The Formation and Development of Cnpt in Chinese Enterprises

investment environment, it makes the Chinese market more attractive than ever to foreign investors. CNPT and foreign investment capital interact and complement each other, creating a driving force to promote CNPT development.

2. The formation and development of CNPT in Chinese SMEs

The formation and development of CNPT in Chinese SMEs can be summarized through 3 stages: the initial stage, the formation and development stage, and the strong growth stage.

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2.1. Early stage (Before 1978)

Since the 1960s, the scientific and technological revolution has taken place strongly and attracted all countries in the world at different levels. Material production and social life in the process of deep internationalization have created the possibility of cooperation and specialization in the increasingly rich international division of labor. In that situation, countries cannot close their economies but must open up to the world, turning external impulses into driving forces to develop domestic industry structures to a high level.

Meanwhile, before the 1970s, the Chinese economy and its traditional trading system had shown their incompatibility with the world's open economic development trend. Before 1978, China's economic policy was self-sufficient and operated under a centralized planning mechanism, implementing industrialization by internal resources and assistance from socialist countries. China's industrialization strategy was to develop agriculture as the foundation and industry as the spearhead of the national economy, with priority given to the development of heavy industry. Industries such as mechanics, metallurgy, etc. were given top priority. The Chinese economy was almost completely closed, with foreign trade and some key industries under strict control of the State.

With such a policy throughout the 1970s and 1980s, China's industrial production and economic development were completely controlled by the annual national plan; most prices of production factors were determined by the central government; only a few reforms were aimed at state-owned enterprises. Contrary to the wishes and policies of the Chinese government at that time, the industry not only failed to achieve results but also stagnated. Because it only focused on developing heavy industry without paying attention to comprehensive development, the concepts of supporting industries at that time were still very vague, the supporting industries were still very rudimentary, the number of supporting industries was also very limited and mainly undertaken by state-owned enterprises. These supporting industries provided products of poor quality and high prices due to outdated technology, poor management, etc., so they could only be consumed within state-owned enterprises. But because of using these auxiliary products, the assembled products and finished machines at state-owned companies are not competitive. It is an inefficient and mutually binding association. During this time, Chinese SMEs were also restrained by the old operating mechanism of the economy, so IT and SMEs seemed to not develop at all.

2.2. Formation and development stage (From after 1978 to the early years of the 21st century)

In the general context of the world situation, China must choose a development path suitable to its conditions and find ways to create comparative advantages for itself. Faced with that demand, in 1978, the State Council and the Chinese Economic Reform Commission unanimously adopted an economic reform policy associated with opening up based on Deng Xiaoping's viewpoint: to accelerate the pace of industrial development, it is necessary to selectively import advanced technology from abroad and financial resources to serve the import.

technology based on rapid increase in export of mining products and taking advantage of long-term loans from the world. However, with the characteristics of a large country, large population, large area with many natural resources, China does not implement a completely export-oriented policy like some other East Asian countries but focuses on developing domestic industry.

Under the influence of the transformation from a centrally planned economy to a socialist-oriented market economy, along with the loosening of restrictions and the creation of conditions for SMEs by the Government, the number of SMEs has been constantly increasing. However, the first years after the reform were a period of stabilizing social order, creating new policy institutions to suit the market economy, and the new industrial sector had just begun to form and develop, so the relationship between SMEs and the industrial sector was not really clear. Compared to before 1978, the number of SMEs has increased significantly. In 1980, China had about 377,300 industrial enterprises collectively owned by villages and towns (town and village enterprises), including 1,400 large enterprises, 3,400 medium-sized enterprises and 372,500 small enterprises. However, these SMEs mainly operate in traditional industries or services that directly serve life. The number of SMEs doing IT can be counted on the fingers and the quality of the products provided is still very low.

From 1980 to the early 1990s, with the increase of foreign companies in China, the “era of Chinese industrialisation” began. However, during this period, both domestic and foreign enterprises focused on producing labor-intensive products such as textiles, leather, food processing, wood products, rubber, and plastic products, so industrialisation did not develop much. In addition, the Government’s policies in

During this period, import substitution production was the only thing that China was concerned with, promoting exports and attracting as much FDI as possible, without any specific policies to increase the attractiveness of the investment environment in a sustainable and long-term manner. Therefore, SMEs during this period still only operated in a limited number of fields, mainly to satisfy domestic demand, and the supply of supporting products for FDI enterprises was mainly their subsidiaries or foreign companies from Taiwan or Japan. During this period, China still had to import most of its components and spare parts.

During this period, China's economy maintained a trend of rapid and stable development, and the scale of the entire economy was constantly expanding. The number of SMEs also increased, but in terms of proportion, the proportion of small-scale enterprises decreased by 10% due to a number of reasons:

(1) The number of large and medium-sized enterprises increased after restructuring, consolidation and merger.

(2) Changes in regulations on enterprise size have resulted in a large number of SMEs previously not being counted due to their small size.

(3) The promotion of the open-door policy and the Asian economic crisis caused a lot of cuts in state-owned Vietnamese SMEs.

The proportion of SMEs in general decreased in the structure of business types, but the proportion of SMEs operating in the supporting industry increased. The reason is: This is the period when the State pays special attention to improving the investment environment and attracting FDI. Therefore, a series of new laws were issued, including the "Industrial Development Law", tax incentives for research and development activities, production automation, environmental protection, policies to encourage supporting industries, etc. Developing supporting industries has become a priority direction.

strategy in industrial development and attracting foreign investment of China in this period. In addition, FDI enterprises investing in China after a period of time have transferred technology and business skills to local enterprises. Therefore, with their flexible operating mechanism, now supported in terms of capital, technology and product consumption market by FDI enterprises, and realizing the huge market demand for supporting products, Chinese SMEs have boldly and confidently participated in supporting industry. Moreover, as analyzed above, SMEs are the type of enterprise that can be said to be the most suitable in supporting industry due to the requirements of division of labor and specialization of this industry. Therefore, the number of small and medium enterprises doing supporting industry has increased rapidly.

2.3. Strong growth period (from 2001 onwards)

This period is counted from after China became an official member of the WTO in 2001. Joining the WTO and successfully organizing two Party Congresses, the 16th and 17th Congresses, China's economy has really flourished and it can be said that it has initially successfully carried out industrialization.

Since 2001, China's real growth rate has averaged nearly 9% per year. According to WTO statistics, China's total merchandise trade value alone accounted for about 64% of its GDP in 2005 and 6.7% of the world's total merchandise trade value in 2004, bringing China from 6th place (in 2001) to the country with the 3rd largest total trade turnover in the world, after the EU (14.5%) and the United States (13.6%), surpassing Japan (5.9%). FDI in China continues to increase strongly. In 2005, the country attracted $72.4 billion in foreign direct investment, compared to $46.6 billion in 2001. The sharp increase in FDI not only reflects foreign companies' perception of China's great potential as the world's low-cost factory, but also reflects the country's growing economic clout.

Not only has China become a global manufacturing hub and a booming consumer market, but it has also marked a remarkable improvement in the country’s business environment, thanks to the country’s industrial sector. In some categories, such as home appliances, dozens of domestic and foreign companies have sprung up (often with the support of local governments) after witnessing the success of the first manufacturers. For example, nearly two-thirds of the world’s laptop production capacity has been moved to Suzhou in just 18 months. The auto industry, with the help of industrialisation, has also made great strides. China has now surpassed Japan to become the world’s second-largest automaker, with brands such as SAIC and Nanjing Auto.

In recent years, China's supporting industry has really developed and become the most attractive factor to attract foreign investment. Along with the success of the supporting industry, since January 2003, the "Law on Promoting the Development of Vietnamese SMEs" has officially come into effect, defining the criteria of Vietnamese SMEs as well as the policy goals for developing small businesses, thus contributing to a significant increase in the number of Vietnamese SMEs in general and supporting enterprises in particular. Between 2002 and 2003, foreign enterprises have built 60,000 manufacturing plants in China. European chemical companies, Japanese automobile manufacturers and American industrial corporations are building (or have announced their intention to build) factories in China to supply export goods around the world. Since then, with the support and facilitation of the Government, the stable growth of the economy, the increase in FDI capital flows, the growth of the IT industry and the accumulation of practical experience in the IT industry over the past time, along with their own acumen, Chinese SMEs have become more and more enthusiastic in participating in the IT industry.

The Chinese economy is now shifting its priority to the production of high-tech products such as automobiles, televisions, electronic watches, digital controllers, computers, etc. These products are mostly assembled and processed, so the processing stages are all undertaken by SMEs, while large enterprises only carry out the final assembly. The position of SMEs is enhanced because they can produce small orders of products with diverse designs and types, which are highly appreciated in the world market. In traditional industries such as garments and footwear, SMEs continue to affirm their position, demonstrating that they can produce 80% of raw materials from needles, threads, leather, etc. Most Chinese manufacturing industries not only no longer depend on imported components and materials, but also export a large amount. Taking information technology products as an example, for three consecutive years from 2002 to 2003, electrical machinery and equipment products were always at the top of the list of China's top 10 export items with respective turnovers of 65,119.4 million USD; 88,997.6 million USD; 129,663.7 million USD.

II. POLICY ON DEVELOPING INDUSTRY AND TECHNOLOGY FOR CHINESE SMES

In order to develop IT for SMEs, the Chinese Government has implemented support policies through regulations and legal documents such as the "Law on Promoting SMEs" in 2003, "National Technology Industry Policy" in 2002, "Automotive Industry Development Policy", "Automotive Industry Plan for the period 2006-2010". The contents of the policies show:

1. Reform and develop small and medium-sized supporting enterprises in cities and towns in various forms.

Chinese SMEs operating in the IT industry include three main components: collective enterprises, state-owned enterprises, and non-state-owned enterprises that satisfy the Government's regulations on SME standards.

1.1. For collective enterprises

In order to promote the development of collective enterprises, China has adjusted the industrial structure, enterprise structure and commodity structure. The method of structural adjustment is:

(1) Encourage large-scale mergers, consolidations, and joint ventures within industries regardless of region or ownership, based on the requirements of economic scale. This method aims to reduce the number of enterprises that are too small or ineffective, and to link them together to take advantage of economies of scale.

(2) For industries with excess production capacity, a part of it will be divided into industries considered as new growth points and other related industries will produce components, parts or participate in trading products related to the main products of this industry.

(3) Implement the joint-stock partnership regime. This regime is most suitable for small businesses with less than 100 employees.

An important part of Chinese collective enterprises, participating very effectively in the CNPT industry, is the township enterprises. To promote the positivity of this part in the economic development in general and CNPT in particular, in addition to the policies applied to enterprises,