The “2007 Management Trend of SMEs”, one sub-project of “Editing Project of White Paper on Small and Enterprises in Taiwan, 2007”, offers “White Paper on Small and Enterprises in Taiwan, 2007” the basic data and analyses the commerce and regulation of SMEs. The major research of “2007 Management Trend of SMEs” includes the timely information collection and application analysis.
I The timely information collection of SMEs
(Ⅰ) The Management Survey of SMEs Statistical indicators for Taiwan’s SME sector in 2006 – including the number of SMEs, total sales, domestic sales and export sales – all displayed steady growth compared to 2005. There were 1,244,000 SMEs, representing 97.80% of all enterprises in Taiwan; Sole proprietorships accounted for 58.33% of all SMEs; the wholesaling and retailing sector, the largest share of SMEs, accounts for 52.86%. Domestic sales accounted for 84.75% of total sales of SMEs, while export sales held only 15.25%. In 2006, the new set-up SMEs dominated 99.68% of all new set-up enterprises.
（II）The Current Status of SMEs Labor Force and Training The total number of employed persons working and hired in SMEs in 2006 respectively increased 1.35% and 2.75% compared to 2005. Employees, dominated by highly-education males, were mainly concentrated in the 25–55 age group. The number of self-employed persons decreased in 2006; the numbers of approved foreign employees and of foreign employees both moved upwards. The average working revenue of most industries rose, but the weekly working hour fell in 2006. The number of SMEs participating in manpower cultivation programs fell in 2006, but the total spending on vocational training rose slightly. The main motivation for SMEs participation in manpower cultivation activities is to upgrade manpower quality and strengthen professional capabilities of employees. However, employees are generally not enthusiastic about participating in such activities which without support from SMEs.
（III）Financial Status of SMEs The financial status of SMEs showed some improvement in 2005 compared to 2004. Only 29.62% of SMEs lost in 2005, down from 35.66% in 2004. There was a slight decline in current assets and fixed assets and a pronounced up in funds and long-term investment. Long-term liabilities rose, while current liabilities fell. Reserves and operating surplus was a negative value, but the absolute value dropped significantly. The current ratio, quick ratio and inventory ratio of SMEs all rose compared to 2005; the net liabilities ratio fell, but the long-term funds ratio rose. All turnover ratios rose, and all profitability ratios were positive. As of the end of 2006, the total outstanding loans (excluding overseas loans) of Taiwan commercial banks were up 3.55% compared to 2005. Loans to SMEs rose from NT$2.56 trillion to NT$2.83 trillion, an increase of 0.27%. The share of total bank loans going to SMEs rose by 1.10 %, from 16.06% to 17.16%.
II. Application Analysis
（I）SMEs Overseas Trade and Investment Activity In 2006, Taiwan invested in overseas US$4,315 million, a 76.32% increase compare to the amount in 2005. This overseas investment in Hong Kong, Singapore, and Thailand rose significantly, but there were a slightly decline in Japan, Indonesia, Philippines, and the Oceania. The approved investment amount in China grew 27.22%. The motivations for overseas investment of manufacturing operations were the development potential of overseas market, the abundant cheap labor, and the pressure from overseas customers. The main deficit reasons were intense competition in the local market and the rising cost of raw materials. The main challenges included the revaluation of the Chinese Yuan, the macroeconomic adjustment policies in China, rising manufacturing costs, issues relating to the investment environment and dispute resolution, and the substitutive effect between Taiwan and China. Besides leveraging Internet and adopting new marketing techniques, SMEs should advance innovation, the recruitment of overseas talent, the adoption of global management, and the development of core competencies and strong brands, to boost sales, expand into overseas markets, and create international competitiveness.
（II）The strategies of SMEs for commerce between Taiwan and China With the localization of overseas management, the overseas commercial strategy shifted from defensive investment to market extension. Facing the high opportunity and high risk environment, the Taiwan investors should take the following suggestion: (1)Clear realization to both status of Taiwan and China; (2)Stable management; (3)Elasticity to environment change; (4)The persisting investors should follow China custom, reinforce intelligent and poverty right protection, seek for international support, and involve in proper industry; (5)Core value in globalization trend; (6)Attitude to work hard, value creditability, and keep flexibility; (7)Implementation to free market economy.
（III）Effect of reversion of Labor Insurance Ordinance According to the reversion of Labor Insurance Ordinance passed by the Legislative Yuan, labor hired by companies fewer than four people compel to take insurance, which would impact the small companies most. From estimation, the impacted companies hold 77% share of all companies under four people. Therefore, the reversion would expand the labor cost of each employee from 16.1694% to 18.1394%; the swell labor cost would reach NT. 102.29 billion, which would drop the entire profit ratio from 9.12% to 4.78%。 SMEs have been the major part of Taiwan economy and the shelter of weak status employment. A remedy plan should be offered, once the reversion passed, to avoid huge impact on SMEs and damage to weak status employment and economy.
（IV）SMEs in the M-shaped Society The emergence of the M-shaped society is a worldwide phenomenon. Faced with such society structure, SMEs have to response properly by adopting flexible manufacturing and marketing strategies. Moreover, global warming and the rapid consumption of natural resources speeded the growth limit approaching and caused rigorous environmental legislation, which impacted on the operation of SMEs. With the promoting importance of intangible assets and knowledge economy, SMEs should take decent move to turn danger into opportunity.
（V）SMEs Statistics Data There are eleven government-related statistics surveys, including the Taiwan and Fukien Area general merchant and service industry survey, could be analyzed by scale. Each survey assists to construct the statistics indicators of SMEs respectively; however, there are still some shortcomings in each survey. The statistics indicators of SMEs are suggested to construct by quantified data such as basic data and behavior-related data. The subjects of statistics indicators of SMEs advised to quantify includes: (1)Basic Data: set-up year, the number of employees, proceeded capital, operating income, operating expense, inventory, utilized fixed assets, added fixed assets, and development; (2)Behavior-related Data: brand management, cooperative network, automation, electronic development, triangle trade, and research and develop center in Taiwan.