America Needs to Learn from China to Support SME Growth

Thursday, July 7, 2011 23:11

While US lawmakers work to find a way to remove the immediate debt crisis, and get reelected, a flurry of crappy news about the US continues to flow out of nearly every medium of news.

The one that hit me today was about the number of Americans who have now been out of work for 99+ weeks, and that 1/7th of the US population is on food stamps..  the consumer economy unfolding…  It is a situation that is clearly NOT getting any better, and as if confidence bring low weren’t enough, cynicism seems to be at a peak.  Not exactly the conditions for “Change”, and over the last few weeks I have been trying to think of areas where I believe China’s economic model holds lessons for America’s economic model as it looks to stop the hemorrhaging and pick itself up off the floor.

It’s a thought process that was kicked off by the Time article Fixing America’s economy: Nine global ideas , which I generally found worthless, but it led me to think about the ways that America can learn from China to support SME growth by bringing in new tools that  benefit local economies, communities, and citizens.

Here are a few thoughts (and feel free to suggest your own in the comments section):

1) Create a regulatory framework that promotes investment into local economies
Bitch about China’s market protection all you wish, at the local level there are some cases for it…. and with one of the more heated debates being that of the US firms who makes billions overseas, are a drag on the real economy, and are only paying a smidge in US taxes, perhaps it is time to look at how the regulatory environment can be improved to protect (and support) local SMEs.

Perhaps more a state/ local issue, some of the ways that I see this could go would be preferential tax rates and subsidized loans for firms that build, invest, and employ locally… it could go as far as a “policy” where the reach of the nationalized banks were leverage to act as policy banks.

2) Restructure the incentives for new and expanding businesses
One of the greatest benefits about setting up a new firm, or expanding an existing one, then there is a menu of incentives at the ready for you.  Free rents, free utilities, and  reduced taxes perhaps being the three that my clients always found to be the most valuable… and it is time for similar incentives to be introduced on a national, state, and local level to provide a entrepreneurs 2-3 years of reduced overhead – which will catalyze their investments in people (jobs) and growth (economic activity)

Leverage nationalized/ repo assets to build community businesses – Looking back to when I was growing up, the idea of a national big box (outside malls) was still a new one.  Economies ran on the local shop, who were opened/ managed by members of the community.  However, as groups like Wal-Mart, Borders, and CVS have expanded across the country (and world) a lot of these small entrepreneurs were taken out.  Nothing new here, but as the big boxes go bankrupt, it is time to open these failed assets back up to the community and allow for  the return of community businesses

3) Create a domestic innovation program to compete with China’s
One of the biggest mistakes I saw in the aftermath of the BP oil spill was that the administration dropped the ball to turn what was an industry clearly outside the bounds into an opportunity to create a new economy that put the US back on the map.  It was an opportunity fo rhte US, as a nation, to get behind innovation in a big way …. but failed..

Which leads me to my third suggestion.. have a domestic innovation policy which promotes, and supports, the development of IP, jobs, and production.

Using the BP oil case as my example where I saw the opportunity for the administration with respect to domestic innovation was in creating a policy, and a trajectory, that moved the US fleet away from petro-only cars, supported the efforts of auto firms to turn factories lines over from producing gas to hybrid cars (electronic cars later), and put in place a policy that cars sold in the US must be produced in the US.

4) Be creative and leverage “state” assets
If there is one trend that I would like to see unwound it is the one where natural communities are torn apart and replaced by market based communities.. Where Starbucks (which I have nothing against) is the leading meeting point in the community

So, returning a big box to the community so that a community center, crossfit complex, or other pro-community / economically viable organization can start up… or taking out commercial assets that have gone through foreclosure, and offering those to community entrepreneurs… well, that is another lesson one can learn from China as well.

With that, a few ideas while waiting for my next appointment to arrive…

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4 Responses to “America Needs to Learn from China to Support SME Growth”

  1. Hao Hao Report says:

    July 7th, 2011 at 11:28 pm

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  2. Micah S says:

    July 8th, 2011 at 7:22 pm

    The recent article in this vein by Bill Clinton also had a dozen great ideas for revving up the US economy.

  3. America Needs to Learn from China to Support SME Growth | SurviveinChina China Blog News says:

    July 17th, 2011 at 9:06 am

    […] SME growth by bringing in new tools that  benefit local economies, communities, and citizens.   See OP >> Share/Bookmark American economy, learn from China, SME […]

  4. Rogelio Ramos Portillo says:

    August 21st, 2011 at 11:26 pm

    It is true, not only America, but also Latin America has to look up and find common ground for mutual benefit. IF anyone is interested this is a great page to find contacts and establish relationships between China & Latin America.