What Makes Small Business Develop in U.S. and China? ——An Exploratory Comparative Analysis of Georgia, US and Guangxi, China
Date of Award
Master of Public Administration (MPA)
William E. Baker, Ph. D
As the U.S. Small Business Administration (SBA) points out, small business is critical to U.S. economic recovery and strength, to building America's future, and to helping the U.S. compete in today's global marketplace. In 2007, U.S. small business constituted 99.7 percent of all businesses, about half of all private sector employees, nearly 45 percent of total U.S. private payroll, 60 to 80 percent of net new jobs annually over the last decade, and half of non-farm private gross domestic product (GDP). It is similar to China. In 2007, the firms called small and medium-sized enterprise (SME) contributed to 99.8 percent of all employer firms, more than 75 percent of all non-farm employees, and about 60 percent of gross domestic product. Small businesses are full of energy and enthusiasm compared with large firms.
U.S. federal and state governments provide small business with systematic, effective, and efficient services which are primarily delivered via the SBA. The SBA is an independent agency of the federal government. It is different in China. The China Small and Medium-sized Enterprise Department (SMED) is not an independent state agency. It is just a branch of the China Ministry of Industry and Information Technology. The China SMED just provides some macro-guidance services for SMEs. The SMEs services mainly focus on the local government. But the services which local governments deliver are as poor as the national level. However, the SBA has an extensive network of field offices and partnerships with public and private organizations throughout the U.S. and its territory. SBA programs and services support small business owners by means of SBA-backed loans, government contracting opportunities, disaster assistance, training programs, advocacy, laws and regulations, national ombudsman, and civil rights compliance. More importantly, most of them are of good practicability and can meet a wide variety of small business needs. These measures are promoting small business development. However, Chinese SMEs are not given any priority over all large firms and state-owned firms. Indeed, they are given unfair treatment in loans, access to some industries, tax breaks, and so on.
I think there are three primary factors which promote small businesses development; including market opportunities, entrepreneur environment, and entrepreneurship wisdom. Entrepreneurship wisdom is more important than entrepreneur environment, and entrepreneur environment is more important than market opportunities. The services that the SBA provides for small business just meet these needs. But why on the whole can China SMEs achieve success in difficult circumstances? Perhaps this is because they primarily rely on their entrepreneurship wisdom to put efforts into their business. Another reason might be the initial development points for SMEs is very low, almost zero, and so that China SMEs are experiencing a rapid period of development, as like as China’s economic growth.
To conclude, many SBA approaches to aid, counsel, assist, and protect the interests of small business concerns can apply to China, especially to local governments to improve service systems for China SMEs. In China, local governments have the major responsibility to develop the local economy, which is the biggest difference from the U.S. This paper will make four suggestions for China’s local government; which includes access to capital, entrepreneurial development, government contracting, and advocacy.