Established in 1983, K K Yeung Management Consultants Limited advises multi-nationals on investments in China, turnkey management, and China joint ventures. Its clients include the top 100 companies in the European Union. General Committee member and newly elected chairman of the Chamber's SME Committee K K Yueng told Editor Malcolm Ainsworth about his plans to help Hong Kong's SMEs adapt to the 'new economy' and what he feels China's WTO accession will mean for SAR business.

What are your goals as the Chamber's new SME Committee chairman?

Broadly speaking, there are four issues which we will focus on. The first one is to liase with government on policies and regulations wherever they affect SMEs. The second point is to enhance their management and technology skills. The third one is to promote networking. Because SMEs don't have the image of a big company, business doesn't go to them; they have to go out looking for business. We realise that networking is a very important issue for SMEs to pursue, so we ironed out how we can improve the networking skills of SMEs in government purchasing centres; in the major corporation sector and in the whole professional sector. This is connected to the fourth area that I have sort of charted out, which is to have a wider involvement in the community. As you know the Chamber has grown to a stage where we have to help the community, for example on environmental issues, and the recent discussion about improving our competitiveness. These are the kind of issues that we want to expose SMEs to. So to summarise: government policy side, technology side, networking for business and community work.

What do you think about the 'new economy'?

I think the new economy is, of course, basically achieved by the same people that built the old economy. It's not because people shave off their hair that they have a cyber look and then they are in the new economy, it's not like that. It's achieved by those who are running faster; those who are more updated. So I think the old economy and the new economy is actually an economy which is migrating. Some may migrate faster than others, but basically it is an economic force that is going to change the way we do business. I think on the SME side there is certainly need to facilitate change too.

SMEs normally lack global connections, because if you want to do global business through the Internet, you still need global connections. These are not there. So it has to be cultivated for them, and I think this is the area where we should give them the know-how: how to be more innovative, and how to deal with global innovations. The Chamber can do its part through committee workshops, and through research funded by government.

What are SMEs doing -- or should be doing -- to get 'new economy' savvy?

First of all it's not just a matter of upgrading your computer skills, but rather training the understanding of what business will be performed, because the platform is different. You may have to react very quickly to business needs. And are you geared towards supply chain management? Are you geared to using agents overseas or not? Are you going to take an order and deliver in American and how do you do that? Previously you'd delegate all this to shipping carriers. Now you have to figure out what are the steps in between to reach the inquirer, because the inquirer is bypassing everyone to come to you directly. This involves a lot more organisation.

But this also means there will be fewer middlemen, and the unfortunate situation is that many SMEs are themselves middlemen.

China looks set to enter the WTO this fall, what should SMEs be doing to prepare themselves for the increased competition that is expected?

I think SMEs will probably benefit a lot from the opening of the China market. Many SMEs are actually secondary providers of goods and services -- of course many supply directly to retailers -- but both of them will benefit because China's WTO accession will mean the market will be bigger.

There will be more players, but with the strong entry board and expertise of Hong Kong SMEs I think they will welcome this market expansion which is on their doorstep. In other words, they are better off [than competitors] because they are next to China; others have to take 10 steps to get into China. So I think they are bound to gain. For the short term, perhaps some middlemen will lose out because people will go directly to china, but not those who have special skills.

Hong Kong's big advantage is in its service industries. I don't mean just banking and insurance, these two belong to the big service industries, but there are many SME service industries which are essential and which can help China deal with the influx of worldwide traders and investors, because you will need people in engineering, transportation, tax and China law, and other aspects of professional services or service industries.

These are Hong Kong's strong points being in a very cosmopolitan environment and that will be -- if you add up Hong Kong plus China -- a win-win situation.

Will SMEs have to set up offices in China to boost their competitiveness?