The competitiveness of SMEs in a globalized economy

Abstract Purpose – The purpose of this paper is to analyze different challenges for small and medium enterprises (SMEs) in India and China following globalization. It aims to describe the status of these enterprises and examine the roles of government policies and strategy development for competitiveness. Design/methodology/approach – A questionnaire‐based survey was conducted, which produced 241 valid responses. Of these, 80 percent were from SMEs. Statistical analysis of the data acquired from survey used a reliability test, t‐test and correlation analysis. A relevant literature review pinpoints salient issues in the environment of the SMEs. Findings – The governments of China and India have launched various promotional schemes for SMEs. Various challenges for SMEs in these countries are similar; however, the rate of growth is different. Indian SMEs give more attention to supplier development, total productive maintenance and the organization's culture. Chinese SMEs pay more attention to relationship management and cost reduction. Human resource development and quality improvement are also highly correlated with competitiveness. Research limitations/implications – SMEs should focus on developing their human resources and improving product quality. This effort will help SMEs retain human capital as well as increase the demand for their products. Similar studies could explore Chinese SMEs in‐depth for additional comparisons. Originality/value – This paper will help SMEs in shaping their competitive strategies and policy formulation by respective governments.