Global trade tensions hit business confidence: CPA Australia Small Business Survey

While small business innovation is still strong in Asia, small businesses in Hong Kong are under pressure from global trade tensions and soaring rents.

CPA Australia's tenth annual Asia-Pacific Small Business Survey finds that overall, small business conditions in the region are slightly weaker than a year ago.

Global trade tensions appear to be the primary reason for a weakening in small business confidence in the Asia-Pacific region, the latest CPA Australia Asia-Pacific Small Business Survey has found.

The survey of more than 3600 small business owners in Australia, Mainland China, Hong Kong, Indonesia, Malaysia, New Zealand, the Philippines, Singapore, Taiwan and Vietnam found that small businesses that are growing strongly or expect to grow strongly are far more likely to:

  • invest in technology, including new digital and online payment technology
  • focus on improving customer satisfaction
  • innovate through new products, processes or services
  • seek to enter new markets
  • use social media to better engage with and understand customers
  • make online sales an important part of their business
  • spend more time on improving business strategy and management.

Key Highlights of the survey

Small businesses from Vietnam, Indonesia and the Philippines were the most likely to have grown in 2018, while Australian and Hong Kong small businesses were the least likely. Small business confidence in their growth prospects in 2019 was strongest in the Philippines, Vietnam and Indonesia and weakest in Australia and Hong Kong. Falls in confidence were largest in Hong Kong, while confidence increased strongly in Malaysia.

Confidence in the growth prospects of their local economy in 2019 was strongest in Vietnam, the Philippines and Indonesia and weakest in Hong Kong and Australia. Small business confidence in Malaysia’s economy in 2019 rose strongly from 2018, while Hong Kong recorded a large fall.

It appears that global trade tensions are behind the less positive results for 2019, with many owners and managers concerned that a global trade war will have a negative impact on their business, particularly in Hong Kong. Interestingly, Indonesian small businesses are more likely to expect that global trade tensions will have a positive impact on their business in 2019 rather than a negative impact. 

Asian businesses are far more likely to be using technologies such as online sales, new payment technologies and social media than counterparts in Australia and New Zealand. Asian businesses are far more likely to find that their investment in technology will be profitable sooner, and they tend to have younger owners and managers who want to use technology.

Small businesses from Mainland China lead in the use of e-commerce and new payment technologies, such as Alipay, Apple Pay and WeChat Pay. In fact, it would be difficult to find a business from Mainland China that is not selling online or using new digital payment options.

Fewer respondents expect a cyber attack in 2019, but nearly half had reviewed their cybersecurity measures in the previous six months.

Small business innovation

Small businesses in Asia are again more likely to be innovating by introducing a new product, process or service (to their market or the world) than Australian and New Zealand small businesses.

As in previous years, small businesses from Australia and New Zealand are much less likely to have required external finance, but those that needed it were the most likely to report easy or very easy financing conditions.

Given robust growth and a focus on technology, it is not surprising that small businesses from Mainland China, Vietnam and Indonesia were the most likely to have accessed external finance in 2018. These markets are also the most likely to access external finance in 2019.

Respondents aged under 40 are more likely than older business owners to have reported their business grew in 2018, and expect their business to grow in 2019.

Respondents aged under 40 are more likely to expect their local economy to grow in 2019 than respondents aged 50 or over.

Respondents aged under 40 are significantly more likely to use social media for business purposes and earn revenue from online sales, and are much more likely to be innovating and looking to sell into overseas markets.

Suggestions for small businesses from the survey:

  • Seek advice on which technologies are best suited for your business and if affordable, invest in those technologies
  • Use data so that you can learn more about your customers and improve customer satisfaction
  • Look for government incentives that support innovation
  • Explore opportunities in the fast-growing economies of Asia
  • Invest in improving the strategic and management skills of your business
  • Undertake a strategic review of costs and risks

Suggestions for how governments can better support small businesses:

  • Offer incentives, information and training, and work with key influencers to improve the digital capability of small businesses, so that they are better placed to invest in and use the most appropriate technologies for their business 
  • Continue to offer incentives to small business to innovate
  • Continue to expand the number of free trade agreements and government trade offices

Stay in touch

CPA Australia’s policy team welcomes feedback and comments. Visit the policy pages for more details about our submissions, plus information about open consultations and the latest policy bulletins and newsletters.

Read next: 10th annual CPA Australia Small Business Survey

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June 2019
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