This study analyses competition and management issues of Small and Medium Enterprise (SME) entrepreneurs in three provinces of Laos: Vientiane Municipality (the capital city), Savannakhet (an important economic development zone) and Luang Prabang province (a famous historical site and tourist destination). Competition and management have changed dramatically after the introduction of the New Economic Mechanism in 1986, which moved the economy from central planning to market-based economic management. Qualitative research was used, with 52 in-depth personal interviews conducted and combined with behavioural observation and content analysis of secondary sources of data. R esults indicate the importance of SM Es in the Lao economy, with some 74% of total enterprises being family-owned SMEs. These concentrate on food processing, garment production, construction materials, wooden furniture, tourism, education, trading, transportation, internet services and others. Increases in the SME sector have contributed to job growth and overall GDP growth. Findings also showed increased competition in the sector as substitute products are introduced, with significant bargaining power for buyers and a high rate of new entrants into a limited range of product/service markets, without much competition in terms of price and quality of goods and services. Entrepreneurs find it difficult to access modern technology and finance, have limited resources in terms of capital and skill and must also negotiate unfair treatment by officials. Management styles usually focused on short-term day-to-day objectives and few were able to consider longer-term considerations or business sustainability. Skills management and capacity building in these SMEs were narrowly conceived and required to be profit-based. Training and development of human resources was seen as a cost rather than an investment. Recommendations are made for enhancement of SME productivity and capacity.