SME Development: To Achieve High Quality, Digitalization Is Essential

National “ Both the “14th Five-Year Plan for Promoting the Development of Small and Medium-Sized Enterprises” and the “14th Five-Year Plan for Digital Economy Development” explicitly set out strategic measures to advance the digital transformation of SMEs. Achieving digital transformation has become an indispensable path for enterprises seeking sustained growth. Through digital transformation, companies can fully leverage digital technologies to comprehensively overhaul and apply them across all stages—production, operations, management, and marketing—thereby fostering development that is digital, networked, intelligent, and personalized.

At present, with a complex and volatile international and domestic political and economic environment and continued significant pressure from epidemic prevention and control, China’s small and medium-sized enterprises (SMEs) are confronting challenges such as rising factor costs, insufficient momentum for innovation and development, and intensifying competition in both domestic and international markets. Accelerating digital transformation has thus become essential for SMEs to achieve high-quality growth. “A must-answer question.”

Digital transformation is imperative for small and medium-sized enterprises.

Small and medium-sized enterprises are a vital driving force behind national economic and social development, contributing to the nation’s… More than 50% of tax revenue, over 60% of GDP, more than 70% of technological innovation, and over 80% of urban employment are generated by small, medium, and micro enterprises. These businesses, which are numerous and widely distributed, constitute an essential foundation for economic stability, serve as the main pillar of employment, and play a critical role in enhancing the resilience and competitiveness of industrial and supply chains.

However, constrained by factors such as business philosophy, technology, management, and capital, small and medium-sized enterprises are struggling to advance and face obstacles in their transformation, making them a group in urgent need of support within the broader wave of digital transformation. The target group for “support and assistance.” At present, the overall level of digitalization among China’s small and medium-sized enterprises (SMEs) remains relatively low. According to relevant data, 89% of SMEs are in the exploratory phase of digital transformation, 8% are in the implementation phase, and only 3% have reached the stage of deep‑level application. Overall, the vast majority of Chinese SMEs are still at the exploration stage. Furthermore, data from the Ministry of Industry and Information Technology indicate that, as of 2020, only 25% of enterprises in China had embarked on digital transformation, with an even lower proportion among SMEs.

Small and medium-sized enterprises (SMEs) are both the main actors in digital transformation and its key focus—and also its most challenging frontier. Accelerating the digital transformation of the vast majority of SMEs will not only help build a full‑chain, end‑to‑end digital ecosystem, strengthening the resilience and self‑reliance of industrial and supply chains, but will also inject new momentum into quality‑driven, efficiency‑driven, and growth‑model reforms, making it an indispensable path for unleashing fresh impetus for SME development.

Digital transformation helps enhance the overall competitiveness of small and medium-sized enterprises (SMEs). Compared with large corporations, SMEs typically face challenges such as limited scale, weak risk resilience, insufficient internal capital, and difficulties in accessing external financing. On the one hand, leveraging the precision measurement and control capabilities of digital technologies can help reduce waste, streamline processes, and lower operational costs. On the other hand, digital transformation enables SMEs to address the constraints posed by their smaller size; in an ever‑changing production and business environment, they can adopt flexible manufacturing approaches, These challenges can be addressed with flexible solutions such as CRM systems. Meanwhile, digital transformation provides SMEs with a broader array of external digital resources, enabling them to gain greater support and expertise in areas like collaborative R&D, supply-chain integration, management-capacity building, and value enhancement, thereby further strengthening their core competitiveness.

Digital transformation helps elevate the modernization of SMEs’ industrial value chains. As the largest and most dynamic segment of the business community, SMEs are the main driving force behind the real economy and the primary arena for advancing the overall digital transformation of industries, strengthening foundational capabilities, and achieving modernization of industrial chains. The widespread adoption of next-generation information technologies in accelerating SMEs’ digital transformation can expedite the ubiquitous connectivity, flexible allocation, and upstream–downstream collaboration and resource sharing of production inputs—such as raw materials, equipment, production lines, personnel, and technologies—thereby seamlessly integrating key links across production, distribution, circulation, and consumption, and fostering resilient, agile, and stable industrial and supply chains. In particular, some SMEs possess critical core‑technology R&D capabilities, playing a vital role in ensuring the stability of industrial and supply chains and enhancing industry‑wide foundational capacities. Accelerating the digital transformation of these SMEs is therefore an essential step to help them integrate more deeply into the supply and innovation networks of larger enterprises, build cohesive industrial ecosystems, and ultimately achieve industrial chain modernization.

Digital transformation helps drive high-quality development among small and medium-sized enterprises (SMEs). With their large numbers and widespread presence, SMEs can leverage data as a key factor to innovate products and services, expand consumption into new domains, and continuously give rise to emerging consumption patterns. Moreover, the digital transformation of SMEs can steer investment toward more focused areas, placing higher demands on the development of new infrastructure in such fields as networking, computing power, algorithms, and cybersecurity. Amid the reshaping of the global landscape by the COVID‑19 pandemic… Against the backdrop of the global trade landscape, the digital transformation of small and medium-sized enterprises has strengthened China’s comparative advantages in the digital trade sector, becoming a key driver of the country’s high-quality economic development.

Adopting a multi-pronged approach to accelerate the digital transformation of small and medium-sized enterprises.

So, how can we help small and medium-sized enterprises accelerate their digital transformation? Here are some key recommendations:

First, we will innovate the ways in which we support the digital transformation of small and medium-sized enterprises to address the issue of their reluctance to undertake such transformations. Encourage leading enterprises and chain‑leading firms that meet the necessary conditions to open up their data resources, thereby enhancing upstream–downstream collaboration and helping small and medium‑sized enterprises integrate into digital application scenarios and industrial ecosystems. Provide model guidance for the digital transformation of SMEs, leveraging… “Specialized, Sophisticated, Distinctive, and Innovative” SMEs are advancing digitalization across the entire value chain—R&D and design, production and manufacturing, operations management, and sales and service—thereby establishing industry‑leading benchmarks for digital transformation.

Second, develop digital transformation tools for small and medium-sized enterprises to address the challenge of their inability to undertake digital transformation. In response to the specific needs of SMEs across various industries, we will develop digital transformation tools tailored to key sectors and cultivate a cohort of digital solution providers. We will encourage digital service providers to open up platform APIs, data sets, computing resources, and other digital assets to SMEs and startup teams. Furthermore, by strengthening the development of digital products in areas such as communications, computing, analytics, and services, we will deliver more practical, user-friendly, and cost‑effective digital products, tools, and services to support the digital transformation of SMEs.

Third, strengthen digital security safeguards for small and medium-sized enterprises to address the issue of reluctance to undergo digital transformation. Improve relevant laws and regulations, enhance consistency among legal provisions, strengthen administrative law enforcement, and reinforce end-to-end protection of intellectual property rights, thereby safeguarding the data‑asset rights of small and medium-sized enterprises and ensuring the security of data involving trade secrets. Further refine and完善 the data‑security regulatory framework, and elevate both regulatory capacity and technological sophistication. Fully implement the Data Security Law and the Cybersecurity Law, bolster protection of critical core technologies, improve oversight of data flows involving listed companies, and proactively mitigate data‑security risks.

Fourth, strengthen the cultivation of digital expertise among SMEs to address the challenge of inadequate digital transformation. Implement a new enterprise‑based apprenticeship model with Chinese characteristics, and support universities and vocational colleges in adopting advanced domestic and international vocational education concepts and models. Establish digital transformation curricula and cultivate multidisciplinary skilled professionals for the digitalization of small and medium‑sized enterprises. Improve the system for attracting innovative talent to SMEs, refine mechanisms for supporting recruited personnel and related complementary measures, and encourage SMEs to actively recruit high‑level digital talent.