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South China’s small businesses leading Asia Pacific in innovation and technology

CPA Australia

GUANGZHOU, CHINA - Media OutReach - 17 April 2019 - Small businesses in South China generally experienced positive businessconditions in 2018, with small businesses from Guangzhou being the most likelyfrom Mainland China to state that they grew, according to a survey conducted byCPA Australia, one of the world's largest accounting bodies.

Mr William Huang, President of CPA Australia South China Committee, introduces the findings of Asia Pacific Small Business Survey 2018

These positiveconditions are expected to continue in 2019 with Guangzhou's small businessesalso being the most likely from Mainland China to expect to grow. This reflectsthe resilience and capability of South China's small business sector in theface of a potentially uncertain and challenging year.

Key to this is thevery strong focus on innovation and technology by small businesses from Guangzhou and Shenzhen -- with the surveyresults showing that small businesses in those cities not only leading the restof Mainland China in the use of many technologies, but also leading smallbusinesses from the Asia Pacific. Further, the survey results also show a clearlink between innovation and technology, and strong business growth.

The findings from CPAAustralia's 10th annual Asia-Pacific Small Business Survey, follow extensivesurveying of more than 3,600 small business operators in ten markets, includingAustralia, mainland China, Indonesia, Malaysia and the Philippines.

With 77 per cent reportingthat their business grew in 2018 and 46 per cent increasing the size of theirworkforce, Guangzhou's small businesses experienced the most positive conditionsin Mainland China among the surveyed cities. The positive sentiment inGuangzhou is likely to continue, with nearly 80 per cent of small businesses expectingtheir business to grow in 2019 and over half expecting to increase theirheadcount.

Mr William Huang,President of CPA Australia South China Committee said that under a challengingenvironment caused by trade tensions and other issues, small businesses inSouth China generally performed strongly last year and show confidence in both thelocal economy and their business growth in 2019.

"I believe thisconfidence is built on their leading position on the utilisation of digitaltechnologies in their business and their innovative culture.

"The survey findingsin the Asia-Pacific show that high levels of adoption and utilisation ofdigital technology is one of the most positive influencers to drive businessgrowth.

"We are not surprised that the smallbusinesses in this region have strong confidence since the Greater Bay Area isone of the central engines of economic growth in Mainland China, withworld-class innovation and technology at its core.

"Both Shenzhen and Guangzhou are the top performers in theAsia Pacific for online sales and are also leaders in the adoption of newdigital or mobile payment methods in transactions. Over 80 per cent ofbusinesses in both cities are earning over 10 per cent of their revenue fromonline sales, and nearly nine in ten businesses generate more than 10 per centof their sales through new payment technologies.

"Further, we are delighted to find that small businesses fromSouth China are quite sophisticated in the technologies they are investing inand adopting in their business. The survey findings show that they not onlyhave a strong capability to identify the suitable technologies to invest fortheir short-term returns but also have an eye on the future and theircustomers, with respondents in South China being the most likely to haveinvested in Artificial Intelligence (AI) and customer relationship management(CRM) software among all markets surveyed in the Asia-Pacific," Mr Huang says.

Increasing cost, especially staff costs, is the factor thatis most likely to have had a negative impact on businesses in South China in2018, with nearly 60 per cent of respondents in Guangzhou stating that staffcosts was the cost most detrimental to their business, ranking top in thesurveyed markets.

"On the one hand, small business owners are facing increasingcosts such as staff costs, on the other hand, they are having difficultyrecruiting suitable staff to support their business growth, Mr Huang says.

To solve this dilemma, CPA Australia suggests that smallbusinesses revisit their company structure and cost structure and seek toimprove their business strategy and operating model.

"The development of the Greater Bay Area should acceleratepeople movement throughout its 11 cities and attract non-local talent to thearea. Taking advantage of this development and new technologies, which arechanging the way people work, provides opportunities for small business ownersto get the staff they need to grow their business. However, this may require achange in how businesses engage talent, for example, offering more flexible andmobile work conditions to attract and retain the right skill sets from anywherein the Greater Bay Area, or collaborating with a distant team orfreelancers. 

"In addition, through the interconnection of cities in theGreater Bay Area, there are opportunities for financial institutions to worktogether to create a better business environment for small businesses in SouthChina to access to finance and support their further growth.

"The slowing global economy and economic uncertainties aremaking 2019 a challenging year for small businesses in South China, however,CPA Australia remains positive. Strong domestic consumption in South Chinasupported by recent tax cuts, the region's leading capabilities in innovationand technology, government policies to improve SME access to finance, andemerging opportunities from the Greater Bay Area plan, make us confident thatSouth China's small businesses will continue to grow and stay vibrant," MrHuang says.

CPA Australia has six tipsfor China's small businesses in 2019:

  • Lookfor government incentives that are supportive of innovation
  • Seekadvice on which technologies are best suited for your business before investingin those technologies
  • Usebig data analytics to analyse your customers to further improve customersatisfaction
  • Exploreopportunities in Greater Bay Area, emerging economies on the Belt and Road, andother fast-growing markets in the Asia Pacific region and Africa
  • Investin improving strategic and managerial skills
  • Undertakea strategic review of your cost structure and potential business risks.

About CPA Australia

CPA Australia is one of the world's largest accountingbodies with more than 164,000 members working in 150 countries and regionsaround the world, and with more than 25,000 members working in seniorleadership positions. It has established a strong membership base of more than18,000 in the Greater China region.

About CPA Australia Asia-Pacific Small Business Survey

The CPA Australia Asia-Pacific Small Business Survey providesannual insights into the views of small businesses across the region and formspart of a longitudinal study that began in 2009. The 10th CPAAustralia annual survey comprised extensive surveying of 3607 small businessoperators in ten markets, including Hong Kong, Mainland China (Beijing,Guangzhou, Shanghai, Shenzhen and Chongqing), Taiwan, Malaysia, Vietnam,Indonesia, Singapore, the Philippines, Australia and New Zealand.

Market Summary -- China

Asia-Pacific Small Business Survey