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Chen Xiaochen: BRICS needs to boost SME cooperation


By Chen Xiaochen    Source:    Published: 2016-10-4


The 8th BRICS Academic Forum and the 5th Think Tank Council were held respectively in Goa and Delhi, India, on Sept. 19-23.


The 8th BRICS Academic Forum and the 5th Think Tank Council were held respectively in Goa and Delhi, India, on Sept. 19-23. As a member of the Chinese delegation participating in the meeting, I think the BRICS countries could learn from the fruits of the recent G20 Hangzhou Summit by promoting cooperation among BRICS small and medium-sized enterprises (SMEs) in five areas.

Currently, trade and cooperation among BRICS SMEs are often blocked due to high transactional costs, needing more injection of public products. The G20 Summit showed that, first, the fruits achieved by the G20 and B20 meetings could promote cooperation and innovation among BRICS SMEs both in direct and indirect ways.

Second, BRICS countries could establish a new dialogue system in industrial and commercial circles like the B20 forum so that SMEs could gain a bigger voice in decision-making.

Thanks to their highly complementary nature, BRICS countries have large space for cooperation. At present, cooperation among big enterprises features good development, while that among SMEs still faces a series of difficulties.

To help SMEs minimize their costs and facilitate trade expansion, public products are badly needed. This could come both from capital and government, but to rely on only either of them could bring many problems.

Since it`s hard for SMEs to move up the value chain, reliance on capital to provide public products will produce a climate of unfairness. However, due to lack of production and demand data, reliance on government will end in low efficiency.

Therefore, government should coordinate with market, so as to build a better communication environment for the market.

During the G20 Hangzhou Summit, helping SMEs to gain more benefits from the new industrial revolution formed the key content of the "G20 New Industrial Revolution Action Plan."

On industrial policy, the B20 meeting proposed the Electronic World Trade Platform (eWTP) to provide more convenience for SME trade. On financial governance, the "G20 Leaders` Communiqué" vowed to support better financing of SMEs, and encouraged countries to set up an inclusive financial system.

In addition, the close connection between G20 and B20 has established a good example for the BRICS countries. They have their own business council (BBC), and, last year, the first forum of BRICS small and medium enterprises was held in Ufa, Russia. However, the impact of industrial and commercial participants - meeting just once a year - is still limited in regard to decision-making.

To promote SMEs cooperation among BRICS countries, we should focus on five "I`s" - infrastructure, information sharing, institutionalization, intellectual support and integration.

Firstly, infrastructure is the foundation of building a good trade system and reducing transactional costs. Infrastructure includes both hardware and software (such as finance). The "G20 Hangzhou Communiqué" proposed an inclusive financial system to help SMEs solve their financing problems.

Secondly, information sharing, especially building a big data platform, is an effective way for SEMs to reduce transaction costs and connecting with each other. The "G20 Hangzhou Communiqué" encouraged SMEs to participate in the global value chain, and also proposed the eWTP project. The latter is a successful example of G20 and B20 interaction, which BRICS countries may copy.

Thirdly, institutionalization could gain SMEs a bigger voice in decision-making. There should be more channels for industrial and commercial participants, especially SMEs, to express their demands to the BRICS leaders` summit. The aforementioned BBC should include more delegates from SMEs, which is an important part for BRICS institutionalization.

Fourthly, intellectual support will provide macro-level guide for SME development, help them with innovation and creating blueprints. The G20 Summit emphasized innovation and technology transfer among different countries to help SMEs. BRICS countries could learn from this, and think tanks should play a more important role.

Last but not least, integration is the basic approach to boost cooperation among BRICS SMEs. In order to promote integrated development, SMEs should communicate and cooperate with local governments to jointly build infrastructure, set up a trade platform, participate in decision-making, as well as gather technological and intellectual resources.

Chen Xiaochen is the deputy director of the International Studies Department at Chongyang Institute for Financial Studies, Renmin University of China.

Key Words: BRICS   SMEs   G20  

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