The year 2006 witnessed the beginning of the ¡°Eleven Five-Year Plans¡± as well as Shanghai¡¯s record high economic development. The small and medium enterprise departments of government at all levels, together with various agents and service organizations, achieved great success in ensuring and boosting the rapid and healthy development of the small and medium enterprises by actively upholding scientific development view, fully utilizing resources, and creating a fair environment. The steady and healthy growth of the small and medium enterprises contributed to the city¡¯s two digit annual economic growth for the last 15 consecutive years and more importantly to its GDP breakthrough over one trillion RMB in the year. Statistics also support the fact that the small and medium enterprises are the fresh combatant of the city¡¯s economic growth. They are the source of new advantages, the base of well-balanced development, the foundation of harmonious society, playing an increasingly important role in the economic and social development of Shanghai. In a word, it is of profound significance to promote the development of small and medium enterprises.

The small and medium enterprises¡¯ characteristic of development in Shanghai, 2006, are as the following:

1. Small and medium enterprises and the non-public sector kept developing rapidly with their isomorphism accelerating.

According to the updated annual report from municipal statistic bureau, small and medium business corporations of Shanghai amounted to 326,300 (not including unincorporated businesses and individual businesses), with an increase of 6812, accounting for 99.42% of all the corporations in Shanghai. Among them were 7798 medium enterprises, increased by 317, or 4.24%. In 2006, the municipality¡¯s drive for encouraging medium and small enterprises to be more specialized, stronger, and bigger achieved glorious success with more than 830 medium enterprises joined the large enterprises and 1140 small enterprises grew into medium ones.

The number of small and medium enterprises is dominant in the composition of all the enterprises across ownerships in Shanghai. Up to the end of 2006, the city had 254,800 private enterprises, among which small and medium enterprises took over 99.84%, increased by 3.76% with 9246 ones newly established. And among the 16,400 foreign enterprises, 97.88% were small and medium ones, 1902 or 13.09% more than the previous year. Among the 7,362 Hong Kong Macau and Taiwan enterprises, 99.68% were small and medium enterprises with 719 or 10.82% newly established. In the 7,332 state-owned enterprises, 96.70% belonged to the genre, 394 or 5.1% less than last year. Of the 19,900 collectively owned businesses were 99.70% small and medium enterprises, 2,208 or 9.94% less. And in the 22,300 businesses with mixed ownership were 97.0% small and medium enterprises, 1,622 less, or decreased by 6.79%. 

The small and medium enterprises employed 7.807 million RMB, which was 82.61% of the overall workforce of Shanghai, with a yearly increase of 286,800. Among them, 2,437,400 worked for medium enterprises, 5.31% more than the year before, and 5,369,600 for small enterprises, 3.15% more.

The overall paid-up capital of small and medium enterprises amounted to 1,685,978 million RMB, 68.12% of that of corporation businesses and 8.97% more than the year before. The overall paid-up capital of medium enterprises is 653.825 billion RMB, increased by 17.33%, and that of small enterprises is 1095.153 billion RBM, increased by 5.11%.

The overall revenue of small and medium enterprises is 3932.425 billion RMB, accounting for 55.29 of that of all Shanghai¡¯s corporation businesses and increased by 8.27%. The number for medium enterprises is 1464.153 billion RMB, which increased 8.86% and accounted for 37.23% of the revenue of small and medium enterprises together. And the number for small enterprises is 2468.273 billion RMB, increased by 7.93% and took over 62.77% of the sum of small and medium enterprises¡¯ revenue combined.

2. Medium and small enterprises as well as the non-public sector were contributing more

Up to the end of 2006, the overall GDP of non-public sector was 454.01 billion, 44.1% if the city¡¯s, increased by 16.85%. And the amount for private and individual businesses was 453.01 billion RMB, 44.1% of the city¡¯s overall GDP, 17 % of which, or 174.842 billion RMB was from private and individual businesses, increased by 14.50%.

The industrial enterprises may serve as a good example. There were altogether 69,000 industrial enterprises in the city, among which were 115 large ones, 6 more than the year before. The number of small and medium industrial enterprises was 69,200 that included the 3,170 new comers of the year. The 14,700 small and medium industrial enterprises of considerable size had earned an overall prime operating revenue of 1,114,886 billion RMB, increased by 18.01%, accounting for 58.58% of that of all industrial enterprises of considerable size. The profit of them reached 63.166 billion RMB and increased by 29.39%, accounting for 58.13% of the profit of all industrial enterprises of considerable size, 6% more than last year. The total tax amount and value-added tax payable of small and medium industrial enterprises respectively increased by 16.62% and 18.64% to 45.35% and 59.34% than the year 2005. 

3. A Well-Balanced Market Development Pattern Driven by the Secondary and Tertiary Industry was Taking Shape

The industrial GDP of small and medium enterprises in 2006 reached 464,158 million RMB, 13.0% more than the year before and accounted for 45.1% of the city¡¯s GDP with a GDP contribution rate of 48.7%. Their tertiary-industry GDP increased by 11.5% and amounted to 520.535 billion RMB that is 50.6% of the city¡¯s GDP with a GDP contribution rate of 48.3%. Thus a well-balanced market development pattern driven by secondary and tertiary industry has taken shape. Meanwhile, the unsatisfactorily lack of contribution of the first industry to economic development and employment pressure relief was greatly improved and has been developing at a delightful rate. 

The small and medium enterprises of the three industries were improved and strengthened in various aspects. Their number accounted for over 99% in each industry.

The First Industry: The number of enterprises rose from 608 to 1458, a huge leap of 139.80%. And small and medium enterprises took over 99.86% of the total amount. The number of people employed went from 20,600 to 42,100, an increase as much as 104.80%. Paid-up capital rose from 519.7 million RMB to 702.4 million RMB, increased by 35.14%. Operating revenue grew from 253.5 million RMB to 418.30 million RMB, increased by 65.06% and accounted for 81.80% of the city¡¯s overall amount for the first industry. However, the first industry is still left far behind the secondary and tertiary ones in terms of overall amount.

The Second Industry: The number of enterprises rose from 80.2 thousand to 84.0 thousand, an increase of 4.68%. And small and medium enterprises took over 99.83% of the total amount. The number of people employed went from 416,400 to 4,349,200, an increase of 4.39%. Paid-up capital rose from 474,578 million RMB to 536,917 million RMB, increased by 13.14%. Operating revenue grew from 1,341,150 million RMB to 1,606,727 million RMB, increased by 19.80% and accounted for 63.95% of the city¡¯s overall amount for the secondary industry.

The Tertiary Industry: The number of enterprises rose from 230.87 thousand to 240.9 thousand, an increase of 0.93%. And small and medium enterprises took over 99.27% of the total amount. The number of people employed went from 4,164,000 to 4,349,200, an increase of 4.39%. Paid-up capital rose from 1,042.69 billion RMB to 1,115.038 billion RMB, increased by 6.94%. Operating revenue grew from 2,288.209 billion RMB to 2,321.515 billion RMB, increased by 1.46% and accounted for 50.53% of the city¡¯s overall amount for the tertiary industry.

4. Small and Medium Enterprises had Distinct Features in Distribution across Industries

In terms of distribution in number, 279.2 thousand, or 85.55%, of all the city¡¯s small and medium enterprises were from 7 industries namely, wholesale (95.2 thousand), manufacture (69.2 thousand), retail (39.9 thousand), commercial service (36.6 thousand), construction (14.8 thousand), science and technology service (12.1 thousand) and real estate (11.5 thousand).

In terms of operating revenue, the wholesale manufacture industries boasted more than 1 trillion RMB while the construction; transportation and retail industries had 150 billion RMB. The five industries totaled 3.69716 trillion RMB, 94.02% of the city¡¯s overall amount.

5. The Development of Individual Business Fell

Most of Shanghai¡¯s individual businesses are from wholesale, retail, resident service and other service industries. From the general situation of these years, the overall number of individual businesses is shrinking. According to the statistics from municipal industrial and commercial bureau, up to the end of 2006, the overall number of individual businesses in Shanghai was 244.1 thousand, 18.7 thousand less than the previous year with a registered capital of 3.415 billion RMB, 319 million RMB less than the last year. And the number of people employed by individual businesses was 311.6 thousand at the time, 31.2 thousand less than the year before.

5.1 The Number of Individual Businesses Fell by Almost 20 Thousand

In 2006£¬ there are 211.9 thousand individual business in the wholesale and retail industry of Shanghai, accounting for 80.23% of the overall amount, with an increase of 8.4 thousand, or 4.13%. However, the city¡¯s overall amount of individual businesses was 18.7 thousand less than the previous year, a 6.61% drop.

5.2 The Number of People in Individual Enterprises Decreased by 30 Thousand

In 2006, the number of people in the individual enterprises in wholesale and retail industry was 245.4 thousand, accounting for 78.75% of the overall amount, with an increase of 11.3 thousand, or 4.83%. And the whole city¡¯s amount of people working in individual businesses was 311.6 thousand, which is 31.2 thousand, or 9.10% less than the previous year. 

5.3 The Registered Capital of Individual Businesses Fell by More than 300 Million

In 2006, the overall registered capital of the individual enterprises was 3.415 billion RMB, accounting for 78.75% of the overall amount, with a decrease of 319 million, or 8.54%. But the registered capital of individual enterprises in wholesale, retail, resident service and other service, and manufacture industries all increased by a certain degree. Among them, the registered capital of individual businesses in wholesale and retail industry was 2.463 billion RMB, accounting for 72.12% of all the registered capital of individual businesses, with an increase of 256 million or 11.60% from the previous year.