The 2019 Shanghai SME Development Forum was held on November 20, at which the Shanghai SME Survival Development Index Report and Innovation Capability Survey Report were released.

Operating index and confidence index down slightly

Data shows that the 2019 overall survival index of Shanghai’s small and medium-sized enterprises is 65.53 points, an increase of 0.67 compared with last year. However, the operating index has decreased from 2018.

Among the ten sub-indexes of the operating index, five have shown negative trends such as operational intensity, overall profit, current orders, capital turnover and government subsidies, demonstrating the overall external environment of the market in 2019 has affected their general operations negatively. On the other hand, the other five indexes, including financing, labor relations and talent allocation have seen better performance, which is partly a consequence of the Shanghai government vigorously promoting the reform of the business environment in 2019.

The confidence index was basically the same as in 2018, showing a slight decline. In terms of sub-indicators, SMEs have decreasing confidence in economic trends and industry prospects, but feel good about government support, their own business strategy, and corporate prospects.

Innovation Capability better but still needs improvement

The report says that, generally, the Innovation Capability Index of the SMEs in 2019 was 37.2 points, 0.8 points higher than last year. Due to the lack of ability to obtain innovative resources, and the low level of innovation investment, the innovation capability of these enterprises still needs to be improved.

Innovative resources mainly mean that high-end talents are what the SMEs are in urgent need of. In the aspect of innovation investment, for 78% of the investigated companies, increased investment in innovation accounts for less than 10% of their total revenue.

Nevertheless, the government’s support in the innovation field has been greatly recognized with 62.16% of the surveyed companies feeling satisfied, up 7.9 % from last year.

The reports suggest that high business costs such as labor and property are important factors affecting the survival and development of SMEs. Government at all levels should implement more precise support policies in finance and taxation, innovation and entrepreneurship and market expansion so as to help SMEs cut the costs and lower the survival pressure.