Success and Failure of SMEs in China and South Africa

This chapter aims to conduct a systematic review of the literature to investigate factors contributing to the success and failure of SMEs in China and South Africa with the view of synthesizing the current trends, experiences, and knowledge. The Chinese government’s efforts to establish regulations to create a conducive atmosphere for SME operations have paid significantly, resulting in increased Gross Domestic Product. Notably, SMEs have not only grown faster than anywhere in the world but there is a trajectory in numbers, size, profitability, and tax contribution to the country’s economy. The success of these SMEs is due to the support intervention provided by the Chinese government and the conducive environment in which they operate. On the same note, the South African government has embarked tirelessly since 1995 to create a conducive environment for SMEs. Several policy documents and regulations were enacted to support and promote small businesses in the country. A PRISMA method was followed in this review. This involved a comprehensive search of electronic databases, namely, Google Scholar, Web of Science, and Scopus, which was conducted to identify studies published between 2014 and 2023 that met the inclusion criteria. A total of 29 studies were included in the Systematic Reviews. The findings of the selected studies were analysed and synthesized to provide logical arguments and a picture of the trends, patterns, commonalities, and differences between the two countries. The findings revealed some differences between SMEs in South Africa and China. As a result of the differences, there are some of the important aspects that can be learned from each country. Importantly, Chinese SMEs have a very high success rate due to government support whilst South African small businesses show that five out of seven new businesses fail in their first year of operations. The systematic literature review provides important information on the trends, patterns, commonalities, and differences (variations) among the two countries regarding the success and failure of SMEs. Notably, the findings can inform policymakers of the support interventions’ success in the two countries. This can further assist the governments in restructuring the support system and structures and reflecting on overcoming factors contributing to the failure.