The research question holds a central position in a research paper. It addresses the idea, in brief, that the researcher explains in the course of his paper. Generally, the research question is stated specifically although sometimes, to address complex issues, multiple questions have to be mentioned. A common phenomenon observed among the Chinese enterprises is described by the phrase ‘lasting briefly, and growing with difficulty’. With the passage of time, the mindset of people has undergone changes along with the economic development of the country. In the later part of the 1980s, the term ‘Private Economy’ emerged in China. The economic entities which are invested into by a non-government body or a private enterprise or individual and run by them are known as the privately operated economy. They are based on private resources and do not embody the state capital. There are several small and medium enterprises that are emerging in the country based on private investment. Such firms, although faring well in the initial phase, sometimes cannot grow further later on. It is quite difficult for any enterprise to hold on to its existence if it becomes stagnant. The hypothesis made in this paper is: whether the difficulties faced by private enterprises is owing to the problem arising in the management of their human resources. Literature Review The literature review of a research paper provides guidance in the formation of a theoretical and conceptual framework required for the study. This builds the base on which the entire research work is founded. The literature review provides the backdrop for research work and shows further avenues for conducting research. In this current paper, the theory of small and medium private enterprises in China and their basis of management have been well established. Consequently, the authors have discussed the hurdles that these firms face, and the links between these problems and their improper management structure. Conceptual Framework The conceptual framework pertaining to research work is inclusive of three broad things: the problem to be addressed, the literature review and the purpose of research. Foreign companies operating in China had brought in the term ‘Human Resources’ into China. In simple words, the term refers to the workers that work in a certain organization and their capability to do productive work. They are an integral part of an enterprise since the development of a firm, both economically and socially, depends to a great extent on the human resources of the firm. The workers’ efforts can be categorized into two divisions: physical work and intellectual work. Not only does the quantity of production made by the workers put an upward thrust on the performance of the company in the market but is also largely dependent on the efficient management of the resources that would lead to a good quality of their performance. Human resources management, thus, plays a crucial role in any organization’s administration for it to remain healthy over time. By ‘effective human resources management’ one emphasizes the management of human resources in a reasonable and scientific way. Reasonable utilization of the human resourceis very important.