QINGDAO, May 20 (Xinhua) -- Overseas officials and entrepreneurs attending the ongoing fourth APEC (Asia-Pacific Economic Cooperation) small and medium enterprises (SME) technology exchange fair believe that China's SMEs have become an important part of the transnational corporations' world industrial chain.

　　China's small and medium enterprises are involving themselves in transnational trade in various forms, said Li Jun, vice head of the Export-Import Bank of China.

　　In 2005, 68.3 percent of China's export turnover was contributed by the SMEs, especially in the fields of clothing, handicrafts and toys.

　　According to the China entrepreneur association, 450 companies out of the Fortune 500 have investment projects in China, which provide more chances for China's SMEs to enter the transnational corporations' world industrial chain.

　　Li said the establishment of the cooperation network and mechanism with the small and medium enterprises is one of the key measures that the transnational corporations should take to achieve their global strategy.

　　He said the transnational corporations chose to cooperate with some large enterprises when they started their business in China but now they have begun to increase their collaboration with the small and medium enterprises for cost-saving considerations.

　　Johnny Kwan, board chairman of BASF China, said this Germany-based world chemical giant has guaranteed the stability of its world production system through cooperation with China's smalland medium enterprises.

　　In 2005, about 60 percent of BASF's purchases were from China and mostly from the SMEs.

　　Kwan said they will choose more of China's small and medium enterprises to be their suppliers and at the same time they will help these enterprises to upgrade their managing strategies with more international and sustainable elements.

　　The State Development and Reform Commission Vice Director Ou Xinqian encouraged more of China's SMEs to expand their business in the overseas market and try to establish cooperative relations with the transnational corporations.

　　Currently, China has more than 4.3 million registered small and medium enterprises.

　　In the country's eastern coastal areas, many export-oriented SMEs have formed industrial clusters, which make it easier for the transnational corporations' to outsource production.

　　The total purchase value of the world retail giants including Wal-Mart, Carrefour and Metro were above 200 billion yuan (25 billion U.S. dollars) in China last year, said the statistics provided by the Ministry of Commerce.

　　Mike Gregory, head of the University of Cambridge Institute for Manufacturing, paid attention to the close cooperation between China's SMEs and the transnational corporations during his visit in China a few weeks ago.

　　He said current competition in world manufacturing not only exists among nations, but also tends to exist among the corporations.

　　These corporations are active in many countries, hoping to find a best combination of the different sorts of resources.

　　Gregory said different companies in different nations will have their own advantages, which decide their positions in the world industrial chain.

　　"That is why the Chinese companies invest so much to enhance their production capability but those in the UK do not," he said. "Different companies will find the commercial opportunities in the fields where they are good at." Enditem