Over one-third of small businesses surveyed in Mainland China plan to increase headcount this year

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What Mainland China's small businesses are also doing is staying ahead of their APAC peers in terms of technology use over the past five years.

In good news for the region, more than half (56%) of the small businesses (SMEs) surveyed in Mainland China expect to grow in 2023. Further, over one-third of small businesses (35%) are planning to increase their employee headcount this year, a slight increase from 2022, per CPA Australia's Asia-Pacific Small Business Survey. 

What Mainland China's small businesses are also doing is staying ahead of their APAC peers in terms of 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.

In fact, Mainland Chinese respondents were more likely (41%) to have sought professional advice from IT consultants last year than the survey average (29%). They also intend to innovate strongly - 93% of the respondents harbour such plans for 2023, the highest in APAC.

Lloyd Peng, President of CPA Australia's North China Committee, noted that a vast majority of the respondents (87%) come from businesses older than five years. As such, they were able to demonstrate strong resilience during the pandemic and overcame many challenges. 

He also pointed out that the government has announced a series of timely policies to support micro, small and medium-sized enterprises, such as for financing and stabilising raw material prices, "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."

The focus on technology is particularly strong in Mainland Chinese small businesses. Raymond Zhu, President of CPA Australia's East and Central China Committee noted: "The majority (61%) found technology investments last year boosted profits. Supported by government policies such as the 14^th Five-Year Plan and extra tax deductions for research and development, we expect this tech focus to continue."

As such, for better commercialisation of new products or services, he recommended businesses to focus on understanding changes in customer behaviour, as well as explore opportunities in markets such as the Greater Bay Area, ASEAN and Belt and Road markets."

For policymakers, he urged them to 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."

The final dimension of assessment was financing conditions. A large 90% per cent of Mainland Chinese small businesses expect to seek external funds this year, with 40% intending to seek funds for survival, while 46% intending to use the funds for growth. However, one-third expect it to be tough to access funds.

"Small businesses typically have a low credit rating and insufficient collateral. Hence, it may be difficult to obtain finance from traditional sources such as banks," said William Huang, member of CPA Australia's South China Committee. He added that the respondents' diverse funding sources include banks (29%), investors, venture capital or angel funds (30%), and non-bank financial institutions (18%).

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Lead image / CPA Australia