CPA Australia’s Asia-Pacific Small Business Survey reveals over one-third of small businesses (35%) in Mainland China are planning to increase their employee headcount this year. The result was a slight increase from 2022.
More than half (56%) of Mainland China’s small businesses expect to grow in 2023. Meanwhile, their investments in technology and innovation will pay dividends, according to a new survey by one of the world’s largest accounting organisations.
Mainland China’s small businesses have consistently outstripped their Asia-Pacific peers for technology use over the past five years. This includes earning revenue from e-commerce, adopting digital payment technologies and using social media for business purposes.
CPA Australia’s North China committee president, Lloyd Peng, commented: “In Mainland China, 87% respondents come from businesses older than five years. These businesses demonstrated strong resilience during the pandemic and overcame many challenges.
“Businesses are using the experience gained from the past few years to strive for growth in 2023. For example, by adopting cutting-edge technology, innovating and improving their customers’ experience.
“The government has announced a series of timely policies to support micro, small and medium-sized enterprises. These measures aim to improve businesses competitive edge, ease financing conditions, stabilise raw material prices and promote innovation.
“If these policy supports are implemented in a consistent and predictable way, it could further unleash the potential of small businesses to achieve high-quality growth.”
Mainland Chinese respondents were more likely (41%) to have sought professional advice from IT consultants last year than survey average (29%). They also intend to innovate strongly. Additionally, 93% of Mainland Chinese respondents plan to innovate in 2023, the highest in the Asia-Pacific.
CPA Australia’s East and Central China committee president, Raymond Zhu, further said: “Mainland Chinese small businesses are reaping rewards from their focus on technology. The majority (61%) found technology investments last year boosted profits.
“Supported by government policies such as the 14th Five-Year Plan and extra tax deductions for research and development, we expect this tech focus to continue.
“To make the commercialisation of new products or services a success, we recommend businesses start by focusing on understanding changes in customer behaviour. We also encourage them to explore opportunities in markets such as the Greater Bay Area, ASEAN and Belt and Road markets.
“Policymakers should review and improve individual income tax policies for businesses from key industries. This will help attract more science, technology, engineering and mathematics talent to the small business sector.”
Easing of financing conditions is essential for business success in 2023. The survey found that 90% of Mainland Chinese small businesses expect to seek external funds this year. On top of this, 40% reported their main reason to seek funds is for survival, while 46% intend to use funds for growth. However, one-third expect it to be tough to access funds.
CPA Australia’s South China committee member, William Huang, added: “Small businesses typically have a low credit rating and insufficient collateral. Hence, it may be difficult to obtain finance from traditional sources such as bank.
“The survey shows small businesses in Mainland China have diverse funding sources. This includes banks (29%), investors, venture capital or angel funds (30%) and non-bank financial institutions (18%).
“Small businesses with unique advantages, especially those that have capacity to introduce novel and specialised products, are more likely to attract investment from investors. We recommend small businesses pay close attention to their cash flow, forecast their financial needs and optimise their business models.”