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CONTENTS

PREFACE

CHAPTER 1HISTORY OF CHINA’S SMES1

1.1Genesis of SMEs in China1

1.2Developing Stage2

1.3Growing Stage5

1.4Contemporary6

1.5Globalization and Opportunities for China’s SMEs7

Reference8

CHAPTER 2BASIC THEORIES OF SMES MANAGEMENT9

2.1Definition of SMEs9

2.2Identification of small and medium-sized enterprises in China18

2.3Controller， Governor， Owner19

2.4Social responsibilities of SMEs20

2.5SMEs ’System Management (Corporate Governance)21

2.6Innovation24

Reference26

CHAPTER 3ENTERPRISES MANAGEMENT STRATEGIES28

3.1Vision and Mission of SMEs28

3.2Environment Analysis39

3.3Strategic choices and Elevation42

Reference48

CHAPTER 4ORGANIZATIONAL DESIGN AND STRUCTURES50

4.1Organizational Design50

4.2Organizational Structures53

4.3Formal and Informal Organization66

4.4Organizational Change72

Reference81

CHAPTER 5HUMAN RESOURCE MANAGEMENT OF SMES84

5.1Standard Breakdown of HR Processes84

5.2Job Analysis86

5.3Human Resource Planning89

5.4Recruitment， Selection And Placement89

5.5Training And Development90

5.6Compensation Management96

5.7Performance Appraisal Management100

5.8Career Planning Management103

5.9HR Office107

5.10Employee relationship management108

5.11Leadership of SMEs109

Reference114

CHAPTER 6PRODUCTION & OPERATIONAL MANAGEMENT116

6.1Theories of Production & Operations Management116

6.2Goods and Services Design119

6.3Production and Operational Process125

6.4Quality Control of Production and Operational127

6.5General Control138

6.6Risk control142

Reference148

CHAPTER 7MARKETING MANAGEMENT OF SMES151

7.1Role of Marketing in Small Medium Enterprises151

7.2Marketing Mix and Key Marketing Activities151

7.3Developing Market Segmentation156

7.4Product Planning and Development159

7.5Promotion Mix: Advertising， Publicity， Personal Selling and Sales Promotion165

7.6Distribution Planning and Pricing Strategy172

Reference179

CHAPTER 8FINANCE MANAGEMENT OF SMEs182

8.1Finance and Business182

8.2Financial Management186

8.3Managerial Finance Function188

8.4Finance Functions191

Reference194

CHAPTER 9CONTROL MANAGEMENT195

9.1Overview of Control Management195

9.2Process of Controlling197

9.3Principles of Effective Control200

9.4Managerial Approaches to Implementing Controls202

9.5The Primary Types of Organizational Control203

9.6Control Systems and Techniques216

9.7Planning and Controlling220

Reference225

Chapter 10CRISIS MANAGEMENT229

10.1Definition of Crisis229

10.2Types of Crisis230

10.3Crisis Theory231

10.4Crisis Management232

References239

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CHAPTER 1 HISTORY OF CHINA’S SMES

　　There is consensus among policy makers， economists， and business experts that small and medium enterprises (SMEs) are drivers of economic growth. A healthy SME sector contributes prominently to the economy through creating more employment opportunities， generating higher production volumes， increasing exports and introducing innovation and entrepreneurship skills. The dynamic role of SMEs in developing countries insures them as engines through which the growth objectives of developing countries can be achieved.

　　It is estimated that SMEs employ 22% of the adult population in developing countries. United Nations Industrial Development Organisation (UNIDO) estimates that SMEs represent over 90% of private business and contribute to more than 50% of employment and of gross domestic product (GDP) in most African countries (UNIDO， 2000). A recent study conducted by Abor and Quartey (2010) estimates that 91% of formal business entities in South Africa are SMEs， and that these SMEs contribute between 52 to 57% to GDP and provide about 61% to employment.

1.1 Genesis of SMEs in China

　　The emergence of mixed， ‘unorthodox’ ownership and governance forms in China is one of the most interesting aspects of its dynamic development since 1978. China now exhibits a distinctive type of ‘mixed property’ system， which is in some ways like the 1921~1928 NEP in the Soviet Union. It is important to understand the role of SMEs within this complex environment， specifically considering the ownership forms， relationships with large SOE and government authorities at both national and local levels. This system is still in active， rapid evolution toward unclear future forms (Sun et al， 1999). Some consideration of the institutional developments over the last several decades is required to make sense of contemporary patterns.

　　The historical process of China’s socialist revolution was entirely different from that of the Soviet Union. The Communist party built its base among the peasantry before the party took political power， and since rural workers comprised well over 80 per cent of the labor force， the Chinese Revolution was a real mass phenomenon from the beginning. It produced a highly mobilized popular support among the peasants A close identification of the peasant base with the party which claimed to represent it; and an ideology which made the peasant majority a real and natural part of the party constituency. Most importantly， the last phases of the Chinese Civil War were mostly easy victories and so did not (as had the 1918~1921 Russian Civil War) decimate the ranks of lower level supporters and party activists. The winners in the Chinese case were already successfully governing a large part of the country， and took total control with their popular base intact.

　　After an initial period of attempting to copy in great detail the institutional arrangements of the Soviet Union， China abandoned the classical Stalinist model. It turned away from centralized decision-m carried out through a national administrative hierarchy， and experimented with construction of a new model of socialist development. Political mobilization campaigns and attacks on the privileges of the ‘new elite’ created economic chaos， but also avoided early institutional stagnation within a tightly organized Soviet-type party-state. After the death of Mao Tse-Tung， China then moved toward market reforms beginning in 1978. This was quite late， compared to the diverse reform developments that had been carried out in Eastern Europe and the Soviet Union over the prior 25 years， but China has persevered with these reforms in a careful， pragmatic way over two decades. A common theme to each reform period is the tendency to build in greater decentralization in economic management， either through changes in the administrative structure of planning or through use of the market to take over some but not all of the functions of planning.

1.2 Developing Stage

　　“Setting the Stage for SME Growth: Unlikely Results of the Great Leap”

　　A major decentralization of industry was undertaken in 1957~1958 (at the same time similar reorganization was occurring in the Soviet Union). Control of individual enterprise was transferred from ministries to provincial and local governments. In 1958 decentralization was extended by a wide-scale attempt to develop very small-scale rural industries (most famous of which were the so-called backyard steel furnaces).

　　This program was not meant to divert resources from the operation or construction of large-scale plants but was part of China’s effort to industrialize by ‘wa on two legs’. This meant simultaneously using technologically advanced， capital-intensive methods in the modern sector and intensifying the development of traditional， technically simple， labor-intensive methods in the other sector.

　　The attempt to develop small-scale rural industries was part of a

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