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Accelerate the Construction of Training Service System in Light of China's Conditions for SMEs


By Wang Hui, General Office of DRC, and Jia Tao & Wang Jicheng, Enterprise Research Institute of DRC

Research Report No 82, 2012

Currently, China's policy toward small and medium-sized enterprises (SMEs) has scored some success in relieving burdens and overcoming difficulties, including reduction of taxes and fees, subsidy granting, easing of financial straits and improvement of business environments, yet attention paid to training ability has been few and far between. Training services to SMEs mainly include management training, skill training and business startup training, which consist of an important part of the service system for SMEs. These services are not only the effective measures to help SMEs to enhance their management of human resources and raise their management levels, but also an important channel for improving the skill training and vocational education system, nurturing management personnel and improving workers' qualities, which are of vital importance to SMEs in enhancing their abilities for existence, development and competition. Meanwhile, training services to SMEs are of special strategic importance to the implementation of the strategy of reinvigorating China through human resource development, the construction of China into an innovation-oriented country, the acceleration of the development of burgeoning service industries, the construction of harmonious industrial relations and the boosting of the radical transformation of the modes of economic development. Encumbered by their own conditions, SMEs rely more on the socialized training service system than large enterprises. International experiences reveal that a perfectly-operated training service system for SMEs is an important means for improving the development of those enterprises and deserves major attention and strong support.

I. Current Development of the Training Service System for SMEs in China

The training service system for SMEs is a complete system which includes SMEs as demanders, training institutions as suppliers, various kinds of training organizations such as skilled workers' schools, as well as government service departments (institutions) as coordinators for SMEs and relevant policy resources, as shown in figure below. Training services toward SMEs came into being in China at a later time. In recent years, with the gradual improvement of policies toward SMEs and in need of the enterprise restructuring and upgrading and market competition, rapid progress has been made in China in the growth of training services to SMEs, and a business startup and training service system has taken shape initially under the positive guidance of both the Central Government and the local governments, with the wide participation by socialized training entities as well as the sound interaction between the government and the market, covering skill training, management training and business startup training.

The Training Service System for SMEs

In terms of training demand, over 11 million SMEs have registered in China, with the self-employed in excess of 34 million, most of which are small in scale, poor in strength and with low overall qualities. In recent years, a growing number of enterprises have fully come to realize that personnel training can help realize management enhancement, technological progress and improvement of effectiveness and is of vital importance to the sustainable development of enterprises. Questionnaire-Based Survey of One Thousand SMEs (Private Enterprises) conducted by the city of Wuxi indicates that in 2010 82% of surveyed enterprises intended to give vocational training to their employees and the percentage of such enterprises reached 98% in 2011. Of the most-needed training courses, business management, marketing and professional skills accounted for 47%, 38% and 22% respectively. Compared to large enterprises, SMEs were particularly more desirous for training. Data from CCID Consulting suggest that, by 2010, the size of the business management and training service market had reached the amount of 75 billion yuan or so in China and maintained an average annual growth of 25% or above on the whole, whereas the training demand from SMEs had made up 96.1% or so. It shows that currently SMEs have an urgent demand for training, particularly for management training and are desirous to tap their management potentials, enhance their management levels and improve their economic benefit through management training. The training service toward SMEs has a broad room for development.

In terms of the training suppliers, they can be divided into three types: first, training companies with corporate capacities, which are market-oriented and provide commercial training services; second, institutions, such as skilled workers' schools and professional schools, which are an important integral part of China's vocational education system and are market-oriented and provide commercial training services; and third, non-profit training institutions set up by departments concerned of the government and their subordinate agencies. Training institutions of the three types have their respective features and are complementary to each other. Of those institutions, training companies, focused mainly on management training, can probe fully into enterprise demand and are better market-adapted and, by adopting such service patterns as internal training, open classes, distance education and judgment and consultation in a flexible way, can better meet the personalized demands of enterprises, which are a forceful complement to the vocational education system. Relevant estimates show that at present there are more than 30,000 management training companies in China, which are the most vigorous under the training service system for SMEs. Complete and regular and characterized by national input and policy support, the training institutions, such as skilled workers' schools, have a relatively good number of teachers and are centered on skill training, pre-job training and personal training. Job training centers and higher skill training centers have been mainly set up for boosting employment and meeting local demand for specific hard-sought skilled personnel and are mainly focused on offering free skill training. By the end of 2010, there had been 2,988 skilled workers' schools in China and such schools had provided training for 4.68 million people; there had been 3,192 job training centers and 20,000 privately-run training institutions, which had conducted vocational training for 18.2 million people. Most of the non-profit training institutions have been set up directly by department concerned of the government. By 2009, the number of such institutions had reached 525, and nearly 1/3 of the provinces, autonomous regions and municipalities have preliminarily set up service systems at provincial, municipal and county levels. In addition, dependent on their resources and diploma education, many colleges and universities and research institutions provide training services mainly for entrepreneurs of SMEs and for higher management personnel and, such services are, in essence, still commercially-based.

The governments and the related service institutions for SMEs have played an important role in guiding and promoting the development of the training service system. On one hand, the Central Government and the local governments have attached major importance to the training work among SMEs. The state policies and documents on the development of SMEs have all been focused on training and support of the development of training institutions. In line with their own conditions, many places have unveiled personnel plans and policies on development of SMEs and have taken innovation methods, rationalizing of mechanisms and enlargement of input as the focus in strengthening the training work among SMEs. On the other hand, the Central Government and local governments have given some basic and non-profit training activities, such as the Galaxy Training Program by the Central Government, Expertise Updating Program and the Management Upgrading Plan for SMEs, etc. The province of Jiangsu has formulated relevant training plans for various types of entrepreneurs, and Shenzhen has carried out training of leading talents for SMEs or training of hard-sought personnel for various industries.

In a word, China has, at present, initially formed the training service system for SMEs, reflecting the positive results achieved in recent years through the implementation of policies toward SMEs and vocational education and training policies. To sum up, huge and urgent training demand from SMEs has been a realistic basis, support and input from the Central Government and the local governments have been an important guarantee, and the unremitting model innovation by training institutions particularly by market-oriented training enterprises has been the source of vitality.

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