Situation of SMEs after influx of chinese products and CPEC in Pakistan

Abstract

The SME sector of any country has a great influence on the economic growth of a country. SMEs are considered as one of the most important part for the development of the country as their contribution towards the economic growth is quite large. They increase the GDP of a country and helps in providing employment to the local people. Production of better-quality local products is also made possible with the help of SMEs. SMEs in various parts of the world like United States, China, India, Japan, Malaysia and Turkey act as the backbone for the economy of the country but due to many reasons like lack of finances, lack of management, use of traditional and outdated technology and lack of a proper platform for training of SME employees, the SME sector in these countries is facing a lot of difficulties. The SMEs in Pakistan are defined as all those enterprises where the employees are 50-100 in number and annual turnover is 150-800 million Pakistani rupees. Pakistan is a developing country where SMEs are considered crucial for the increase in its GDP and overall economic growth of the country. However, Pakistani SMEs are also facing a lot of challenges that hinder their growth. These challenges are internal like financial, management and training issues and external like infrastructure, corruption and economic issues. The primary purposes of this research were to analyze the current situation of Pakistani SMEs, challenges faced by them, influx of Chinese products in local markets, CPEC and their impact on SMEs and the prospects for SMEs. Quantitative research methodology was opted for this research. The results of the research showed that the influx of Chinese products and CPEC have a negative impact on the performance of SMEs in Pakistan. Therefore, the government should regulate SMEDA and help it in strengthening the Pakistani SMEs so that better and improved local products are produced by them.