CPA Australia: Technology and Digital Capabilities are Key for Small Businesses in China to Overcome the Challenges of COVID-19

BEIJING, CHINA – Media OutReach – 24 April 2020 – China’s
small business sector’s strong focus on technology and digital capabilities
places it in a better position to recover comparatively quickly from the
impacts of COVID-19, according to analysis of an annual Asia-Pacific Small
Business Survey conducted by CPA Australia, one of the world’s largest
accounting bodies.

 

Many of China’s small businesses also well placed to recover as they entered
the crisis with reasonably strong finances. Despite challenging conditions in 2019, 81 per cent of surveyed small businesses
from China reported that they grew and 57 per cent of small businesses
increased employee numbers.

 

Technology
and digital capabilities are key to support small businesses to manage
challenges

Even before the
Covid-19 pandemic, the survey results indicate a clear link between adoption of
digital technologies and strong business growth. With a surge in consumer
demand for e-commerce and online services caused by measures to control the COVID-19
outbreak, a strong focus on improving technology and
digital capabilities will be essential to support small businesses navigate
through this challenging time and help them rebound strongly.

 

Amongst the surveyed
markets, small businesses from China continue to be leaders in earning revenue
from online sales, adopting new digital or mobile payment methods and using
social media for business purposes. For example, 86 per cent of surveyed small
businesses from China earned over 10 per cent of their revenue from online sales, 91
per cent of businesses generated more than 10 per cent of their sales through
new payment technologies, and 98 per cent of businesses used social media for
business activities, including selling products or services, communicating with
existing customers and digital marketing.

 

An innovative culture is also very important for
small businesses steering through uncertain times. According to the survey,
small businesses from China are the most likely to innovate with 93 per cent of small businesses
stating that they will or intend to introduce a new product, service or
process in 2020.

 

They are also big investors in technology, and for
many this investment is generating a quick return, with 57 per cent finding
that such investment in 2019 was already profitable. Amongst all markets surveyed, small businesses from China
were the most likely to have invested in business intelligence and analytical
software, cloud computing and data visualisation software.

 

Given
China’s large middle-income population and recent government measures such as
issuing digital coupons and the plan to extend weekends to two and a half days
to boost domestic consumption, local small businesses with their strong digital
and technology capabilities and an innovative culture will be well positioned
for future growth.

 

It would
however be beneficial if they invested in reviewing and analysing their
existing customer data to improve customer satisfaction and utilise digital
technologies to identify new customer demands and tap into new business
possibilities that are likely to emerge over the course of the crisis and
beyond.

 

Financial support measures are key for small
business recovery

The survey findings
suggest that government financial support measures in 2019 such as tax reforms and
improvements to small business financing may have helped small businesses in
China to grow.

 

While small
businesses in China were most likely to identify ‘increasing costs’ as a
significant barrier to growth (30 per cent) in 2019, the percentage who selected
this option is at its lowest point since China was first included in the survey
in 2015. In addition, respondents who identified tax as a barrier to growth (9
per cent) is also at an all-time low, suggesting that various government
measures such as the 200 billion yuan tax cuts and fees reduction implemented
in 2019 are helping small businesses in China to manage through challenging
times.

 

Further, amongst the eleven surveyed markets, small
businesses from China were the most likely to state that it was easy or very
easy to access external finance, with 54 per cent of small businesses reported
that it was easy to access finance in 2019, suggesting that ease of access to
external finance is important for small businesses from China to fund their growth.

 

Since the COVID-19
outbreak, the Government has implemented numerous fiscal and monetary policies
to support small businesses, including value-added tax (VAT) relief for small
businesses and the injection of 550 billion yuan of liquidity into the market.
It is crucial for small businesses from China to keep abreast these government
support measures and make full use of them to reduce their financial burden,
including measures to reduce staff costs, materials costs, taxes and rent.

 

CPA Australia has six tips for China’s small
businesses in 2020:

• Make full use of
  government relief measures, including tax cuts and fee reductions /
  exemptions.
• Focus on improving
  cash flow and financial health.
• Keep abreast of
  technology trends such as the development of 5G technology and blockchain
  technology to identify opportunities such technologies provide to improve
  business operations and to stay ahead of competitors.
• Encourage staff with
  any downtime to undertake training so they are better skilled to meet the
  recovery needs of your business.
• Capitalise on your
  existing pool of loyal customers and focus on improving customer
  satisfaction to retain existing customers and to attract new customers.
• Keep an open eye to
  any opportunities that may emerge in the recovery.

Other CPA
Australia resources to assist small businesses in China to manage through
COVID-19

• CPA Australia’s checklist on managing through COVID-19

About CPA Australia

CPA Australia is one of the world’s largest accounting bodies with more
than 166,000 members working in 100 countries and regions around the world, and
with more than 25,000 members working in senior leadership positions. It has established
a strong membership base of more than 19,000 in the Greater China region.

 

About CPA Australia
Asia-Pacific Small Business Survey

The CPA Australia
Asia-Pacific Small Business Survey provides annual insights into the views of
small businesses across the region and forms part of a longitudinal study that
began in 2009. The 11^th CPA Australia annual survey comprised
extensive surveying of 4,193 small business operators in eleven markets,
including 772 from five cities in Mainland China (Beijing, Guangzhou, Shanghai,
Shenzhen and Chongqing), Hong Kong, Taiwan, Malaysia, Vietnam, Indonesia,
Singapore, the Philippines, India, Australia and New Zealand. The survey was
conducted between 18 November and 12 December 2019 before the COVID-19
pandemic.