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The Small and Micro-sized Enterprise Operating Index, with the full name of “Economic Daily-Postal Savings Bank of China Small and Micro-sized Enterprise Operating Index”, also abbreviated to SMEOI, is collected monthly and published jointly by Economic Daily and Postal Savings Bank of China (PSBC). It gives a monthly integrated reflection of how small enterprises, micro-sized enterprises and self-employed businesses in China operate and grow on a monthly basis. With general index, indices of six regions, indices of seven industries and eight sub-indices, SMEOI is the first national index which is published monthly and dedicated to reflecting the operation and growth status of small and micro-sized enterprises (SMEs).
I. Meaning of SMEOI
SMEOI is an index which comprehensively reflects the operation and growth status of SMEs in different industries and at different regions in terms of purchasing, production, sale, financing and others. It is based on the results of monthly field survey on around 2,500 SMEs across the country that are collected through the PPS Sampling (Probability Proportionate to Size Sampling) and mathematical analysis.
The value of SMEOI ranges between 0 and 100. The critical point is 50, representing the general state. Higher than 50 points, it means an improving business situation, namely, the closer to 100 the index is, the better the situation is. Lower than 50 points, the business situation gets worse, namely, the closer to 0 the index is, the worse the situation is.
II. Indicator System of SMEOI
The index system of SMEOI consists of the indices of six regions, the indices of seven industries and the eight sub-indices, forming a unique three-dimensional structure of “6+7+8”.
Among it, the six regions refer to Northeast China, North China, East China, Northwest China, South Central China and Southwest China;
The seven industries are manufacturing industry, wholesale and retail industry, construction industry, service industry, transportation industry, accommodation & catering industry, and farming, forestry, husbandry and fishery;
The eight sub-indices mean market index, performance index, expansion index, purchasing index, risk index, financing index, confidence index and cost index. Specifically, the original data of both risk index and cost index have been processed and adjusted to positive indices. The higher the index is, the better the situation is.
i. Market index
The market index comprehensively manifests the operating condition and market demand of an enterprise and the business situation of overall industry where the enterprise belongs to at the current stage.
ii. Performance index
The performance index means an integrated reflection of an enterprise’s business performance during a certain accounting period, which helps the enterprise owner, investor(s) and other market players understand the business situation of the enterprise and make the correct economic decisions.
iii. Expansion index
The expansion index offers an integrated reflection of growth potential and expansion trend of an enterprise. It is a leading index that most closely and directly reveals the enterprise’s business situation for a medium and long term, and serves as a important reference for its future growth and decision-making process.
iv. Purchasing index
The purchasing index provides an integrated account of an enterprise’s purchasing situation. As a leading index reflecting the short-term business situation, this index can be used to guide such activities as purchasing, production and operation of an enterprise and also serves as a reliable reference for strategic decision-making and business adjustment.
v. Risk index
The risk index gives an integrated reflection of potential risks existing during the production and operation of an enterprise. On the one hand, it can enable the enterprise to promptly realize the risks confronting its growth and make remedies; on the other hand, it can provide a reference for financial institutions while deciding whether to extend a loan to it.
vi. Financing index
The financing index comprehensively reflects whether an enterprise intends to raise funds or how far it would like to expand or shrink its financing scale. It serves as an important index to judge whether an SME can raise funds from external entities, and reflect the business situation at the current stage and in the future. Meanwhile, this index can also be applied to measure the funding elasticity of companies, providing a basis for making a monetary policy.
vii. Confidence index
The confidence index mainly means the entrepreneur confidence index which can comprehensively reflect an entrepreneur’s satisfaction with current economic situation and business operation of the enterprise, as well as his or her confidence in the future macro-economy and enterprise growth. It is a leading index to forecast the economic trend and industry development, and also an indispensable basis for the monitoring of the changes to economic cycle.
viii. Cost index
The cost index works as an integrated reflection of all business costs and work performance of an enterprise. It is a basis to calculate the profit and loss of the enterprise and also a reference for its decision-making process. Not incorporated in the general index, it is only for analysis.
III. Features of SMEOI
i. Completeness of index system
SMEOI takes on a three-dimensional index structure of “6+7+8”: Taking six regions (East China, North China, East China, Northwest China, South Central China and Southwest China) as the “spatial horizontal coordinate” of sampling; taking seven industries (manufacturing industry, wholesale and retail industry, construction industry, service industry, transportation industry, accommodation & catering industry, and farming, forestry, husbandry and fishery) as the “industrial vertical coordinate”; comprehensively reflecting the operation and growth status of SMEs in different industries and at different regions in terms of purchasing, production, sale, financing and others, through eight sub-indices (market index, purchasing index, performance index, expansion index, confidence index, financing index, risk index and cost index).
ii. Good coverage of samples
The unique advantages of PSBC are given into full play. A total of 39,000 physical outlets and 35,000 credit managers have participated in the data collection of the indices. Thanks to the outlet network and numerous professional workers across urban and rural areas, a sample database has been established, covering the SMEs at nearly 75% of county areas nationwide. All subclasses of national standard industries are almost included. Among the actual samples in each term of indices there are about 65% self-employed businesses and SME owners as well as about 35% of corporate entities of small enterprises, fully reflecting the significance of the index in “small and micro”. SMEOI tops among the existing domestic indices of SMEs in terms of total samples, penetration of sampled regions and coverage of sample attributes.
iii. Application of “cloud surveying” technology
Intelligentization, cloud computing and other new technological means have been introduced to guarantee the timeliness of index processing: The intelligent procedures of sample collection have been extended to electronic questionnaire interviewing, audio & video real-time transmission and GPS auxiliary verification. All collecting points upload the survey data to the cloud in 20 seconds through mobile terminals, while the cloud system will complete the data preprocessing within 4 hours. The batch processing technique of cloud data has effectively enhanced the efficiency of statistical analysis, ensured the monthly collection and publication of index data and thus filled China’s gap in monthly cycled publication of SME indices.
IV. Background and Significance of Publication of SMEOI
SMEs are the emerging forces of national economy and have played an important role in stabilizing growth, expanding employment, promoting innovation, prospering market and meeting demands of the Chinese people in various aspects. As such enterprises relates to the overall situation of the Chinese economy and society, the CPC Central Committee and the State Council have attached great significance to promoting the sound development of SMEs.
Founded in Beijing in March 2007, PSBC finished the shareholding reform in 2012. For years, PSBC has always adhered to its strategic positioning of serving agriculture-related business, small and medium-sized enterprises, and communities. Now it has established an operation system of large retail commercial bank with its own characteristics, and developed into a financial service institution with the most outlets and the widest coverage in China. It ranked the 28th place among “2014 Top 1000 World Banks” of the Banker, a British magazine, by total assets.
Economic Daily is a newspapers directly under the CPC Central Committee and run by the State Council. It is an important battlefield of public opinions where the two guide the national economic work, an important channel to spread their economic policies and information, and also a significant bridge between the government and enterprises. Economic Daily boasts the very strong authority and public credibility among the Chinese economic newspapers and periodicals.
SMEOI has been the first one compiled and published by a bank institution and authoritative media outlet in the country to comprehensively reflect the survival and development status of SMEs, especially micro-sized enterprises and self-employed businesses. In early 2014, the preparation for index compilation and the testing were commenced. To ensure a comprehensive, immediate and timely reflection of how SMEs grow through the index, PSBC and Economic Daily conducted the in-depth research in cooperation with influential professors, and created the scientific index model framework and index compilation procedures. After testing and improvement for one year, a reliable and effective sample system and sampling/compiling mechanism took shape. The index compilation has matured.
On May 5, 2015, PSBC and Economic Daily jointly released SMEOI to the public. More than 30 central media outlets including Xinhua News Agency and Guangming Daily made a special report on this event. SMEOI was even reported on the program of Xinwen Lianbo on CCTV-1 and the program Live News on the CCTV News Channel for many times, attracting the great attention of the society. The publication of the index is an important measure that the two powerful institutions have taken together to fully serve SMEs. SMEOI will provide the useful reference for the Chinese government to develop relevant policies and industry planning, and also help all sectors of the society effectively understand the operation and growth status of SMEs.