Human Resources and Organizational Effectiveness case 5 - Essay Example

The Chinese markets have also faces a surge as there has been a huge drop in the social and cultural barriers. This has been a major cause for the businesses to be able to set up the businesses and work more earnestly. Also the SMEs of China have been known for supplying parts and services to the world’s top companies. This has formed a main characteristic of the Chinese SMEs. The fact that the parts are supplied from Chinese SMEs across the world simply means that the demand for the SME depends to a very great extent on the demand of the giants where the company provide for the goods and services.

It is quite difficult to ignore the significance of the SMEs in the Chinese economy. It has also been noted that the Chinese foreign exchange markets and the foreign experts have estimated that the country has been contributed as much as 60% of the total industrial output. Also it provides as much as 75% of the workforce of the country. SMEs are responsible for creating most new urban jobs, and they are the main destination for workers laid-off from state-owned enterprises (SOEs) that re-enter the workforce.

This fact of the companies providing a high level of jobs to the workforce in the country has been recognised by the government however it has also lead to a number of social unrest within the country. Chinese officials have said that SMEs would be more important for preserving social stability than the nascent social security system once increased foreign competition as a result of Chinas WTO entry forces more layoffs from uncompetitive state-owned firms. It has also been noted by the local experts that the employees aged over 40 and 50s are being removed from the jobs, specially those with a lack of skills to be able to compete in the private ventures.

The next essential step is to consider the plausible strategy for Chinese SME in the manufacturing industry. There are two main strategies that need to be