CPA Australia: Innovation and exports bolster small business growth prospects in Mainland China
CPA Australia's 13th Asia-Pacific Small Business Survey surveyed 4,252 small businesses owners or managers across the Asia-Pacific, including 766 from Mainland China, to understand their business conditions and confidence. The survey was conducted from November to December 2021.
Lloyd Peng FCPA (Aust.), Deputy President of CPA Australia's North China Committee said, "The survey results reflect the resilience and stability of Mainland China's small business sector over the past two years.
"Technology adoption and innovation are drivers of sustainable business growth. Our survey shows that Mainland Chinese small businesses are reaping the rewards of their innovative culture. Sixty-three per cent of respondents reported their investment in technology made the businesses more profitable in 2021, up from 57 per cent in 2020.
"Mainland Chinese small businesses have been leaders in online sales and using new payment technologies since 2018, and we expect this leading approach to continue. Nine in ten Mainland Chinese small businesses surveyed will or may introduce new products, processes or services this year, the second highest result among the markets surveyed.
"Although geopolitical and pandemic-related uncertainties continue to weigh on the global and domestic economy, we believe that the digital sophistication of Mainland China's small businesses, their strong innovative culture and government's relief support for SMEs such as R&D tax incentives will help them trade through this challenging period."
Entering new markets was a major positive factor for Mainland Chinese businesses in 2021, and it is likely to continue this year. Lloyd said, "Before this wave of COVID-19 outbreak, fifty-six per cent of Mainland Chinese businesses predict their overseas sales will grow this year, ten percentage points higher than last year. This implies that export is a key factor to small business growth.
"With strong digital capabilities, policy support such as the newly released 23 measures to boost exports of small business sector by the Bank of China and the State Administration of Foreign Exchange, and opportunities from the Regional Comprehensive Economic Partnership (RCEP), Mainland Chinese small businesses are in a good position to tap into new markets and diversify their customer base. For example, they could focus on the ASEAN market – Mainland China's largest trading partner – where the pace of digitalisation has picked up in recent years.
"We recommend businesses seek professional advice, such as business consultants and accountants, to regularly review business strategies and assist them to better understand overseas markets, including regulations in those markets. This way, small businesses will stay on top of changes in the external environment and ensure risks are managed appropriately.
Increasing costs are a significant barrier to growth for small businesses in Mainland China. Kevin Ng FCPA (Aust.), member of CPA Australia's North China Committee suggested, "The newly announced VAT credit refund program will not only cover existing taxes but will also cover new taxes. This timely initiative may relieve liquidity pressure for many small businesses and free-up capital to invest in areas of long-term growth such as technology and green development."
Mainland Chinese small businesses were the most likely in the Asia-Pacific to spend time and resources on renewable energy investment in the past 12 months.
"We recommend Mainland Chinese businesses make full use of government support policies and relief measures on tax and financing, review their existing business model and make necessary changes to prepare for sustainable development in the future," Ng commented.
Based on the characteristics of high growth small businesses from the survey results, we recommend that Mainland Chinese businesses:
- Utilise business data to drive innovation in business operations, products and services
- Identify and invest in technologies that suit your business
- Increase revenue from overseas markets through e-commerce, especially RCEP markets
- Seek professional advice to regularly review business strategies and opportunities.
Download CPA Australia Asia-Pacific Small Business Survey 2021-22 (English only)
About CPA Australia
CPA Australia is one of the largest professional accounting bodies in the world, with more than 170,000 members in over 100 countries and regions, including more than 22,200 members in Greater China. We have offices in Beijing, Shanghai and Guangzhou. CPA Australia provides thought leadership on local, national and international issues affecting the accounting profession and public interest. We engage with governments, regulators and industries to advocate policies that stimulate sustainable economic growth and have positive business and public outcomes. Find out more at cpaaustralia.com.au
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