The survival, development and innovation of small and micro enterprises

Abstract Some small enterprises have very simplistic development ideas. In their view, being small means not having high technical content, and they don’t consider themselves involved in any form of "innovation." Their main way of maintaining growth is by ensuring product quality meets standards and keeping their existing customer base. But is this enough? Today, many small businesses still operate with this basic mindset. They believe that since their products aren't highly technical, innovation isn’t necessary. Their survival depends on whether the products meet specifications and retaining their current customers. However, what should truly concern small and micro-enterprises is more than just compliance and retention. The author believes that what small and micro-enterprises value largely depends on their positioning, which is often part of their corporate strategy. If a company positions itself as a supplier for branded enterprise parts, then quality becomes the key. As long as the components are up to standard, it can partner with larger brands. But it’s also important to understand the position of supporting enterprises within the industry and to track overall market trends. This helps avoid being left behind when the market changes. Planning ahead, developing other accessory manufacturers or products based on production capacity is essential. Therefore, even small enterprises producing parts must be ready to innovate. It's true that some abrasive and tool companies won’t be eliminated by current market trends. By doing their own matching parts and maintaining good relationships with clients, they can survive comfortably. However, they must also face reality: rising raw material costs, increasing labor expenses, and low entry barriers leading to more competitors. Maintaining a stable workforce and customer base has become a long-term challenge. Even without product innovation, managing innovation—like improving internal processes—becomes crucial. Interestingly, a business owner recently shared concerns about employee stability. Although he wasn’t in the abrasive industry, his issues were universal: training employees only to have them start their own businesses and compete with him. This made him hesitant to invest in training, forcing him to do everything himself. While the staff was stable, the business couldn’t grow, and he remained overworked. Why does this happen? Many Chinese SMEs are still managed in outdated ways, lacking decentralization, cooperation, and shared growth. Employees don’t feel a sense of belonging, and the culture of short-term profit often hinders long-term development. In industries with low entry barriers, it's common for employees to resign and start their own businesses. It’s almost normalized. As everyone knows, China’s SMEs are small, and this is partly due to deep-rooted cultural traditions. The saying “Ning is not a phoenix” reflects this mindset. In the ocean, only aircraft carriers can withstand storms, while small boats easily capsize. In today’s globalized world, Chinese entrepreneurs need to think long-term. If they continue with the mentality of “the emperor takes turns to do my home next year,” or focus only on immediate profits, they’ll never build lasting brands or achieve sustainable growth. Companies will keep changing hands, employees will move between factories, and no one will have a real dream or sense of achievement. The label of “world factory” will remain attached to China. Every big company started small. I don’t mean every business must grow large, but I advocate for long-term thinking. Even if you don’t dream of building a century-old company, at least aim for excellence. Once a small business commits to doing things well, it will quickly find problems: product rework, defects, waste of materials, time, and equipment, and inefficient processes. Can these issues be ignored? Isn’t change itself a form of innovation? We shouldn’t equate innovation only with technological breakthroughs or patents. Innovation can be as simple as changing traditional thinking, streamlining production, optimizing layouts, or improving management practices. It’s everywhere. Innovation doesn’t belong only to big companies or experts. Any enterprise, including small and micro ones, can innovate. As a business owner, you don’t need to do everything yourself. You just need to create an environment that encourages creativity and supports new ideas. Innovation doesn’t always cost a lot. For small businesses, it’s often about breaking old habits and finding better ways to work. Small and micro-enterprises need innovation, and they can do it. Innovation is everywhere! It’s the core of enterprise development. Development and innovation go hand in hand. Focusing on product quality, protecting customer interests, and embracing innovation are not conflicting goals. Changing from relying solely on personal ability to lead the business is the biggest innovation a small enterprise can make.

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