Study on Internal Control System Optimization of Chinese Small and Medium-sized Private Enterprises

Abstract

With the continuous deepening of market-oriented reform, small and medium-sized private enterprises (SMPEs) developed rapidly, gradually becoming the important component of national economy, and exerting more and more important role in national economy. However, in recent years, lots of SMPEs that dominated the market in the last met failure in succession, while the main cause resulting in its operation failure is the failure or deficiency of internal control. At the present stage, SMPEs urgently need to construct and optimize internal control system. Basing on analyzing the development status and internal control status of Chinese SMPEs, this paper proposed suggestion on optimizing internal control system of SMPEs, hoping to promote the sound and steady development of Chinese SMPEs. The rapid development of market economy brought opportunity for SMPEs. SMPEs seized opportunities and developed rapidly, and its proportion in overall national economy increased continuously. At the time of achieving rapid development, the operation system of SMPEs also experienced great change. Lots of enterprises have management problems, making them cannot adapt to severe market competition, even resulting in operation failure. From Giant Interactive Group to Wanjie Group, from Guangdong Aido Electrical Appliances to Sanzhu Oral Liquid, these cases tell us that the deficiency or failure of internal control has become the important bottleneck impeding the development of SMPEs. At the present stage, Chinese SMPEs urgently need to establish and perfect internal control system. 1. Development Status of SMPEs With the continuous development of market economy, SMPEs gradually developed into the important component of national economy. The development of SMPEs generally experienced three stages: capital accumulation, exploration and development, and knowledge management. At the present stage, SMPEs occupy important position in local economy, especially county economy, becoming the entity of investment, tax payment, and offering employment post. Relevant data show that in 2013, China's private economy contributed over 60% of total GDP.