Economics World, Mar.-Apr. 2019, Vol.6, No.2, 96-109 doi: 10.17265/2328-7144/2019.02.004 D DAVID PUBLISHING

The Research of the Development of the Manufacturing Enterprises in SME Board

Kexin Wang Jianghan University, ,

As in recent years the deepening reform and opening-up and the accelerated economic development of Hubei region as well as the vigorously advocate of the government for innovation and enterpreneurship, small and medium-sized manufacturing enterprises have already becoming a nucleus of pushing the rapid economic development in Hubei. This paper explores the whole development status of the Hubei Manufacturing Enterprises in SME Board through the analysis of eight aspects of the 186 Hubei Manufacturing Enterprises in SME Board Regularly Operated and Annual Report Disclosure in 2017, which finds out that currently Hubei Manufacturing Enterprises in SME Board concentrate to the developed region, the overall education background of the employees is low and most of the enterprises are private enterprises with labor-intensive economy, the financial situation reflects the characteristics of industry differences. Enterprises should accelerate upgrading and transformation, enhancing the market competitive ability, at the same time the government should carefully study, formulating encouraging and supporting policies suitable for different enterprises and industries, strengthening supervision and management of SME board market in order to attract more outstanding small and medium-sized manufacturing enterprises, accelerating the development of manufacturing industry in Hubei.

Keywords:Hubei, SME Board, manufacturing industry,comprehensive analysis

Industry Distribution and Geographical Distribution Industry Distribution According to the Guidelines for Classification of Management-oriented Industries of Listed Companies issued by China Securities Regulatory Commission on January 3, 2018, we can see from Table1 below that the industry of Hubei Manufacturing Enterprises in SME Board covers 63.33% of the 30 sub-sectors of manufacturing industry. The top five industries in the number of enterprises are Chemical Raw Materials and Chemical Products Manufacturing, Special Equipment Manufacturing, Pharmaceutical Manufacturing, General Equipment Manufacturing and Electrical Machinery and Equipment Manufacturing, whose total number has reached 58.62% of the total number of manufacturing enterprises in Hubei Province in SME Board.

 Project Supported: Subsidized Project of Management Science and Engineering of Key Disciplines in Hubei Province “The Research of the Development of the Hubei Manufacturing Enterprises in SME Board” (Project No.ZDXK2018YB12). Kexin Wang, master of Economics, lecturer, Department of Accounting, School of Business, Jianghan University, Wuhan, China. Correspondence concerning this article should be addressed to Kexin Wang, the Economic and Technological Development Zone of Wuhan, Jianghan University, Wuhan430056, China.

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Table 1 Industry Distribution of Manufacturing Enterprises in Hubei in SME Board Number of Subcategories of manufacturing industry Proportion enterprises 1. Agricultural and Sideline Food Processing Industry 7 3.76% 2. Food Manufacturing Industry 2 1.08% 3. Wine, Beverage and Refined Tea Manufacturing Industry 1 0.54% 4. Textile and Apparel Industry 1 0.54% 5. Printing and Recording Media Reproduction Industry 1 0.54% 6. Chemical Raw Materials and Chemical Products Manufacturing 27 14.52% 7. Pharmaceutical Manufacturing Industry 21 11.29% 8. Chemical Fiber Manufacturing Industry 1 0.54% 9. Rubber and Plastic Products Industry 5 2.69% 10. Non-metallic Mineral Products Industry 14 7.53% 11. Metal Products Industry 6 3.23% 12. General Equipment Manufacturing Industry 19 10.22% 13. Special Equipment Manufacturing 23 12.37% 14. Automobile Manufacturing Industry 13 6.99% 15. Railways, Ships, Aerospace and Other Transportation Equipment Manufacturing 4 2.15% 16. Electrical Machinery and Equipment Manufacturing 19 10.22% 17. Computers, Communications and Other Electronic Equipment Manufacturing 11 5.91% 18. Instrument Manufacturing Industry 8 4.30% 19. Comprehensive Utilization of Waste Resources 3 1.61% Total 186 100%

Table 2 Geographical Distribution of Manufacturing Enterprises in Hubei in SME Board Administrative Number of Administrative Number of Proportion Proportion division enterprises division enterprises Wuhan 98 52.69% 1 0.54% 12 6.45% 2 1.08% 4 2.15% Zhijiang 1 0.54% 7 3.76% 2 1.08% 9 4.84% 7 3.76% 4 2.15% Chibi 3 1.61% 1 0.54% 4 2.15% 6 3.23% 5 2.69% 1 0.54% 4 2.15% 2 1.08% 1 0.54% 5 2.69% 1 0.54% 3 1.61% 1 0.54% 2 1.08% Geographical Distribution As shown in Table 2 below, The registration area of Hubei Manufacturing Enterprises in SME Board is widespread. There are 186 companies located in 25 administrative regions of the province, 52.69% of which are registered in Wuhan, which is much higher than the second rank Huanggang City, which has 6.45% of the

98 THE RESEARCH OF THE DEVELOPMENT OF THE HUBEI MANUFACTURING registered companies. It shows that for the manufacturing enterprises in SME Board, although Wuhan, as the “nine provinces thoroughfare”, will bring greater pressure on the cost of rent, manpower, and operation, after comprehensive consideration of factors of favorable policies, convenient transportation, urban development, population size, and education level, enterprises believe that the advantages brought to its survival and development far outweigh the disadvantages. With the increase of technology content, the industry tends to gather more and more in Wuhan, which shows that Wuhan, as the capital city of Hubei Province, has greater advantages in economic development and support for high-tech industries than other administrative regions in Hubei Province, and has greater attraction for small and mediumu -sized enterprises.

Establishment and Listing Time National Share Transfer System for Small and Medium-sized Enterprises of China was established on September 20, 2012. There were 169 of 186 companies established at that time, but only five companies listed in the year established the system, which on the one hand because of the unfamiliarity with the system in terms of rules and regulations and operation modes, some small and medium-sized enterprises might not dare to rush into the system for listing, but on the other hand, it must be clearly understood that this also means that the norms of many small and medium-sized enterprises in manufacturing industry in Hubei themselves didn’t meet the requirements of the system. At that time, the management of SME market lacked standardization.

4.38%

20.63% 35%

2000-2004 2005-2009 2010-2014 2015-2017

40%

Figure1. Time Distribution of the Establishment of Listed Companies in Hubei Manufacturing Industry in SME Board.

Since the establishment of the national share transfer system for SMEs in 2012, the number of SMEs listed in Hubei manufacturing industry has been growing exponentially in the past five years up to 2016. We can see from Figure 2 below that from the overall trend, the difference between the time of establishment and listing shows an increasing trend from 10 to 11 years, while a decreasing trend from 11 to 29 years. The time difference mainly concentrates on 5 to 16 years, during which the number of companies reaches 75.81%.

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20 18 18 16 16 15 14 13 13 12 12 10 10 10 10 9 8 8 8 7 7 6 6 5 4 4 3 3 Number of enterprises Number 2 22 2 1 1 1 0 0123456789 10 11 12 13 14 15 16 17 18 19 2021222629

Time difference between establishment and listing

Figure2.Time difference between establishment and listing in Hubei manufacturing industry enterprises in SME board.

Emplooyee Academic Degree Structure, Equity Concentration and Typpe and Nature of Actual Controller Employee Academic Degree Structure In Figure3 below we can see that Most of the 37790 employees in 186 enterprises of Hubei Manufacturing Industry in SME Board have below junior college education, while the number of high-level Doctoral degree and Master’s Degree holders accounts for only 0.23% and 2.12% of the total number of employees respectively.

0.23% 2.12% 15.44%

Doctor Master Bachelor 21.77% 60.45% Junior College Below Junior College

Figure3.Employee academic degree structure in Hubei manufacturing enterprises in SME board. Equity Concentration The largest shareholder of Hubei Manufacturing Enterprises in SME Board accounts for 39.25% of the total number of enterprises with a shareholding ratio of more than 50%, which means the manufacturing enterprises in SME Board in Hubei have high concentration of equity.

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Table 3 Overall Index of Equity Concentration of Hubei Manufacturing Enterprises in SME Board Average Value Standard Deviation Maximum Minimum 46.59% 19.86% 99% 9.49% Type and Nature of Actual Controller The vast majority of the manufacturing enterprises in SME Board in Hubei take the natural persons in the territory as their actual controllers, accounting for 95.16% of the total number of enterprises. Local SASASAC accounts for 1.61% of the remaining enterprises, while overseas natural persons, limited liability companies and non-actual controllers account for only 1.08% of the total enterprises, respectively. The Manufacturing Enterprises in SME Board in Hubei are basically privately owned.

1.06% 1.60%

Local States Operated Privatedly Operated Foregin Capital Operated 97.31%

Figure 4. The nature of actual controller of manufacturing enterprises in Hubei in SME board.

Analysis of Major Financial Indicators Profitability Analysis According to Table 4 and Table5 below, there is a big difference in the profitability of Hubei Manufacturing Enterprises in SME Board. Among them, the Food Manufacturing Industry has the strongest profitability compared with other industry of owners’investment funds. On the contrary, the profitability of companies in the Comprehensive Utilization of Waste Resources is very low. At the same time, due to the rapid development of network media and self-media, the traditional Printing and Recording Media Reproduction Industry has been greatly impacted, especially the small and medium-sized enterprises, which have suffered greater negative impact due to their own limited size and funds. The profitability of the owner’s investment depends not only on the operation and development of the company, but also on the industry in which the company is located. Solvency Analysis According to Table6, Table 7 and Table 8 below, automobile Manufacturing Industry has the worst long-term solvency; Textile and Apparel companies have the strongest long-term solvency, but it also means that they may not make good use of financial leverage. The largest difference in the proportion of liabilities to total assets is found among Food Manufacturing companies. There is little difference between companies in the

THE RESEARCH OF THE DEVELOPMENT OF THE HUBEI MANUFACTURING 101 ratio of debt to total assets in the Comprehensive Utilization of Waste Resources. Less than half of the manufacturing industry has stronger long-term solvency than the overall level, which indicates that the long-term solvency of manufacturing industry segments is close to the overall level.

Table 4 Weighted Average Return on Net Assets Index of Subcategories of Manufacturing Industry in Hubei in SME Board Average Standard Subcategories of manufacturing industry Maximum Minimum value deviation Agricultural and Sideline Food Processing Industry 6.41% 12.78% 19.65% -16.07% Food Manufacturing Industry 14.79% 16.39% 26.38% 3.20% Wine, Beverage and Refined Tea Manufacturing Industry 9.53% — — — Textile and Apparel Industry -4.87% — — — Printing and Recording Media Reproduction Industry -6.13% — — — Chemical Raw Materials and Chemical Products Manufacturing 1.96% 21.33% 30.47% -66.96% Pharmaceutical Manufacturing Industry 0.28% 16.82% 24.40% -42.84% Chemical Fiber Manufacturing Industry 14.27% — — — Rubber and Plastic Products Industry 9.16% 15.68% 24.32% -15.49% Non-metallic Mineral Products Industry 4.44% 8.99% 21.68% -18.15% Metal Products Industry 2.75% 5.33% 10.41% -4.11% General Equipment Manufacturing Industry -1.00% 16.87% 19.19% -48.67% Special Equipment Manufacturing 2.36% 22.89% 54.56% -48.70% Automobile Manufacturing Industry 8.26% 16.28% 45.56% -28.38% Railways, Ships, Aerospace and other Transportation Equipment 6.13% 4.86% 11.05% -0.56% Manufacturing Electrical Machinery and Equipment Manufacturing 5.28% 10.86% 26.25% -16.70% Computers, Communications and other Electronic Equipment 1.24% 13.50% 22.31% -23.86% Manufacturing Instrument Manufacturing Industry 9.05% 36.08% 57.33% -40.17% Comprehensive Utilization of Waste Resources -5.30% 10.05% 6.23% -12.16%

Table 5 Basic Earnings Per Share Index of Subcategories of Manufacturing Industry in Hubei in SME Board Average Standard Subcategories of manufacturing industry Maximum Minimum value deviation Agricultural and Sideline Food Processing Industry 0.26 28.92% 0.59 -0.13 Food Manufacturing Industry 0.39 29.70% 0.6 0.18 Wine, Beverage and Refined Tea Manufacturing Industry 0.19 — — — Textile and Apparel Industry 0.03 — — — Printing and Recording Media Reproduction Industry -0.07 — — — Chemical Raw Materials and Chemical Products Manufacturing 0.23 41.53% 1.5 -0.4 Pharmaceutical Manufacturing Industry 0.11 31.65% 0.68 -0.5 Chemical Fiber Manufacturing Industry 0.21 — — — Rubber and Plastic Products Industry 0.46 60.77% 1.47 -0.13 Non-metallic Mineral Products Industry 0.15 22.71% 0.57 -0.34 Metal Products Industry 0.08 12.51% 0.31 -0.06 General Equipment Manufacturing Industry 0.08 26.39% 0.79 -0.4 Special Equipment Manufacturing 0.17 58.86% 1.36 -1.59 Automobile Manufacturing Industry 0.28 46.87% 1.74 -0.25

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Table 5 to be continued Railways, Ships, Aerospace and other Transportation Equipment 0.17 14.75% 0.36 0.002 Manufacturing Electrical Machinery and Equipment Manufacturing 0.20 27.30% 0.66 -0.24 Computers, Communications and other Electronic Equipment 0.11 34.69% 0.8 -0.52 Manufacturing Instrument Manufacturing Industry 0.42 78.81% 2.02 -0.24 Comprehensive Utilization of Waste Resources -0.12 23.71% 0.1 -0.37

Table 6 Asset-Liabiliy Ratio Index of Manufacturing Industry in Hubei in SME Board Average Standard Subcategories of manufacturing industry Maximum Minimum value deviation Agricultural and Sideline Food Processing Industry 48.49% 18.46% 65.65% 9.83% Food Manufacturing Industry 42.45% 36.19% 68.04% 16.86% Wine, Beverage and Refined Tea Manufacturing Industry 34.54% — — — Textile and Apparel Industry 27.61% — — — Printing and Recording Media Reproduction Industry 44.27% — — — Chemical Raw Materials and Chemical Products Manufacturing 43.12% 21.59% 86.91% 4.05% Pharmaceutical Manufacturing Industry 39.83% 18.78% 83.42% 7.61% Chemical Fiber Manufacturing Industry 49.58% — — — Rubber and Plastic Products Industry 44.27% 9.25% 58.03% 34.34% Non-metallic Mineral Products Industry 35.80% 15.67% 64.65% 14.74% Metal Products Industry 41.65% 21.42% 81.41% 20.38% General Equipment Manufacturing Industry 45.63% 14.89% 71.31% 21.74% Special Equipment Manufacturing 39.35% 18.03% 70.68% 11.07% Automobile Manufacturing Industry 51.13% 17.09% 81.97% 16.87% Railways, Ships, Aerospace and other Transportation Equipment 32.38% 26.50% 63.63% 6.58% Manufacturing Electrical Machinery and Equipment Manufacturing 34.61% 19.74% 78.40% 6.85% Computers, Communications and other Electronic Equipment 37.89% 16.08% 70.98% 11.18% Manufacturing Instrument Manufacturing Industry 33.97% 20.25% 55.15% 10.27% Comprehensive Utilization of Waste Resources 47.28% 2.55% 50.15% 45.27%

Table 7 Liquidity Ratio Index of Manufacturing Industry in Hubei in SME Board Average Standard subcategories of manufacturing industry Maximum Minimum value deviation Agricultural and Sideline Food Processing Industry 1.90 263.43% 7.8 0.25 Food Manufacturing Industry 5.69 707.11% 10.69 0.69 Wine, Beverage and Refined Tea Manufacturing Industry 2.33 — — — Textile and Apparel Industry 3.44 — — — Printing and Recording Media Reproduction Industry 1.71 — — — Chemical Raw Materials and Chemical Products Manufacturing 2.17 360.94% 19.56 0.051 Pharmaceutical Manufacturing Industry 1.77 206.08% 7.86 0.02 Chemical Fiber Manufacturing Industry 1.30 — — — Rubber and Plastic Products Industry 1.50 70.28% 2.67 0.94 Non-metallic Mineral Products Industry 2.12 120.09% 4.36 0.44

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Table 7 to be continued Metal Products Industry 1.89 81.74% 3.03 0.82 General Equipment Manufacturing Industry 1.79 74.06% 3.57 1.05 Special Equipment Manufacturing 6.36 1,903.39% 93.48 0.48 Automobile Manufacturing Industry 1.18 65.79% 2.14 0.02 Railways, Ships, Aerospace and other Transportation Equipment 5.27 609.82% 14.24 1.14 Manufacturing Electrical Machinery and Equipment Manufacturing 3.45 359.18% 13.16 0.05 Computers, Communications and other Electronic Equipment 2.02 180.12% 6.12 0.01 Manufacturing Instrument Manufacturing Industry 3.62 300.46% 9.45 1.19 Comprehensive Utilization of Waste Resources 1.12 54.24% 1.58 0.52

Table 8 Interest Guarantee Multiplier Index of Manufacturing Industry in Hubei in SME Board Average Standard Subcategories of manufacturing industry Maximum Minimum value deviation Agricultural and Sideline Food Processing Industry 225.66 58,642.64% 1,555.52 -2.77 Food Manufacturing Industry 46.47 6,257.90% 90.72 2.22 Wine, Beverage and Refined Tea Manufacturing Industry 7.33 — — — Textile and Apparel Industry 13.46 — — — Printing and Recording Media Reproduction Industry -2.24 — — — Chemical Raw Materials and Chemical Products Manufacturing 21.33 3,237.62% 136.28 -4.67 Pharmaceutical Manufacturing Industry 32.10 18,433.66% 808.76 -208.51 Chemical Fiber Manufacturing Industry 16.85 — — — Rubber and Plastic Products Industry 15.12 1,412.17% 30.23 -0.98 Non-metallic Mineral Products Industry 65.63 14,939.25% 456.59 -6.76 Metal Products Industry 2.12 1,003.52% 15.16 -15.55 General Equipment Manufacturing Industry 4.62 1,308.75% 32.41 -22.87 Special Equipment Manufacturing 183.41 76,699.16% 3,307.71 -331.39 Automobile Manufacturing Industry 7.40 789.02% 27.33 0.08 Railways, Ships, Aerospace and other Transportation Equipment 6.85 342.24% 9.27 4.43 Manufacturing Electrical Machinery and Equipment Manufacturing 96.21 29,841.15% 1,129.99 -14.66 Computers, Communications and other Electronic Equipment 4.39 891.37% 24.82 -5.02 Manufacturing Instrument Manufacturing Industry 41.54 9,095.55% 218.39 -13.29 Comprehensive Utilization of Waste Resources -0.43 277.71% 2.78 -2.05

The short-term solvency of Special Equipment Manufacturing Industry is strong, but the current assets such as cash and inventory are seriously underutilized; while the enterprises in the Comprehensive Utilization of Waste Resources lack short-term solvency and the differences between enterprises are smaller than those in other industries. But in fact, the standard deviation of the overall liquidity ratio is relatively high in any manufacturing sector, which indicates that many companies lack short-term solvency or insufficient utilization of current assets. Agricultural and Sideline Food Processing Industry has the strongest ability to pay interest, while the profits realized by SMEs in Print and Record Media Reproduction Industry are not enough to cover their

104 THE RESEARCH OF THE DEVELOPMENT OF THE HUBEI MANUFACTURING current expenses, which has great financial risks. This is precisely because this industry has been impacted by new media and its profits have fallen sharply. Operating Capability Analysis According to Table 9 and Table 10 below, the utilization effect of accounts receivable of Comprehensive Utilization of Waste Resources Industry is better while the utilization effect of inventory of Non-metal Mineral Products Industry is better, but there are great differences among enterprises; Railway, Ship, Aerospace and other Transport Equipment Manufacturing Industry accounts receivable utilization efficiency is poor, but the range of change and the difference between enterprises is the smallest. The utilization of accounts receivable and inventory in more than 60% of the sub-industries are lower than the overall level, and reflect certain inter-industry differences.

Table 9 Accounts Receivable Turnover Index of Manufacturing Industry in Hubei in SME Board Average Standard Subcategories of manufacturing industry Maximum Minimum value deviation Agricultural and Sideline Food Processing Industry 23.63 3,748.42% 108.13 2.61 Food Manufacturing Industry 11.45 1,273.50% 20.45 2.44 Wine, Beverage and Refined Tea Manufacturing Industry 5.36 — — — Textile and Apparel Industry 2.66 — — — Printing and Recording Media Reproduction Industry 1.92 — — — Chemical Raw Materials and Chemical Products Manufacturing 7.09 695.38% 27.01 0.1 Pharmaceutical Manufacturing Industry 6.18 512.92% 18.14 0.02 Chemical Fiber Manufacturing Industry 11.27 — — — Rubber and Plastic Products Industry 4.64 205.71% 6.76 2.37 Non-metallic Mineral Products Industry 4.85 949.28% 37.24 0.26 Metal Products Industry 2.82 274.49% 8.31 1.01 General Equipment Manufacturing Industry 1.79 103.37% 4.24 0.53 Special Equipment Manufacturing 5.68 823.25% 32.46 0.40 Automobile Manufacturing Industry 3.04 124.77% 4.67 0.05 Railways, Ships, Aerospace and other Transportation Equipment 1.32 36.65% 1.86 1.09 Manufacturing Electrical Machinery and Equipment Manufacturing 3.13 615.34% 29.87 0.02 Computers, Communications and other Electronic Equipment 3.64 374.37% 13.90 0.03 Manufacturing Instrument Manufacturing Industry 2.98 234.92% 8.11 1.009 Comprehensive Utilization of Waste Resources 25.32 4,281.43% 74.76 0.33

Table 10 Inventory Turnover Index of Manufacturing Industry in Hubei in SME Board Average Standard Subcategories of manufacturing industry Maximum Minimum value deviation Agricultural and Sideline Food Processing Industry 7.23 422.72% 12.53 1.49 Food Manufacturing Industry 3.82 156.27% 4.92 2.71 Wine, Beverage and Refined Tea Manufacturing Industry 4.52 — — — Textile and Apparel Industry 2.87 — — — Printing and Recording Media Reproduction Industry 1.51 — — — Chemical Raw Materials and Chemical Products Manufacturing 5.56 411.03% 20.05 0.02

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Table 10 to be continued Pharmaceutical Manufacturing Industry 2.64 200.96% 7.61 0.02 Chemical Fiber Manufacturing Industry 3.47 — — — Rubber and Plastic Products Industry 4.85 80.60% 6.17 4.02 Non-metallic Mineral Products Industry 8.05 1,619.26% 63.22 1.46 Metal Products Industry 5.43 465.74% 12.85 0.72 General Equipment Manufacturing Industry 3.32 340.37% 11.41 0.50 Special Equipment Manufacturing 3.20 641.02% 31.54 0.48 Automobile Manufacturing Industry 3.77 259.64% 8.84 0.08 Railways, Ships, Aerospace and other Transportation Equipment 2.48 238.31% 6.05 1.09 Manufacturing Electrical Machinery and Equipment Manufacturing 3.13 228.76% 10.40 0.03 Computers, Communications and other Electronic Equipment 3.03 190.05% 6.86 0.09 Manufacturing Instrument Manufacturing Industry 2.32 119.42% 4.50 0.80 Comprehensive Utilization of Waste Resources 5.56 753.46% 14.25 0.85 Growth Ability Analysis According to Table 11, Table 12 and Table 13 below, the growth rate of assets and business income are quite different among enterprises, the overall operating efficiency is not high, the operating results are not good, and the development trend and potential of enterprises are not optimistic. At the same time, the difference of net profit growth rate is particularly huge, which indicates that some companies have good development trend and potential, while others are facing huge problems in their operating conditions and development prospects.

Table11 Gross Asset Growth Rate Index of Manufacturing Industry in Hubei in SME Board Average Standard Subcategories of manufacturing industry Maximum Minimum value deviation Agricultural and Sideline Food Processing Industry 17.93% 14.71% 41.88% 1.93% Food Manufacturing Industry 11.48% 6.31% 15.94% 7.01% Wine, Beverage and Refined Tea Manufacturing Industry 62.38% — — — Textile and Apparel Industry -4.76% — — — Printing and Recording Media Reproduction Industry 4.22% — — — Chemical Raw Materials and Chemical Products Manufacturing 17.13% 32.29% 125.31% -24.61% Pharmaceutical Manufacturing Industry 18.38% 14.51% 47.79% -2.93% Chemical Fiber Manufacturing Industry 66.72% — — — Rubber and Plastic Products Industry 22.43% 25.18% 54.32% -3.88% Non-metallic Mineral Products Industry 18.14% 28.51% 74.05% -17.50% Metal Products Industry 4.85% 19.82% 44.73% -8.76% General Equipment Manufacturing Industry 6.13% 7.78% 18.52% -15.89% Special Equipment Manufacturing 24.25% 49.98% 181.26% 27.94% Automobile Manufacturing Industry 13.73% 21.55% 68.75% -12.30% Railways, Ships, Aerospace and other Transportation Equipment 5.69% 7.58% 12.20% -4.78% Manufacturing Electrical Machinery and Equipment Manufacturing 33.79% 102.27% 450.82% -7.90% Computers, Communications and other Electronic Equipment 10.51% 19.47% 43.74% -21.86% Manufacturing Instrument Manufacturing Industry 2.32 119.42% 4.50 0.80 Comprehensive Utilization of Waste Resources 5.56 753.46% 14.25 0.85

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Table12 Operating Income Growth Index of Manufacturing Industry in Hubei in SME Board Average Standard Subcategories of manufacturing industry Maximum Minimum value deviation Agricultural and Sideline Food Processing Industry 20.54% 27.40% 68.52% -3.51% Food Manufacturing Industry 4.55% 45.95% 37.04% -27.94% Wine, Beverage and Refined Tea Manufacturing Industry 10.56% — — — Textile and Apparel Industry 17.77% — — — Printing and Recording Media Reproduction Industry 9.24% — — — Chemical Raw Materials and Chemical Products Manufacturing 26.36% 35.54% 107.29% -27.45% Pharmaceutical Manufacturing Industry 37.17% 68.84% 214.49% -67.34% Chemical Fiber Manufacturing Industry -6.45% — — — Rubber and Plastic Products Industry 20.07% 14.75% 37.08% 5.00% Non-metallic Mineral Products Industry 24.11% 44.43% 133.78% -57.24% Metal Products Industry 33.95% 37.92% 93.18% -1.39% General Equipment Manufacturing Industry 10.16% 18.40% 50.54% -19.73% Special Equipment Manufacturing 11.25% 46.84% 114.92% -88.81% Automobile Manufacturing Industry 30.36% 47.37% 141.04% -17.47% Railways, Ships, Aerospace and Other Transportation Equipment 1.36% 10.19% 11.39% -12.32% Manufacturing Electrical Machinery and Equipment Manufacturing 59.41% 205.59% 903.29% 59.41% Computers, Communications and Other Electronic Equipment 16.76% 29.91% 78.56% -36.66% Manufacturing Instrument Manufacturing Industry 4.96% 42.52% 50.34% -54.47% Comprehensive Utilization of Waste Resources -26.01% 5.59% -21.39% -32.22%

Table13 Net Profit Growth Rate Index of Manufacturing Industry in Hubei in SME Board Average Standard Subcategories of manufacturing industry Maximum Minimum value deviation Agricultural and Sideline Food Processing Industry -122.34% 329.58% 97.75% -859.41% Food Manufacturing Industry -15.13% 75.14% 38.00% -68.26% Wine, Beverage and Refined Tea Manufacturing Industry 6.08% — — — Textile and Apparel Industry 155.82% — — — Printing and Recording Media Reproduction Industry -9,997.99% — — — Chemical Raw Materials and Chemical Products Manufacturing 106.97% 449.22% 1,870.01% -212.80% Pharmaceutical Manufacturing Industry -6.08% 184.33% 305.56% -426.21% Chemical Fiber Manufacturing Industry 60.33%% — — — Rubber and Plastic Products Industry -78.86% 266.26% 85.40% -550.89% Non-metallic Mineral Products Industry 78.13% 253.42% 624.96% -247.83% Metal Products Industry 2.34% 29.45% 47.12% -29.52% General Equipment Manufacturing Industry -0.10% 92.80% 162.54% -193.54% Special Equipment Manufacturing 0.87% 197.76% 204.20% -723.08% Automobile Manufacturing Industry -6,130.84% 22,425.44% 429.89% -80,765.58% Railways, Ships, Aerospace and other Transportation Equipment 65.57% 79.37% 153.10% -16.24% Manufacturing Electrical Machinery and Equipment Manufacturing -1,882.36% 8,247.13% 191.71% -35,936.32% Computers, Communications and other Electronic Equipment -7.03% 296.02% 432.07% -596.40% Manufacturing Instrument Manufacturing Industry -543.53% 1,508.26% 143.55% -4,268.79% Comprehensive Utilization of Waste Resources -138.84% 302.71% 104.95% -477.66%

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Among them, the lowest average growth rate of total assets is Textile and Apparel Industry which is4.76%, but whether the negative growth rate is beneficial or not needs to be analyzed in light of the actual situation of the company. If the negative growth rate comes from the treatment of invalid or surplus assets, it actually improves the company’s operating efficiency and is beneficial to the company’s future development. At the same time, the operating efficiency and results of Chemical Raw Materials and Chemicals Manufacturing Industry and Electrical Machinery and Equipment Manufacturing Industry are superior to those of other manufacturing sectors, and the development trend and potential are better; while the growth rate of business income in the Comprehensive Utilization of Waste Resources is not very different among enterprises, and the development prospect is the most worrying. Growth ability also reflects obvious industry characteristics.

Research Conclusions and Policy Recommendations Research Conclusions Enterprises are concentrated on developed areas and tend to move towards the SME board after stabilization. From the previous analysis, we can see that from the perspective of industry distribution, the manufacturing enterprises of Hubei in SME Board have greater advantages in the field of Medical Chemistry and Equipment Manufacturing and it also shows that the manufacturing industry in SME Board of Hubei has better policy support for high-tech enterprises.From the perspective of regional distribution, the number of companies registered in Wuhan is much higher than that in other areas, which shows that the regional economic development will indeed greatly affect the location decision of SMEs. From the perspective of time of establishment and listing, most of the enterprises were established between 2000 and 2009, and the largest number of them came from Chemical Raw Materials and Chemicals Manufacturing enterprises. This shows that Hubei provides a better environment and policy support for Chemical Raw Materials and Chemicals Manufacturing Industry in the ten years. The listing time of Hubei New Third Board Manufacturing Enterprises increased rapidly from 2012 to 2016, which indicates that the local policy of Hubei Province has played a better role in promoting the listing of SME Board, and that the manufacturing SMEs are more aware of the benefit of SME Board during this period and efforts to adjust themselves to meet the standardization requirements of it. At the same time, enterprises are more inclined to develop steadily for a period of time after its establishment to achieve economies of scale effect before listing on the SME Board, so as to provide more powerful support for the follow-up development of them. Most are private enterprises with low educational background and labor-intensive economy. From the perspective of employee academic degree structure, the overall level of staff's academic qualifications of Hubei SME Board manufacturing enterprises is obviously low, and the overall industry is still dominated by labor-intensive industries, which has become an important factor restricting the development of Hubei SME Board Manufacturing Enterprises. From the perspective of equity concentration, the enterprises in Hubei have a high degree of equity concentration. From the perspective of type and nature of actual controller, the vast majority of actual controllers are private enterprises controlled by domestic natural persons, which shows that the development of Hubei SME Board Manufacturing Enterprises still has some limitations due to their own size and financial constraints. There are great differences in the overall financial situation among enterprises, but the differences among enterprises in the industry are relatively small, reflecting certain characteristics of inter-industry differences. From the perspective of financial situation, the scale of enterprises in Hubei SME Board

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Manufacturing Industry varies greatly. Although the difference in profitability is relatively small, it is still at a high level, which indicates that there is a great difference in the profitability of Hubei SME Board Manufacturing Enterprises. At the same time, from the comparative analysis among industries, the profitability of different industries is also quite different, while the profitability of enterprises in the same industry is relatively small, indicating that the profitability of Hubei SME Board Manufacturing Enterprises has certain industry characteristics. The overall short-term solvency and interest payment ability of Hubei SME Board Manufacturing Enterprises are relatively strong, but there are huge differences in the actual indicators between enterprises, which indicates that many enterprises are facing high financial risks, and there are great differences in short-term solvency among industries, which indicates that many enterprises lack short-term solvency or inadequate utilization of movable assets. The overall operating and growth capacity of enterprises in Hubei SME Board Manufacturing Industry differ greatly, but the differences among enterprises in different sub-categories are relatively small, which indicates that both operating and growth capacity reflect certain industry characteristics. Generally speaking, the financial situation of different enterprises in Hubei SME Board Manufacturing Industry is quite different, but relatively similar within different manufacturing industry subdivisions . Policy Recommendations Enterprises should speed up upgrading and transformation to improve their market competitiveness.Firstly, each enterprise should find its own position in the industry, find out its own advantages and disadvantages of development, so as to formulate its future development direction. Secondly, enterprises should increase R&D investment, improve the level of education of employees, and strive to accelerate the transformation from labor-intensive to technology-intensive, so as to improve their own production efficiency. Thirdly, enterprises should analyze their financial situation in detail, find out the problems in the process of production and operation in time and make adjustments, so as to improve the profitability, solvency, operation ability and growth ability of enterprises, thus improve the development prospects of enterprises. Finally, enterprises should strengthen their efforts to standardize the internal management and internal control and audit system, so that they can finally meet the relevant requirements to obtain broader development resources and platforms. Government should study carefully and formulate encouraging and supporting policies suitable for different enterprises and industries so as to accelerate the development of SMEs of Hubei. Government should formulate policies suitable for different SMEs according to the characteristics of different enterprises and different industries and their current development situation. For the performance that enterprises can bring positive effects, the government should increase encouragement and support policies to promote their rapid development and extend them to other industries and enterprises. As for the negative effects of enterprises, government should take timely measures to stop them. At the same time, because many indicators of manufacturing enterprises in SME Board in Hubei show obvious industry characteristics, the relevant departments should take into account the differences among different industries in formulating policies, adjust the policies flexibly and strictly, and pay close attention to the changes of indicators in the SME Board market in real time, and make corresponding adjustments in time, in order to make the SME Board truly serve as a boosting platform to promote the development of SMEs in various sub-sectors of manufacturing industry. Government should strengthen the supervision and management of the SME Board market to provide a clean development platform for SMEs. Because there are still some problems such as incomplete

THE RESEARCH OF THE DEVELOPMENT OF THE HUBEI MANUFACTURING 109 disclosure of relevant information in the SME Board enterprises of Hubei manufacturing industry, the relevant departments should actively standardize and improve the SME Board market, and take timely measures to stop and punish the bad behavior of enterprises, so as to deter the violations of laws and regulations, and to encourage the performance of good and positive practices in order to enable more SMEs to follow suit, so that the SME Board can truly become a platform for the majority of manufacturing SMEs of better opportunities. Government should try its nest to formulate more preferential incentive policies to attract more excellent manufacturing SMEs to the SME board market.On the one hand, the development of SMEs is closely related to the overall economic development of Hubei Province, and the regional economic development situation will greatly affect the choice of SMEs. However, if the enterprises all gather to the economically developed areas, the local resources will be saturated or even excessive, which in turn will restrict the development of enterprises, therefore improving the imbalance of regional development is the key problem that the government urgently needs to solve. On the other hand, the SMEs are limited by their own size and capital, they urgently need the new SME Board market as a platform to provide them with broader development space for follow-up to a stronger development. Therefore, government should focus on formulating more relevant policies to attract and encourage excellent manufacturing SMEs, and establishing a fast way and simplify the procedures of administrative examination and approval for entering the market which make it easier for SMEs with willingness and ability to enter the market so as to truly achieve government’s original intention of promoting the better development of SMEs and even the overall development of Hubei’s economy.

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