Opportunities and Role of SMEs in the Belt and Road Initiative
Since its proposal more than ten years ago, the Belt and Road Initiative has emerged as a global public asset and a means for international collaboration that goes beyond geographic limits, connects diverse cultures, and aligns development requirements.
TroibNews 
Editor's note: Ma Xiaobai is a director and researcher at the Enterprises Research Institute of the Development Research Center under the State Council, China's cabinet. Yuan Yue is a PhD fellow at the Belt and Road Center of China’s National Development and Reform Commission. The article reflects the authors' opinions and not necessarily the views of CN.
Since its inception over a decade ago, the Belt and Road Initiative has emerged as an international public good and a collaborative platform that transcends geographic boundaries, bridges cultural divides, and integrates developmental needs. Notable achievements range from extensive infrastructure projects to smaller yet impactful livelihood initiatives.
In this new phase of construction, which demands rigorous efforts, small and medium-sized enterprises (SMEs) have become crucial for advancing the high-quality development of Belt and Road cooperation. SMEs are vital to economies, as they play an essential role in boosting trade and investment, facilitating technological collaboration, and enhancing people’s livelihoods, thanks to their flexibility, innovation, and adaptability. The challenge now lies in harnessing the historical opportunity presented by the upcoming "golden decade" to bolster the BRI.
SMEs encounter various challenges when engaging in the BRI. Primarily, they struggle to identify potential political, economic, social, and environmental risks in target countries. Their unfamiliarity with industry-specific policies, legal frameworks, and cultural practices in these nations leads to higher compliance costs.
Additionally, SMEs often lack international management expertise and experience, with many operating at the middle or lower tier of the global value chain. Without established brands or access to international sales channels, they find themselves at a disadvantage against larger transnational corporations.
Moreover, the aspiration of "going global" calls for significant financial backing, yet access to financing is limited for SMEs. They face particular difficulty securing funds within international financial markets.
Large-scale initiatives, such as infrastructure and energy projects pivotal to the BRI, typically involve long timelines and substantial investments—areas where SMEs may struggle. Further complicating matters, issues like information asymmetry and a lack of clear policy understanding can hinder their international growth efforts.
Despite these hurdles, the forthcoming "golden decade" offers rich prospects for SMEs participating in BRI initiatives.
Most countries and regions involved in the BRI are developing nations and emerging economies undergoing economic transformation and enhancement. This context opens new avenues for SMEs.
In particular, "small-scale yet impactful" livelihood projects represent significant market potential. As nimble innovators, SMEs can swiftly adapt to market changes and offer a wide array of products and services, making them well-suited to respond to fluctuations in technology and demand on the international stage.
Their strengths in small-batch manufacturing, multifunctional machinery, labor-intensive production, and local material sourcing align with the preferences of BRI countries.
Though infrastructure projects may not be their forte, the spillover effects of these initiatives can create demand for a variety of smaller projects.
By leveraging a division of labor based on specialization, service outsourcing, and make-to-order strategies, SMEs can forge collaborative, innovative, and mutually beneficial partnerships with larger corporations that can manage these substantial projects.
Consequently, they can better integrate into international markets. Additionally, the increasing demand for innovative business models in the global marketplace provides SMEs with opportunities to engage in cross-border e-commerce, digital trade, and service trade under the BRI umbrella, significantly reducing the costs and risks associated with international expansion.
The ability of Chinese SMEs to thrive in BRI-related projects is closely tied to the progress and efficacy of the initiative.
To begin with, it is crucial to assist in establishing overseas service systems for SMEs, shifting the focus from "global expansion of projects" to "global expansion of platforms."
Strengthening the development of overseas industrial zones and parks is essential for effectively pooling resources and minimizing risks, encouraging SMEs to explore international markets while optimizing their use of global resources.
Secondly, enhancing top-level design and policy support for "small-scale yet impactful" projects is necessary to help SMEs refine their niche offerings, enhance brand visibility, and prioritize channel development. This will enable them to evolve from mere original equipment manufacturers to enduring competitive entities integrated deeply into global value chains.
Lastly, fostering collaborative development with central state-owned enterprises and large transnational corporations can yield greater economies of scale.
By adopting a "follow-the-leader strategy" in choosing investment locations and sectors, SMEs can mitigate risks and ultimately transform from merely "going global" to successfully "entering the global market."
Sanya Singh contributed to this report for TROIB News
Since its inception over a decade ago, the Belt and Road Initiative has emerged as an international public good and a collaborative platform that transcends geographic boundaries, bridges cultural divides, and integrates developmental needs. Notable achievements range from extensive infrastructure projects to smaller yet impactful livelihood initiatives.
In this new phase of construction, which demands rigorous efforts, small and medium-sized enterprises (SMEs) have become crucial for advancing the high-quality development of Belt and Road cooperation. SMEs are vital to economies, as they play an essential role in boosting trade and investment, facilitating technological collaboration, and enhancing people’s livelihoods, thanks to their flexibility, innovation, and adaptability. The challenge now lies in harnessing the historical opportunity presented by the upcoming "golden decade" to bolster the BRI.
SMEs encounter various challenges when engaging in the BRI. Primarily, they struggle to identify potential political, economic, social, and environmental risks in target countries. Their unfamiliarity with industry-specific policies, legal frameworks, and cultural practices in these nations leads to higher compliance costs.
Additionally, SMEs often lack international management expertise and experience, with many operating at the middle or lower tier of the global value chain. Without established brands or access to international sales channels, they find themselves at a disadvantage against larger transnational corporations.
Moreover, the aspiration of "going global" calls for significant financial backing, yet access to financing is limited for SMEs. They face particular difficulty securing funds within international financial markets.
Large-scale initiatives, such as infrastructure and energy projects pivotal to the BRI, typically involve long timelines and substantial investments—areas where SMEs may struggle. Further complicating matters, issues like information asymmetry and a lack of clear policy understanding can hinder their international growth efforts.
Despite these hurdles, the forthcoming "golden decade" offers rich prospects for SMEs participating in BRI initiatives.
Most countries and regions involved in the BRI are developing nations and emerging economies undergoing economic transformation and enhancement. This context opens new avenues for SMEs.
In particular, "small-scale yet impactful" livelihood projects represent significant market potential. As nimble innovators, SMEs can swiftly adapt to market changes and offer a wide array of products and services, making them well-suited to respond to fluctuations in technology and demand on the international stage.
Their strengths in small-batch manufacturing, multifunctional machinery, labor-intensive production, and local material sourcing align with the preferences of BRI countries.
Though infrastructure projects may not be their forte, the spillover effects of these initiatives can create demand for a variety of smaller projects.
By leveraging a division of labor based on specialization, service outsourcing, and make-to-order strategies, SMEs can forge collaborative, innovative, and mutually beneficial partnerships with larger corporations that can manage these substantial projects.
Consequently, they can better integrate into international markets. Additionally, the increasing demand for innovative business models in the global marketplace provides SMEs with opportunities to engage in cross-border e-commerce, digital trade, and service trade under the BRI umbrella, significantly reducing the costs and risks associated with international expansion.
The ability of Chinese SMEs to thrive in BRI-related projects is closely tied to the progress and efficacy of the initiative.
To begin with, it is crucial to assist in establishing overseas service systems for SMEs, shifting the focus from "global expansion of projects" to "global expansion of platforms."
Strengthening the development of overseas industrial zones and parks is essential for effectively pooling resources and minimizing risks, encouraging SMEs to explore international markets while optimizing their use of global resources.
Secondly, enhancing top-level design and policy support for "small-scale yet impactful" projects is necessary to help SMEs refine their niche offerings, enhance brand visibility, and prioritize channel development. This will enable them to evolve from mere original equipment manufacturers to enduring competitive entities integrated deeply into global value chains.
Lastly, fostering collaborative development with central state-owned enterprises and large transnational corporations can yield greater economies of scale.
By adopting a "follow-the-leader strategy" in choosing investment locations and sectors, SMEs can mitigate risks and ultimately transform from merely "going global" to successfully "entering the global market."
Sanya Singh contributed to this report for TROIB News
