Challenges for Chinese private enterprises

The All-China Federation of Industry and Commerce released a list of the top 500 Chinese private enterprises in 2013. This list is a window into the Chinese private economy. The view through the window is a mix of progress and problems, says an editorial in China Business News. Excerpt:

Some big private enterprises are making progress despite the effect of the global financial crisis. Their contributions to the country’s tax revenue and employment have become bigger and bigger.

The main challenges for the enterprises include the soaring costs of raw materials and the labor force, the lack of talented employees, a shrinking demand overseas, and a heavy tax burden at home.

Some problems, such as high taxes, should be solved by the government through reforms, and some, such as the lack of skilled employees and rising costs, should be solved by the enterprises themselves.

As long as the government recognizes private enterprises’ important role in the national economy and job market, it should try to ease the tax burden on them, especially the small ones, to inject vitality into the grassroots economic units and stimulate the growth of the private sector.

Balancing the relations between State-owned enterprises and private enterprises in some industries will give the latter more room for development and a more competitive environment. The SOEs will also improve their ability to compete.

Private enterprises are undergoing a transition. The rising costs in various fields is universal in many industries around the world. The enterprises should improve their technological innovation and the efficiency of their marketing network to win out in the competition for consumers as well as skilled workers.