China G20/B20: Moving Full Speed on SME Development Agenda

The Chinese Presidency of the G20 has begun.

During the last week of January 2016, over 300 business executives gathered in Beijing at the kick-off of the Business 20 (B20) outreach group to the G20 China, to discuss key policy priorities of global business for the twenty systematically most important economies of the world.

Last year in Turkey, small- and medium-sized enterprises (SMEs) gained center-stage of the G20 and B20 agendas. This year we are pleased to report that SME Development remains a top priority. B20 China has decided to continue with the SME Development Taskforce (SDTF) as one of its core pillars, and has secured as its Chair Jack Ma, the CEO of Alibaba.com, lending additional credibility and impetus to the task.

From the World SME Forum (WSF) side, after having strongly contributed to last year’s agenda, we are honored and excited to have been appointed as an international Business Network Partner for this year’s SDTF.

Continuity and focus on implementation were the key words at the inaugural session of the SDTF. Last year’s task-force policy paper identified five major constraints to SME development: (i) access to international markets; (ii) access to finance; (iii) access to managerial and entrepreneurial skills; (iv) access to the digital economy and innovation ecosystems; and, (v) ability to comply with business regulations. This year, it has been decided to narrow the focus to constraints (i), (ii), and (v). Narrowing the field will allow the SDTF to move more swiftly into implementation, while at the same time make more specific recommendations/requests to policy makers.

Over the years, B20 has gradually turned into a platform that not only amplifies the voice of the global business for the policy dialogue with the G20 leaders, but also one that enables design and implementation concrete projects which have the potential to overcome issues that constrain development of business. The B20 SDTF’s work is becoming a concrete example of this: in full alignment with the WSF’s agenda, the task-force is now starting to focus on concrete projects based on public-private partnerships. The main ones are highlighted below.

Improving SMEs’ Access to Global Value Chains (GVCs). Access to GVCs is one of the major components of the market access agenda for SMEs, as indicated by a G20-World Bank – OECD report on policy options in trade and complementary areas for GVC integration by SMEs. One recommendation of the report is to start a collaboration with the B20 on quality, certification and standards issues.

World SME Forum is now working on a targeted WSF Certification Program that will include a comprehensive, country-delivered one-stop-shop endorsement system that leverages existing national, regional and international standards to accelerate the connectivity of SMEs with GVCs.

Promoting cross border e-commerce platforms and logistics fulfillment services to connect with overseas market opportunities. Last year’s G20-World Bank-OECD report also recommended to “provide a continuum of potential support activities for both ICT and physical connectivity, from infrastructure building to logistics and e-commerce performance assessments.” On the B20 agenda this year, development of cross-border e-commerce (both B2B and B2C) is one of the major enablers of SMEs’ access to international markets.

At the WSF, we have already started implementing a pilot focusing exactly on this priority area: based on a bilateral agreement between China and Turkey signed during the G20 Antalya Summit, together with DHGate.com, whose CEO Diane Wang co-chairs the SDTF, and National Development and Reform Commission of China, we are piloting an e-trade development pilot between the two countries. The project involves trade facilitation, establishment of direct logistics links and capacity building for SMEs. We hope to gain important lessons from this pilot, and then disseminate the experience to benefit other countries and their SMEs.

Support independent assessment of impact of financial regulation on SME lending and adjust recommendations. Last year’s B20 Financing Growth Taskforce recommended “implement[ation]of additional regulatory requirements based on careful, proportionate calibration.” A special concern was the unintended consequences of the Basel III regulations, and new anti-money laundering and know-your customer requirements on lending to SMEs. New data supports this concern -according to a recent Asian Development Bank’s new survey with 253 banks from 86 countries.

WSF is starting a dialogue with relevant multilateral partners and the international standard setters and regulators, based on novel analytical studies on the negative impact of the new regulations on SMEs.

The kickoff meeting set the 2016 B20 SDTF on the right path. Discussions amongst task-force members are continuing at a rapid pace with conference calls, and we sense a strong willingness to identify how the SDTF can really leave a mark and have impact on the ground before the Presidency passes on to Germany for next year.

The next meetings will be held in Washington D.C. in April (during the WB-IMF Spring Meetings) and in Paris in May (during OECD week). The final outcomes will be delivered to the G20 Leaders during the Hangzhou Summit in September.

We are excited to see the WSF agenda so well aligned with the B20 SDTF priorities, so that our work can directly inform and feed into B20 agenda, and finally into the recommendations to the G20 trade and finance ministers and leaders. We are ready to do more and to directly take the lead in areas of work where there is a need for active private sector partnership with government(s) to succeed in moving the agenda forward.

Ussal Şahbaz is the outgoing secretary-general of the World SME Forum