The Chinese small and medium enterprises have been able to capitalise on the growing demand for low quality and low priced goods in major markets. Multinational supermarket chains have set up product procurement branch offices in China, and shops catering to low and middle income consumers in developed countries are flooded with Chinese products. This competitiveness has been achieved through a mix of external and internal factors. Given the relatively small size of the Indian SME sector, which is largely confined to local and regional markets, India is unlikely to be able to challenge the Chinese export engine.