Mainland Chinese small businesses show strong confidence in growth
The small business sector in Mainland China is showing strong signs of confidence. 64% of small businesses expect their revenue to grow and 42% expect to increase their employee numbers in 2021.
These results are part of CPA Australia’s 2020-21 Asia-Pacific Small Business Survey, published today. The survey canvasses the views of 4,227 small businesses in 11 markets across the Asia-Pacific region, including India, Singapore and Vietnam, to understand their business strategies and outlook. Seven hundred and seventy-nine Mainland Chinese small businesses took part.
Covid-19 is not expected to be a major barrier for many Mainland Chinese small businesses in 2021. 51% have already recovered from the negative impacts of the pandemic or expect to recover in 2021, the second highest result among the markets surveyed.
“The successful implementation of control measures to mitigate the health and economic impacts of the pandemic translated into Mainland China’s small businesses enjoying a relatively positive 2020,” said Mr.Justin Qiu, president of CPA Australia’s North China Committee.
“While there was an understandable fall in the number of small businesses that grew in 2020, 83% of surveyed Mainland Chinese businesses grew or stayed the same last year, the best result of the markets surveyed.
“A strong emphasis on innovation and technology means that Mainland Chinese small businesses are well-prepared for growth. For three consecutive years, small businesses from Mainland China have been the leaders in earning revenue from online sales, using new digital or mobile payment technologies and using social media for business purposes.”
In 2020, 82% of surveyed Mainland Chinese small businesses earned over 10% of their revenue from online sales. Meanwhile, 91% generated more than 10% of their sales through new payment technologies and 94% used social media in 2020. The survey results show that these activities are strongly associated with high growth businesses.
“With the survey showing e-commerce growing across the region, there are excellent opportunities for Mainland Chinese small businesses to use their online expertise to diversify their exports and tap into new markets,” Qiu said.
Small businesses in Mainland China found ‘government support and incentives’ to be the second most positive influence on their business after ‘customer loyalty’ in 2020. 24% of small businesses sought government support and subsidies in response to Covid-19.
“The results show that government relief measures to help small businesses in 2020 had a strong positive influence on many small businesses. This highlights the important role governments can play in supporting small businesses in difficult times,” said Kevin Ng, member of CPA Australia’s North China Committee.
Although ‘increasing costs’, ‘cash flow difficulties’ and ‘increasing competition’ were identified as key barriers to growth, 48% of Mainland Chinese small businesses expect to seek external finance for business growth this year, up from the 43% last year. These results reflect strong expectations for a rebound in 2021.
“The measures and incentives recently announced in the Government Work Report 2021 should provide further support to businesses facing challenges such as financing constraints, and position them for future expansion,” Ng said.
“These measures, including tax cuts, fees reduction, raising the VAT threshold for small businesses, and increasing the tax deduction on research and development expenses, will not only help reduce the financial burden on small businesses but also spur additional investment into innovation and technology.
“Together with the resilient nature of small businesses in Mainland China, these measures are likely to lead to a rebound in business growth in 2021,” Ng said.
Download CPA Australia Asia-Pacific Small Business Survey 2020-21
