be made even more competitive to rival international or foreign businesses.

Research Question

The role of SMEs discussed above, and their unique position in China as major providers of capital and jobs allows one to formulate the question for the present research. The global nature of the current market forces both large and small companies to think about their international potential while assessing threats from foreign rivals (Gu and Yan, 2017). SMEs have to compete with each other, major local corporations, and global companies operating in China. Apart from that, they have to consider what factors could help them expand and take a share in the foreign market. The study examines several levels of factors, including global, national, industrial and enterprise, to capture all possible factors influencing performance. Therefore, the primary research question is: What factors increase the global competitiveness of small and medium-sized enterprises (SMEs) in Zhejiang, China?

Research Objectives

The following objectives are outlined based on the research question:

To conduct a literature review on the topic of global competitiveness to develop the theoretical foundation for the study.
To present the theoretical framework that describes the data collection and analysis of the competitiveness of small and medium enterprises (SMEs) in Zhejiang, China.
To adopt a suitable research design that adequately realises the research objective.
To collect data about factors influencing global competitiveness for SMEs in Zhejiang, China, from secondary sources.
To perform the analysis of collected data using a quantitative methodology and the selected partial least squares path modelling.
Using analysis’ results, to identify the factors that increase the global competitiveness of SMEs in Zhejiang, China, and make recommendations to SMEs for future actions to increase competitiveness.
To identify limitations, future research questions and the paper’s theoretical and practical value for SMEs in China.

Summary and Structure

The position of SMEs in the Chinese economy makes their success potential a valuable topic for investigation. The gap in knowledge is the factors that impact Chinese SMEs, in particular, is identified, as the background research is focused on either large corporations or SMEs operating in Western countries. Thus, the research question proposes to investigate factors of international competitiveness using case studies from Zhejiang province.

The investigation is conducted in several steps – in Chapter 2, the literature review on the topic of international competitiveness is undertaken to develop a theoretical basis for the study. Next, Chapter 3 describes the methodology chosen for this project, discussing the research design, variables, sample, instruments, sources of data and the procedure for data collection and analysis. Chapter 4 presents the results of the data analysis process. Finally, in Chapter 5, the results of the study are discussed, and recommendations, implications and limitations of the research are considered.

Reference List

Gu, W. and Yan, B. (2017) ‘Productivity growth and international competitiveness’, Review of Income and Wealth, 63, pp. S113-S133.

Huiyao, W. (2020) ‘Protecting SMEs should be the second COVID-19 battlefield’, CGTN, Web.

Nasiri, A., Sultan, B. and Alleyne, A. (2018) ‘Analysis of French SMEs’ international competitiveness’, Journal of Economics and Management Sciences, 1(1), pp. 1-12.

Peña-Vinces, J. C., et al. (2017) ‘International competitiveness of small and medium-sized enterprises: Peru, a Latin-American emerging market’, Emerging Markets Finance and Trade, 53(1), pp. 150-169.

UHY (2013) China’s declared backing for SMEs may open doors to foreign investors. Web.

Wu, W. and Parkvithee, N. (2017) ‘Promoting international competitiveness for small and medium-sized enterprises (SMEs): a case study of Chinese SMEs in Thailand’, International Review of Management and Marketing, 7(3), pp. 320-330.

Żmuda, M. (2017) ‘Towards a taxonomy of international competitiveness’, Journal of Management and Business Administration. Central Europe, 25(3), pp. 97-116.

Zou, S. and Stan, S. (1998) ‘The determinants of export performance: a review of the empirical literature between 1987 and 1997’, International Marketing Review,15(5), pp. 333–56.

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