The Research on International Development of Medium-Small

The Research on International Development of Medium-Small
Enterprises Based on E-commerce Environment
Dong
Yuhong
Henan University of Technology, P, R, China, 450052
Abstract As a kind of new commercial mode, the E-commerce strongly impacts the existing economic
situation and traditional management concept depending on its notable advantages, provides a brand
new platform or channel for the medium-small enterprises, and will become mainstream mode of
enterprise development in the 21st century. In this paper, the present the situation of medium-small
enterprises is analyzed in China, the effective approach of the medium-small enterprises international
development is investigated in
commercial mode and operation management method. The reference
is provided for international development of medium-small enterprises.
Keywords Medium-small enterprises, E-commerce, International development
1. Introduction
In general, the so-called medium-small enterprises mean that the enterprises which fixed assets are
less than ten million Yuan, annual sales quantity thereof are from millions to ten millions and the staff
number is less than 500. At present, there are about ten million medium & small enterprises in China
according to statistics, the output value of the medium & small enterprises occupies 60% of Gross
National Product and these enterprises are important support of national economy. Average annual
growth rate of the medium-small enterprises exceeds 20%. The medium-small enterprises are distributed
all over the country, where the medium-small enterprises in coastal developed area and the inland
medium-small enterprises depending on central city as market are not only the most important members
of overall economic scale, but also important groups of growth and development of new-type industries,
and a majority of current large-medium enterprises all grow upon the basis of previous medium-small
enterprises. These enterprises rely on the most flexible enterprise operational mechanism and
unprecedented innovation spirit to adopt boldly new technology and flexible business mode, and take
part in market competition, and depend on stronger ability of controlling the market to win a position
and development space in the furious market competition, and thereby develop strongly.
Due to the restriction from the enterprise size, the severe competition pressure and continued
changeful requirements from the customers have to be faced in the process of enterprise development.
The development of enterprise relies on capturing the market information and realizing high efficiency
management over logistics, capital flow and human resource to a large extent. The traditional
management mode generally lacks of information communication ability and fails to break regional
restrict to realize communication with potential customers or dealers. Therefore, the survival status of
the enterprise relies on the local market, fixed market in foreign places or a few main customers to a
large extent, which makes business risk arising from excessively depending on a certain regional market
exist in enterprises. The enterprise still adopts the traditional operation measure of dispatching business
personnel to broaden market space, so the management over the business personnel dispatched to the
foreign regions absolutely depends on their consciousness, and as a result, the management over the
business personnel is out of control or beyond the supervision to a certain extent. When the enterprise
needs making decision immediately on the important problem but the relevant personnel always can not
carry out the timely negotiation, which results in the miss of business opportunities. In this way,
information communication ability becomes the key factor of restricting the development and expanding
of enterprises.
The continual development and expanding of medium-small enterprises not only needs continuing to
perfect their management level internally and meets increasingly fierce market competition externally
but also using and mastering modern information technology to provide the most brief and convenient
technology approach for understanding market. However, due to the limitation of management concept,
operation condition and staff quality, a majority of medium-small enterprises lack of professional
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technological personnel of E-commerce building and have limited purchase ability, lower identifying
ability of technological products and poor production environment. These enterprises not only fail to
realize internal network interconnection but also seldom directly draw support from information
network.
At present, one of the most important problems faced during the development of domestic
medium-small enterprises is failure information communication, and the obstacle of this kind of
information communication is manifested in lacking of enough internal communication in the company.
At the same time, it also is manifested in the enterprises lacking of effective, reliable and safe
information communication mode with the external world. The causes that the E-commerce level of
domestic medium-small enterprises falls behind domestic large-sized enterprise institutions and
international enterprises are various, from the consideration of the internal constraints of the enterprise,
firstly, a majority of enterprises fail to have special department and personnel internally, and the
decision-making level of the enterprises lacks of full understanding of the IT application to the benefits
of enterprises. Although the existing IT commercialized scheme and enterprise resources are enough to
improve productive forces of business departments, they have no the basic quality of seeking the
solution from the E-commerce building angle, and the chances that the enterprises draw support from
the information technology to realize super-conventional development thereby are lost repeatedly;
secondly, the resources from most of medium & small-sized enterprises are limited, so they are unable
to develop secondary development according to self special requirements of the enterprise; thirdly,
many medium-small enterprises are located at medium and small cities or towns, so they fail to have the
efficient way to get relevant information, the IT enterprises they come in contact with in the routine
work are mostly agent dealers of single-item IT products, it is difficult to get the support of complete
solution.
2. Bastc requirement of medium-small enterprises developing E-commerce
Under the impact of networking trends, the E-commerce is accepted by the enterprises, and all the
business processes of enterprises eliminate spatiotemporal distance between the company and the users
by this effective approach. It is no doubt that all the enterprises are faced with new business opportunity,
and all the enterprises in the world are making their efforts towards this direction. The medium-small
enterprises in China start the network marketing very late, so there is a large distance between them
compared with those of developed countries. The research report released by US Department of
Commerce says that 70% of medium-small enterprises in America make full use of computer network in
the international trade, although the ratio of enterprises making use of the computer network is low in
China, they own strong development potential. An enterprise in Zhengzhou just established no more
than 5 years and processes the most traditional mechanical driving parts in the rent workshop has
exported the products all over the world and the annual export income reaches 5million USD. It realizes
globalization development by making use of the joint of overall process of production operation and
E-commerce.
The supports from E-commerce for improving productive forces and competitiveness of
medium-small enterprises are as follows: firstly, improve information communication including internal
information communication in company, which is realized through internal network connection, and the
communication with the external world which is realized through connecting Internet to strengthen the
understanding of external information; Secondly, improve satisfying degree of the customers. The
E-commerce enables to make traditional management mode of medium-small enterprises centering on
business affairs convert into management mode of centering on customers, helps the enterprises
establish new-type business system based on this kind of management mode, makes it more convenient
to communicate with the customers through Internet, increases openness of the enterprise, makes
enterprises receive feedback from the customers in time and strengthens competitiveness of enterprises;
In addition, introduce management system of enterprises to carry out management over the logistics,
human resource, business affairs, finance, etc. which makes the internal management in the company
become rationalization, improves operation level of capital, produces more and better products with
limited capital and makes the products circulate more smoothly.
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In the brand new marketing environment---E-commerce market, the medium-small enterprises use
E-commerce to carry out internationalized development needs reform and innovation of enterprise
management and carrying out reintegration of enterprise resource and process.
Management organization innovation of enterprises: The crisscross information network has an
impact on traditional industries and brings new challenge, changes information transfer mode and makes
the management organization of enterprises with finesorted division of labor be unable to adapt to the
demand of E-commerce development. The general trend of development is to integrate interdependent
management organization. Carrying out E-commerce needs the enterprise organization shape to deepen
and develop towards both dispersed and centralized tight network type.
Reform of business process: If the traditional enterprises want to realize mode transformation of
E-commerce successfully, they need these advanced concepts to reform their existing business processes
under a majority of conditions. The process reform means that the enterprises need reshuffle: the
resources and rights of the enterprises shall be reallocated or readjusted for the new objective.
Innovation of marketing management: Carrying out E-commerce requests to strengthen the
initiative of customers’ participation and selection and realizes both-way interactive communications of
one-to-one between buyers and sellers.
Attach importance to introduction and training of E-commerce talents: The talents who own the
knowledge, development and application skill of E-commerce are premise and insurance for the
traditional enterprises developing the E-commerce, and the enterprises owning the advantages shall
cultivate and attract the talents of this aspect actively and provide good working condition for these
talents to give full play to positivity and creativity of talents.
3 Research on international development of medium-sall enterprises based on
E-commerce
If the medium-small enterprises want to improve productive forces and market competitiveness
and seek greater development space, firstly, improve information communication including internal
information communication in company, which is realized through internal network connection, the
communication with the external world is realized through connecting INTERNET and strengthening
the understanding of external information; Secondly, improve satisfying degree of the customers. The
E-commerce enables to make traditional management mode of the medium-small enterprises centering
on business affairs convert into management mode of centering on customers, helps the enterprises
establish new-type business system based on this kind of management mode, makes it more convenient
to communicate with the customers through INTERNET, increases openness of the enterprise, makes
enterprises receive feedback from the customers in time and strengthens competitiveness of enterprises;
In addition, introduce management system of enterprises to carry out management over the logistics,
human resource, business affairs, finance, etc. which makes the internal management in the company
become rationalization, improves operation level of capital, produces more and better products with
limited capital and makes the products circulate more smoothly. Now, it is the best time for
medium-small enterprises to carry out E-commerce, the change in operating rule of enterprises shall
bring huge favorable turn for other industries. The work in the following aspects must be got ready for
development of medium and small-sized enterprises:
3.1 Build E-commerce platform through interconnecting network and select commercial mode
suiting for self
Under general E-commerce environment, the commercial mode of medium-small enterprises
mostly applies three kinds of methods:
The first is OEM and ODM. OEM means we carry out processing materials supplied by customers,
that is to say, produce according to sample required by customers. After products of customers are
received, when design personnel feel gradually that some places can be modified, the design of products
melt into wisdom of design talents, this is ODM. It is required that we shall have strong production
ability, design ability and low cost of labor.
The second is building factory by joint venture. Especially building overseas factory, there are two
kinds of forms: one is joint venture with local enterprises for building factory; the other is sole
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investment for building factory. Adopting the mode of joint venture for building factory can realize
getting raw materials from local resources and producing locally, then selling products locally. This
avoids high tariff and breaks market barrier. It is like that foreign enterprises go to China, so in JV stage,
many medium-small enterprises in expanding and developing both reduce funds risk and lower market
risk.
If you want to build factory by joint venture, above all, you shall own yourself brand, at the same
time, you shall also own technology, which can be taken there. On one hand, you need to own good
products, on the other hand, you need to expand marketing network, otherwise, even though you built
factory abroad, it is still impossible for success.
The third is contracting-out. Everyone may know contracting-out industry clearly. Take USA Dell
Computer as example, its headquarters is built in America, while there are no factories in native land.
Own products are contracted out to factory in Southeast Asia, many such orders are also received in
Taiwan. 80% of Dell computers are made in Taiwan. The mode is that Dell doesn’t need its own
factories in native land, what it needs to do is to get well done with marketing and build brand and
expand market.
If you want contracting-out, you shall need many more conditions. First of all, need resources
integration. Where to produce products that are the cheapest and whose quality is best must be clarified.
Many products can be integrated, and then the same brand is used. Contracting-out needs terrific funds
investment, in Europe and America, one kind of product is advertised in TV and public media for the
popularity, the invested amount of money required is calculated by millions of USD, then how much
you can invest? Therefore, enterprises shall need establishing a global marketing network and
developing the market. I think contracting-out shall be taken into consideration in long-term
development of Chinese enterprises.
Whatever business you do, as enterprises, the quality of product is the most important forever. To
the quality of product, the stress shall be laid on manufacturing stage and the importance shall be
attached to manufacturing process. If the management of process is favorable, the final products are
good without a doubt. While there are good products, the marketing ability is needed to sell our products
in the market.
3.2 Common management methods for development of enterprises based on E-commerce
environment
Firstly, MBO: For operation of enterprises, firstly establish objective, then draw up the process
according to objective, finally evaluate whether the objective is achieved or not.
Secondly, BSC-Balanced Score Card: Which indexes do we judge an enterprise on earth? There
are four indexes in all: financial index, customer satisfaction index, human development index and
research & development index.
Thirdly, JIT-Just-In-Time: The JIT method was originally established by Toyota Company, but all
companies are fit for JIT. Only when the size of the enterprise reaches certain extent, JIT shall generate
effect. The basic ideology is “Providing required materials, parts and equipment, etc. when in need”,
thereby idling waste arising from inventory can be avoided.
Fourthly, BPR-Business Process Reengineering: After an enterprise develops, many departments
are set up, it is found that performance of management begins to go down after establishing these
departments, so we need business process reengineering.
Fifthly, simplifying manufacture.Ggenerally, there are many links in the process of manufacturing
of products, sometimes, many processes are added at all times, to the end, the process shall become very
complex. By this time, it is difficult to simplify the complex process. Especially in the stage of
enterprises’ expanding in double-quick time, the efficiency shall be the most valuable and taken the
most importance. It doesn’t always mean that the more the people are, the better the productive force
will be.
Sixthly, It is certain that funds will be needed once an enterprise becomes powerful. Where to gain
funds is the bottleneck problem in development of enterprise, so enterprises must master and utilize the
approach and method of social funds, especially international funds.
Seventhly, research and development capacity: With the form of supply chain of the science and
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technology products, the manufacturing capacity of enterprises is becoming stronger and stronger, the
defective products are becoming less and less and the rate of high quality products is very high. The
competitive power of enterprises transfers from manufacturing capacity to capacity of products research
and development. The research and development capacity of enterprises means that the enterprise
devotes a certain amount of research and development funds which approximately accounts for 2%～
5% of sales volume and organizes a research and development group for carrying out research and
development of the products to develop the new products continually and promote the market share so
that it can improve the competitive power of enterprises.
Eighthly, building E-commerce platform: The application of ERP (Enterprise Resource Planning),
SCM (Supply Chain Management), CRM (Customer Relationship Management) makes it become an
industry chain. The production process of the industry chain type enterprise is connected with the
suppliers of raw materials and spare parts and assembles so that if the supplier wants to know what the
production plan today is and what types of spare parts are needed, he can see them as soon as he starts
the computer. Moreover, he can also know the whole production process by his computer.
4 Conclusion
The advantages of low price and high quality of the products produced by the medium and
small-sized enterprises make the products of the medium and small-sized enterprises have more
powerful competitive power in the international market. However, at present, the operating mode of
most of medium and small-sized enterprises still remains the traditional business mode, which snatches
the market by low price and the added value is not high. For example, the occupation ratio of textiles
and articles of daily use are also high in the world. With the coming of globalization and informatization
of the market, the business mode of products of medium-small enterprises must transform complying
with demand of market environment and improve and create the value and high added value by
innovation. E-commerce provides the channel and platform for medium-small enterprises to realize the
globalization, the first step is how the enterprises take advantage of the channel and platform to make
the enterprises become the factory of global market; the second step is to develop the market by creating
the famous brand. Because if you don’t have your own well-known brand, no matter how excellent
you’ve done, the enterprise will be still forgotten by the customers sooner or latter; the third stage is to
create the supply chain of commodity. It shall obtain all kinds of supplies at the fastest speed and send
the products to the customers in the shortest time. In the future market competition, it is the effective
approach for the survival and development of the medium-small enterprises to develop the globalization
business strategy of the enterprises taking the customers as the principal axis.
References
[1] Charles WLHill: International Business: Global Market Competition (Third Edition) McGraw-Hill
Education Publishing Group
September 2001.
[2] David. Vanhoose: E-commerce Economics Mechanical Industry Press May 2003.
[3]Joel D.Wisner/G.Keong leong/Keah-Choon Tan: Supply Chain Management
Mechanical Industry
Press, January 2006.
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