China’s small businesses see biggest increase in new job creation plans since pandemic
The number of Mainland Chinese small businesses that expect to grow and hire new employees this year is on the rise, reflecting an improving business environment, according to a new survey by one of the world’s largest professional accounting organisations, CPA Australia.
CPA Australia’s annual Asia-Pacific Small Business Survey reveals that 59% of Mainland Chinese small businesses expect to grow in 2024, beating the results from the previous two surveys.
43% anticipate their company will increase their number of employees, the best result since our 2020 survey.
CPA Australia’s North China Committee President Lloyd Peng said, “It’s a positive sign that the number of Mainland Chinese small businesses that expect to recruit staff is gradually returning towards pre-pandemic levels.”
“This indicates improving confidence, as typically small businesses only add to their headcount when they are confident in their prospects. Reflecting the improved expectations, Mainland Chinese small businesses are taking actions to transform and enhance their value creation for sustainable growth.”
“Almost 30% of survey respondents reported that their businesses benefited from improved business management in 2023 and 86% will or may innovate through the introduction of new products and services this year. This upgrading of capacity and a strong focus on innovation helps to explain why small businesses expect to create more positions,” he said.
He further stated, “It’s important that stimulus policies to support private enterprises be continuously and consistently implemented this year. This should further ease the financial burden on small businesses, encourage further innovation and support overseas expansion amidst global uncertainties.”
“For example, the targeted tax incentives such as “Six Taxes and Two Fees” reduction and exemption policies, improving market access, boosting intellectual property protections and supporting domestic consumption,” Peng explained.
Increasing costs, increasing competition and rising interest rates are identified as major barriers for Mainland Chinese small businesses, the survey found.
Most other Asia-Pacific markets surveyed experienced the same challenges.
In response, Mainland Chinese small businesses increasingly embrace and invest in cutting-edge technologies to improve efficiency and reduce costs.
Survey results show that last year, Mainland Chinese small businesses led the Asia-Pacific in investments into advanced technologies like artificial intelligence (AI) (30%), enterprise resource planning (ERP) software (29%) and business intelligence software (27%).
CPA Australia’s East and Central China Committee President Raymond Zhu said, “Supportive policies, along with mature technology solutions in the market such as Artificial intelligence-as-a-Service (AIaaS) and leading digital infrastructure like 3.64 million 5G base stations in Mainland China, provide a strong foundation for small businesses to digitalise.”
“Relying on these AI tools and solutions, they can make business decisions, develop data-driven strategies, reduce costs, and even revolutionise the traditional operational models.
We recommend that Mainland Chinese small businesses enhance their cyber security and compliance management as part of their embracing of the AI era,” he said.
Zhu also recommended, “Our survey also shows that technology uptake, including e-commerce, has notably increased across ASEAN markets in the past five years.”
“We recommend that Mainland Chinese small businesses study this changing customer behaviour and introduce new products or services to cater to emerging demand.”
“These small businesses can use leading cross-border e-commerce platforms to expand into new markets including ASEAN and Belt and Road markets,” he said.
To support the remarkably high levels of technology adoption and innovation by Mainland Chinese small businesses, 90% expect to seek external funds this year.
Over half (52%) reported their main reason for seeking such funds is for growth, six per cent higher than last year.
CPA Australia’s South China Committee Member William Huang said, “The survey shows that Mainland Chinese small businesses found improved financing conditions last year.”
“49% said that accessing finance was easy or very easy in 2023, 10 percentage points higher than the result in 2022. Banks were the most popular source of finance, with 37% saying it was their main source of finance, in 2023, up from 29% in 2022.”
“The State Council has recently introduced guidelines on using a national financing credit service platform to help remove credit barriers for small businesses. We believe financial institutions can play a more active role in supporting small businesses to grow,” Huang added.
“To improve access to green and sustainable finance opportunities, we recommend small businesses start setting their low-carbon transition strategy and spend more time and resources on sustainability.”
The survey reveals 93% of Mainland Chinese small businesses are actively undertaking activities linked to environmental, social, and governance (ESG), the second highest result for the Asia-Pacific.
They are leading the Asia-Pacific in the adoption of green and sustainable finance opportunities.
Huang further explained, “Given Mainland China’s commitment to reach carbon neutrality before 2060, there are likely to be an increasing number of green and sustainable finance opportunities in the market to support the green transition of businesses.”
“These opportunities include but are not limited to government subsidies and grants, green loans and green guarantees. Small businesses should leverage such support to upgrade facilities or introduce new equipment as part of embedding sustainability into their operating model,” he concluded
CPA Australia collected 4,222 responses from small businesses in various industries across Mainland China, Hong Kong, Taiwan, Malaysia, Vietnam, India, Indonesia, Philippines, Singapore, Australia and New Zealand during November to December 2023 for the Asia-Pacific Small Business Survey. There were 753 respondents from Mainland China.
