Chinese small and medium-sized enterprises are poised to profit this year as overall business conditions improve, despite their need to brush up risk management techniques due to increased global uncertainties.
About 74 percent of respondents to a survey of Chinese SMEs said their businesses had grown last year while 77.3 percent anticipated that business will grow in the coming year. The survey was conducted by CPA Australia, a professional accounting body representing 160,000 members.
This was CPA Australia's seventh online survey and it interviewed 2,971 Asian SMEs in October 2016. SMEs that employed less than 20 members of staff from Australia, the Chinese mainland, Hong Kong, Indonesia, Malaysia, New Zealand, Singapore and Vietnam were surveyed.
The accounting body also interviewed 621 SMEs located in Beijing, Shanghai, Guangzhou and Chongqing.
The survey revealed Chinese SMEs are highly proficient in technology adoption, with 96 percent using social media for business purposes. On top of this, 24.3 percent of SMEs expect 30 percent of their revenues to come from online sales while another 40.1 percent believe business internet connectivity is fast enough for their needs.
"With many Chinese small businesses having a focus on innovation, e-commerce and training, we are likely to see an increasing number of China's small businesses evolving to become large, successful global businesses in the next few years. The future of China's small business sector is very positive," CPA Australia said in its report summary.
The findings also showed Chinese SMEs were generally satisfied with financing demands, with 80.7 percent seeking external financing and 40.3 percent found it is easy or very easy to access external finance. Another 66.5 percent have sought funds to propel business growth.
CPA Australia agrees the subdued economic growth prospect creates a challenging market environment for Chinese SMEs this year.
"Increasing costs, increasing rent and increasing competition are the top three issues Chinese small businesses are most likely to believe are barriers to their growth," the survey summary said.
Hence, Chinese small businesses are advised to adopt various risk management policies due to increased global uncertainties ahead.
"Inventory control, overseas account receivable management, adoption of electronic payment technology, intellectual property protection, cost control, cash flow enhancement, cyber security as well as internal control procedures such as fraud control and disaster recovery, are the essential risk management techniques that Chinese SMEs need to harness," said Peter Man-kit, former president of CPA Australia's Greater China division.