Chapter 6 SMALL AND MEDIUM ENTERPRISES SMES Small

Chapter 6 SMALL AND MEDIUM ENTERPRISES (SMES)

Small and Medium Enterprises (SMEs) independently owned and SMEs are firms that are _______ operated, and are ______ not dominant in their markets. Definitions of SME The Mainland of China, Korea and the UK define SME by the number of employees. ____ Japan, the US and Canada use a combination of the number of employees and ____ turnover to define SMEs.

Small and Medium Enterprises (SMEs) Definitions of SME by three international organisations World Bank European Commission < 300 persons < 250 persons Annual sales < US$15 million < EUR € 50 million Total assets < US$15 million < EUR € 43 million No. of employees APEC < 100 persons

SMEs in Hong Kong In Hong Kong, according to the Trade and Industry Department, an SME is 100 persons in the an enterprise which employs fewer than ___ manufacturing sector. 50 persons in the an enterprise that employs fewer than ___ -manufacturing sector. non

SMEs in Hong Kong Types of industry SMEs engaged in tertiary industries. SMEs can be found in both the secondary and _______ sole proprietorships ______ partnerships or SMEs can operate as _________, limited companies ________.

SMEs in Hong Kong Distribution of SMEs in Hong Kong (as at 31 December 2013) Most of the SMEs were in the import/export trading and Manufacturing wholesaling industries in 2013, Secondary Mining & quarrying; electricity & gas industry followed by the retail industry. supply, and waste management; and Number of businesses in SMEs Number of persons employed by SMEs 10, 508 3. 3% 61, 744 4. 8% 1, 341 0. 4% 15, 420 1. 2% Import/Export trade and wholesale 113, 458 36. 1% 461, 740 35. 6% Retail 45, 746 14. 6% 144, 987 11. 2% Transportation, storage, postal and courier services 8, 231 Accommodation and food services 12, 011 Information and communications 11, 524 3. 7% 43, 631 3. 4% Financing and insurance 19, 659 6. 3% 64, 540 5. 0% Real estate 12, 549 4. 0% 38, 834 3. 0% Professional and business services 41, 004 13. 0% 148, 836 11. 5% Social and personal services 38, 251 12. 2% 154, 670 11. 9% construction Tertiary industry Accounted for over 50% of the 2. 6% SMEs in Hong 46, 752 Kong and 3. 6% represented nearly half of 3. 8% 117, 346 9. 0% SME employment

SMEs in Hong Kong Characteristics of SMEs in Hong Kong 1. Owned and managed by single individuals and/or their families individuals p Most SMEs are owned by single ______. p familyoften members Owners manage the businesses themselves. Their experience ________ often take part in management, even though they may lack _____ and management skills.

SMEs in Hong Kong Characteristics of SMEs in Hong Kong 2. Limited resources and capital p owners Most SMEs are financed solely by their _______. p They have limited resources and capital to finance their operations and expand their businesses. p loans from It is also difficult for them to get _____ banks because of their small size.

SMEs in Hong Kong Characteristics of SMEs in Hong Kong 3. Focus on narrow markets p narrow markets which are not attractive to SMEs often focus on _______ large companies. ______ p tailor their products and services to a particular They can _______ group of customers (e. g. , maternity wear for pregnant women).

SMEs in Hong Kong Characteristics of SMEs in Hong Kong 4. Greater flexibility p SMEs have greater flexibility than large companies. p Large companies are often fast／slow in making decisions because many／few people are involved in the decision-making process. p Since owners can make decisions themselves, SMEs can make promptly changes ____. p Flexible operation enables SMEs to rapid changes in the market. meet ______

SMEs in Hong Kong Characteristics of SMEs in Hong Kong 5. Innovative p SMEs are more/ less innovative than large companies. p opportunities in the market and SMEs are eager to explore new ______ receptive to new ideas. are more _____ p To attract customers, they are willing to new products and services. introduce ____ p New products or services can create new competition with markets so that direct ______ large companies can be avoided.

SMEs in Hong Kong Contributions of SMEs to the local economy 1. Providing specialised goods and services p It is costly for large companies to produce specialised goods and services with little market demand. p operating costs are As SMEs are small in scale and their ______ small markets and usually lower, they can specialise in serving ______ profit still make a ______.

SMEs in Hong Kong Contributions of SMEs to the local economy 2. Providing jobs p unskilled and _______ inexperienced labour. SMEs offer jobs to _____ p self-employed as they manage the The owners of SMEs are _______ companies themselves.

SMEs in Hong Kong Contributions of SMEs to the local economy 3. Introducing new products and services p small in size, they are important sources of Although SMEs are _____ new products and services. p innovative to compete with large SMEs are more willing to be _____ companies.

SMEs in Hong Kong Contributions of SMEs to the local economy 4. Supporting large companies p Provide goods and services to large companies p Subcontractors of large companies _______ p specific tasks Hired by large companies to perform ____ p workload and The large companies can reduce their _____ core tasks. concentrate on _______

SMEs in Hong Kong Contributions of SMEs to the local economy 4. Supporting large companies p Wholesaling and retailing stores help large companies _____ distribute their products and provide _____after-sales service to their customers.

Entrepreneurs What is an entrepreneur? risks to start a business for the purpose of An entrepreneur takes _____ profit making a _____. Entrepreneurs can be men or women of any age and any race. Example: Lai Chee Ying Jimmy, the founder of Giordano and Next Media

Entrepreneurs Importance of entrepreneurship to business development innovations set up well-known Entrepreneurs create major ______, enterprises and provide the world with goods and services that _____, have improved people’s living standards.

Entrepreneurs Importance of entrepreneurship to business development Promoting market competition 1. Firms operate more efficiently Brings more and newer ____ products and ____ services to us Promotes ______ competition in the market To compete and survive, firms need to make continuous improvements (e. g. , costs and improving reducing _______ quality product ____).

Entrepreneurs Importance of entrepreneurship to business development Promoting market competition 2. Consumers can enjoy cheaper and higher quality goods lower better Many products are sold for _____ prices and are of ______ quality.

Entrepreneurs Importance of entrepreneurship to business development Organising production and enhancing production efficiency production p Entrepreneurs organiseresources the _____ of goods and services. people p They put _______ and _____ together flourishto start a business. p efficiently makes business ____ economicand growth Entrepreneurship uses resources more _____. These lead to ________.

Entrepreneurs Importance of entrepreneurship to business development Innovating new products and services 1. Satisfy customer demand with new products and services demand New products and services are created to satisfy customer ____. opportunities always look for and are able to seize market Entrepreneurs ______. By turning their innovative ideas into products and services, they build many successful businesses.

Entrepreneurs Importance of entrepreneurship to business development Innovating new products and services 2. Create a new business and even a new market business and Innovative products or services can create a new ____ market even an entirely new _______. Example: The growing markets of smartphones and tablet computers have made significant contribution to the economies of countries such US and ______. Korea as the ___