Competition is based solely on price and regulatory initiatives to promote product quality do not exist. Even when customers do appreciate quality, they are often not able to pay for higher up-front capital expenditures because of severe capital constraints. And there are usually few marketing activities or product labelling initiatives to better inform customers, and encourage them to distinguish between higher quality products and lower quality products. SMEs do not possess the financial means to invest in more advanced technologies. On the other end, technology manufacturers are not in the position and other intermediaries do not exist to provide financial mechanisms encouraging technology supply push.
Financial institutions are reluctant to lend for such investments to SMEs.
SMEs face little competitive pressure in their rural markets. All local producers operate under the control of the SMEs and local markets are highly segregated. SMEs are integrated into a spatial network of enterprises supplying largely to local markets and not in a product oriented network. For this reason, inter-local distribution networks are weak or not existing, and opportunities to exploit existing economics of scale in production are limited. Product pricing is somewhat arbitrary and an SME is not driven out of the market when its profitability is too low.