THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT

THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT

2 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT LEGAL NOTICE CPA Australia Ltd ( CPA Australia ) is one of the world s largest accounting bodies, representing more than 155,000 members of the financial, accounting and business profession in 118 countries. ISBN: 978-1-921742-79-8 For information about CPA Australia, visit our website cpaaustralia.com.au First published 2016 CPA Australia Ltd ACN 008 392 452 Level 20, 28 Freshwater Place Southbank Vic 3006 Australia Copyright CPA Australia Ltd (ABN 64 008 392 452) ( CPA Australia ), 2016. All rights reserved. CPA Australia owns all copyright in these materials or uses it under licence or applicable law. For permission to reproduce any material, a request in writing is to be made to the Legal Business Unit, CPA Australia Ltd, Level 20, 28 Freshwater Place, Southbank, Victoria 3006 Australia. DISCLAIMER CPA Australia has used reasonable care and skill in compiling the content of these materials. However, CPA Australia makes no warranty that the materials are accurate and up to date. These materials do not constitute the provision of professional advice whether legal or otherwise. Users should seek their own independent advice prior to relying on or entering into any commitment based on the materials. The materials are purely published for reference purposes alone. CPA Australia, their employees, agents and consultants exclude completely all liability to any person for loss or damage of any kind including but not limited to legal costs, indirect, special or consequential loss or damage (however caused, including by negligence) arising from or relating in any way to the materials and/or any use of the materials. Where any law prohibits the exclusion of such liability, then to the maximum extent permitted by law, CPA Australia s liability for breach of the warranty will, at CPA Australia s option, be limited to the supply of the materials again, or the payment of the cost of having them supplied again.

3 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT OVERVIEW CPA Australia Asia-Pacific Small Business Survey 2015 is the sixth in a series of annual reports measuring small business confidence, the drivers of confidence, technology uptake and access to finance by small businesses. The data is compared across the eight economies included in this survey and over time. In total, 2932 participants completed the survey, including 510 from Australia, 610 from the mainland of China, 265 from Hong Kong, 306 from Indonesia, 310 from Malaysia, 311 from New Zealand, 310 from Singapore and 310 from Vietnam. Of the 610 participants from the mainland of China, 155 were from Beijing, 152 were from Chongqing, 147 were from Guangzhou and 156 were from Shanghai. The online survey was conducted with a random sample of small business owners/managers between 24 September and 14 October 2015. The sample was obtained through panel providers. To qualify for the survey, participants were required to be an owner, a senior manager (defined as being a director, a principal, a CEO, a CFO, a senior manager or a managing director) or a qualified accountant of a business with fewer than 20 employees.

4 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT SUMMARY OF GUANGZHOU RESULTS Small businesses in Guangzhou are positive, innovating, growing their e-commerce presence and outcompeting many businesses from elsewhere in the Asia-Pacific. CPA Australia s Asia-Pacific Small Business Survey reveals that Guangzhou s small businesses are positive about their business and China s economy and they have a strong focus on innovation, e-commerce and business management. The focus on innovation, e-commerce and improving business management is flowing through to business growth, with the number of small businesses from Guangzhou that grew in the past 12 months rising 10.6 percentage points to 75.5 per cent in this survey from the last. This strong sentiment is expected to continue in 2016, with 74.8 per cent expecting to grow in the next 12 months, which is above the survey average of 70.7 per cent, Hong Kong s reading of 63.8 per cent and Singapore s reading of 58.7 per cent. This strong growth is translating through to the sector being a large creator of jobs in Guangzhou, with 39.5 per cent of Guangzhou s small business respondents increasing employee numbers in the past 12 months, higher than the number of small businesses from Hong Kong and Singapore that created jobs over that period (32.5 per cent and 19.7 per cent respectively). With China s economy being impacted by a variety of factors, including slowing domestic growth (which remains very strong, however) and weak recoveries in the economies of the US, Japan and the euro area, the increase in the number of small businesses that reported growing in the past 12 months shows the resilience of Guangzhou s and China s small business sector. Such resilience and their strong focus on innovation, e-commerce, social media and improving business management should mean that Guangzhou s small businesses are well placed to take advantage of opportunities emerging from government policies, including the Belt and Road initiative. The survey results clearly demonstrate that there are very good reasons to be confident in Guangzhou s small business sector, with nearly a third of Guangzhou s small businesses definitely expecting to undertake innovation through the introduction in the next 12 months of a new product, service or process that is unique to their local market or the world. When it comes to innovation, Guangzhou s small businesses (with 32.0 per cent definitely expecting to undertake innovation) are ahead of their competitors from Shanghai (25.0 per cent), Hong Kong (17.7 per cent) and Singapore (15.2 per cent), but behind Beijing (41.3 per cent). Innovation is not the only strong focus for Guangzhou s small businesses, which are also likely to focus on: growing their e-commerce presence to a large extent over the next 12 months (34.0 per cent of Guangzhou s small businesses expect to grow their e-commerce presence strongly in the next 12 months, compared with 29.5 per cent of Shanghai s small businesses and 19.4 per cent of Singapore s small businesses, but 43.9 per cent for Beijing and 42.6 per cent for Hong Kong) improved business management (34.0 per cent of Guangzhou s small businesses stated that improved business management had a major positive impact on their business in the past 12 months compared with 32.1 per cent of Shanghai s small businesses, 20.4 per cent of Hong Kong small businesses and 20.3 per cent of Singapore s small businesses). This strong focus on innovation, e-commerce and improving business management means that Guangzhou s small businesses are in a good position to outcompete their less nimble and tech-savvy competitors and remain competitive against small business from Singapore, Hong Kong and other parts of China.

5 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT Guangzhou s small businesses are also facing challenges. Like their counterparts in Hong Kong, many of Guangzhou s small businesses stated that increasing costs had a major detrimental impact on their business in the past 12 months. It seems, however, that Guangzhou s small businesses are responding well to this challenge. The focus on e- commerce can reduce business costs such as rent while maintaining their ability to reach out to customers. The strong focus on improving business management should also provide many of Guangzhou s small businesses with the know-how to better manage cost pressures. The range of initiatives China s government has implemented or is implementing to encourage innovation, such as the guidelines to promote mass entrepreneurship and innovation and the Made in China 2025 plan should further inculcate a culture of innovation and entrepreneurship amongst Guangzhou s small businesses. Such a culture should help Guangzhou s small businesses compete and help drive the next phase of China s astonishing economic growth story. Guangzhou s small businesses are not only growing strongly, but creating jobs and preparing for the future, and they are well placed to compete with small businesses from other parts of the Asia-Pacific, including Shanghai, Hong Kong and Singapore. Other results from the survey: Demographics Respondents from Guangzhou are typically below 40 (62.6 per cent) and the business was established less than 10 years ago. There is a strong correlation between younger business owners and those businesses that expect to grow, sell online, use social media for business purposes and innovate through the introduction of new products, processes or services. Access to finance Those small businesses from Guangzhou that sought finance in the past 12 months were significantly more likely to find the experience easier than in 2014 (65.6 per cent found access to finance easy or very easy in this survey compared with 43.9 per cent from the last survey) While government policies to encourage more lending to the sector by the nation s banks would have influenced this easing of finance conditions, small businesses in Guangzhou remain almost as likely to seek finance outside of the banking sector, particularly from non-banking financial institutions. Funding business growth remains the most important reason for accessing external finance.

6 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT MAJOR FINDINGS FOR GUANGZHOU Guangzhou s small businesses, with their strong focus on innovation, are well placed to grow, create jobs and export in 2016 and beyond. With small businesses with an e-commerce presence being more likely to be growing and creating jobs, Guangzhou's strong focus on e-commerce is a competitive advantage for its business and the economy. With small businesses that expect to grow revenue from exporting being more likely to be growing and creating jobs, more small businesses from Guangzhou should consider a stronger focus on exporting. With the survey results showing a strong connection between social media use and business growth, the very strong uptake of social media by Guangzhou s small businesses is a competitive advantage. Reflecting strong business conditions, nearly three in five of Guangzhou s small businesses plan to increase their headcount in 2016. Guangzhou s small businesses are more likely to expect their business to grow in 2016, while confidence in China s economy remains high. Access to finance became easier for a significant number of small businesses from Guangzhou in 2015.

7 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT KEY SURVEY FINDINGS FOR GUANGZHOU INNOVATION Guangzhou s small businesses, with their strong focus on innovation 1, are well placed to grow, create jobs and export in 2016 and beyond. Small businesses that will definitely introduce a new product, service or process in the next 12 months that is unique to their market or the world Beijing 41.3% Guangzhou Chongqing 28.3% 32.0% Shanghai Survey average 22.0% 25.0% Hong Kong 17.7% Singapore 15.2% 1 Innovation, for the purpose of the survey, is taken to be the introduction of a new product, service or process that is unique to a market or the world.

8 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT The relationship between innovation and jobs creation, business growth and exporting EMPLOYEE NUMBERS Percentage that expect to definitely introduce a product, service or process that is new to their market or the world Expecting to increase employee numbers in the next 12 months NOT expecting to increase employee numbers in the next 12 months BUSINESS GROWTH Expecting to grow their business in the next 12 months NOT expecting to grow their business in the next 12 months EXPORTING Expecting revenue from overseas sales to grow strongly in the next 12 months NOT expecting to grow their revenue from overseas sales in the next 12 months

9 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT With Guangzhou s small business sector being a leader on innovation in the region, small businesses from the city are well placed to grow and compete against their rivals from elsewhere in China, Singapore, New Zealand and Australia. This strong focus on innovation is a competitive advantage. With the survey results showing innovative businesses are significantly more likely to be growing, exporting and creating jobs, it is easy to see why China s government is focused on encouraging mass entrepreneurship and innovation, and improving manufacturing innovation through the Made in China 2025 national plan. As a recent OECD paper on innovation stated, in the long run, it is difficult to imagine growth without innovation. Businesses are also more likely to definitely expect to undertake innovation through the introduction in the next 12 months of a new product, service or process that is unique to their market or the world if they: have a business owner/manager aged under 40 have between 5 and 19 staff are from the banking, finance and insurance sector or the manufacturing sector. KEY FINDING Guangzhou s small businesses, with their strong focus on innovation, are well placed to grow, create jobs and export in 2016 and beyond. We suggest that those small businesses that are not innovating should consider incorporating innovation into how they run their business.

10 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT E-COMMERCE With small businesses with an e-commerce presence being more likely to be growing and creating jobs, Guangzhou s strong focus on e-commerce is a competitive advantage for its business and the economy. Small businesses that generated revenue from online sales Shanghai Guangzhou Beijing Chongqing Hong Kong 92.3% 91.8% 91.0% 85.5% 80.4% Survey average Singapore 63.6% 68.9% Small businesses that intend to grow their e-commerce presence to a large extent in the next 12 months Beijing Hong Kong Chongqing Guangzhou Survey average Shanghai 29.5% 34.0% 32.2% 43.9% 42.6% 38.2% Singapore 19.4%

11 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT The relationship between e-commerce and business growth, jobs creation and exporting BUSINESS GROWTH Percentage that expect to grow their e-commerce presence to a large extent Expecting to grow their business in the next 12 months NOT expecting to grow their business in the next 12 months EMPLOYEE NUMBERS Expecting to increase employee numbers in the next 12 months NOT expecting to increase employee numbers in the next 12 months EXPORTING Expecting revenue from overseas sales to grow strongly over the next 12 months NOT expecting to sell into overseas markets in the next 12 months Small businesses from Guangzhou are among the leaders from the region in generating revenue from online sales. This advantage is likely to be maintained in 2016 with over one-third (34.0 per cent) small businesses from Guangzhou expecting to grow their e-commerce presence strongly in the next 12 months.

12 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT With the survey results showing that small businesses that are selling online and seeking to grow their e-commerce presence are significantly more likely to be growing and creating jobs, it is easy to see why so many small businesses in Guangzhou have an e-commerce presence. The focus on e-commerce should also assist small businesses from Guangzhou to better manage rental costs. E- commerce allows some businesses to take up less floor space, particularly in high rental locations, while still giving them access to customers, many of whom are becoming increasingly familiar with purchasing goods and services online. Small businesses are also more likely to earn income from online sales where: they have between 5 and 19 staff the business has been established for less than 21 years the respondent is aged under 40 the business is from the manufacturing sector. KEY FINDING The high level of focus on e-commerce by Guangzhou s small businesses is a key competitive advantage for those businesses and the economy. It should allow many small businesses to better control rent costs and improve their connection with customers.

13 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT SMALL BUSINESS AND EXPORTING With small businesses that expect to grow revenue from exporting being more likely to be growing and creating jobs, more small businesses from Guangzhou should consider having a stronger focus on exporting. Small businesses expecting that revenue from overseas sales will grow in the next 12 months Guangzhou 19.7% 50.3% Shanghai Beijing Hong Kong 10.9% 18.7% 22.3% 55.1% 41.3% 32.8% Chongqing Singapore Survey average 13.8% 17.7% 19.1% 37.5% 31.3% 29.7% Grow strongly Grow a little

14 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT The relationship between exporting, and jobs creation and business growth EMPLOYEE NUMBERS Percentage that expect their revenue from exporting to grow strongly Expecting to increase employee numbers in the next 12 months NOT expecting to increase employee numbers in the next 12 months BUSINESS GROWTH Expecting to grow their business in the next 12 months NOT expecting to grow their business in the next 12 months While seven in ten of Guangzhou s small businesses expect to grow their revenue from overseas sales in the next 12 months, the highest reading of the cities from the mainland of China included in this survey, there is scope for small businesses from the city to have a stronger focus on exports, particularly when major export markets improve. With the survey results showing that small businesses that are exporting are more likely to be growing and creating jobs, this overall focus on exporting is a competitive advantage for Guangzhou s small businesses and the economy more broadly. While such an export focus does come with risks, including foreign exchange risks and the potential for downturns in key markets, the advantages of exporting over focusing on the domestic market are significant. A focus on the domestic market limits growth potential and increases the business s risk exposure should the local economy slow. It also means that the business may be less exposed to competitive pressures, which the survey results show may have a negative impact on innovation and growth. Further, the business may be less exposed to new ideas from other markets, which may also negatively impact innovation.

15 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT With the survey results showing a strong link between increasing revenue from exporting and business growth and jobs creation, it is easy to see why governments across the region are taking action to support and encourage international trade through initiatives such as the Belt and Road initiative and the China-Australia Free Trade Agreement. Small businesses are also more likely to expect strong growth in their earnings from overseas in the next 12 markets if: the business is from the manufacturing sector the businesses has between 5 and 19 employees the respondents is aged under 50 the business has been established for less than 21 years. KEY FINDING The focus of many of Guangzhou s small businesses on exporting is a competitive advantage for them and the economy. With a strong connection between exporting and growth and jobs, more small businesses should consider a greater focus on exporting as part of their business strategy.businesses to consider exporting as part of their business strategy.

16 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT SOCIAL MEDIA With the survey results showing a strong connection between social media use and business growth, the very strong uptake of social media by Guangzhou s small businesses is a competitive advantage. Small businesses that used social media in their business 100% Guangzhou Shanghai 90% Hong Kong 80% Singapore 70% 60% With the survey results showing a connection between social media use for business purposes and business growth, the very strong uptake of social media amongst Guangzhou s small businesses and small businesses across China is a competitive advantage, particularly over businesses from Australia and New Zealand where the number of small businesses using social media is significantly lower. With customers being increasingly likely to seek to communicate and transact with businesses via social media, a robust social media presence should enhance a small business s ability to attract, retain and transact with customers. It may also enhance their brand reputation and assist them to grow their business. Those that use social media use it for a variety of purposes including communicating with existing customers, promoting their business to potential customers, and selling their products or services. Small businesses are significantly less likely to be using social media for business purposes where: the respondent is aged 50 or over the business has been established for over 20 years the business has four or fewer staff. KEY FINDING With small businesses using social media being more likely to grow, the large-scale adoption of social media by Guangzhou s small businesses is a competitive advantage that should help generate future growth.

17 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT JOBS AND SMALL BUSINESSES Reflecting strong business conditions, nearly three in five of Guangzhou s small businesses plan to increase their headcount in 2016. Small businesses that expect to increase employee numbers in the NEXT 12 months Chongqing Beijing Guangzhou 60.8% 58.1% 57.1% Shanghai Survey average 45.5% 41.8% Hong Kong Singapore 27.7% 32.8% Relationship between jobs creation and business growth, innovation, exporting and e-commerce BUSINESS GROWTH Percentage that expect to increase employee numbers in the next 12 months Expecting to grow in the coming 12 months NOT expecting to grow in the coming 12 months

18 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT INNOVATION Definitely expecting to introduce a new product, service or process unique to their country or the world NOT expecting to introduce a new product, service or process unique to their country or the world EXPORTING Expect to grow export revenue strongly NOT expecting to sell into overseas markets E-COMMERCE Expect to grow their e-commerce presence to a large extent NOT expecting to grow their e-commerce presence The large increase in the number of small businesses from Guangzhou that are expecting their business to grow in 2016 from 2015 is flowing through to job creation, with 57.1 per cent of Guangzhou s small businesses planning to increase employee numbers in the next 12 months. This reading is above the forecasts for Shanghai, Hong Kong and Singapore, and is one of the highest readings in the survey. Other factors contributing to this very healthy jobs projection include the strong focus on innovation, e-commerce and social media by Guangzhou s small businesses.

19 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT Over the next 12 months, businesses that expect to increase employee numbers are also significantly more likely to: intend to significantly increase their e-commerce presence strongly grow their revenue from overseas sales innovate through definitely introducing a new product, service or process. Small businesses are also more likely to expect to increase employee numbers over the next 12 months if: the business is in the manufacturing, accommodation or food services industries the business has between 5 and 19 staff the respondent is aged under 40. KEY FINDING A stronger focus on exporting by more small businesses in Guangzhou could lead to further jobs creation by the sector.

20 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT BUSINESS AND ECONOMIC CONDITIONS Guangzhou s small businesses are more likely to expect their business to grow in 2016 while confidence in China s economy remains high, Small businesses that grew over the past 12 months 90% 80% Shanghai Guangzhou 70% Hong Kong 60% Singapore 50% Small businesses that expect their business to grow in the coming 12 months 80% 70% Guangzhou Shanghai 60% Hong Kong Singapore 50% 40%

21 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT Small businesses that expect their local economy to grow over the next 12 months 90% 80% 70% Guangzhou Shanghai 60% 50% Hong Kong Singapore 40% Three-quarters of small businesses from Guangzhou expect their business to grow in 2016, an 8.0 percentage point increase from their forecast for 2015. This is significantly higher than the percentage of Australian, New Zealand, Hong Kong and Singaporean small businesses that expect to grow in 2016. However, the reading is largely in line with the percentage of small businesses that expect to grow in the other cities from the mainland of China included in this survey. Just less than three-quarters of small businesses from Guangzhou expect China s economy to grow in 2016, the highest forecast of the cities from the mainland of China included in this survey. This strong level of small business confidence in China s economy comes at a time when China is under a range of pressures including slowing domestic growth (although growth remains very robust), uncertainty over US interest rates, and weaker than expected recoveries in the economies of the US, Japan and the euro area. Small businesses that expect to innovate, grow their e-commerce presence to a large extent and strongly grow revenue from exports are significantly more likely to expect their business to grow in the next 12 months. In addition, small businesses are more likely to expect to grow if: they have between 5 and 19 employees the respondent is aged under 50 the business reported growing in the past 12 months. Further, small businesses are more likely to expect their local economy to grow if: they have between 5 and 19 employees they are from the manufacturing, property or construction sector the respondent is aged under 40. KEY FINDING A stronger focus on exporting could lead to more small businesses from Guangzhou experiencing growth.

22 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT ACCESSING FINANCE Access to finance became easier for a significant number of small businesses from Guangzhou in 2015. Access to finance the percentage that experienced easy to very easy financing conditions in the previous 12 months 70% 60% Guangzhou Shanghai 50% 40% Hong Kong 30% Singapore 20% Access to finance became easy to very easy for a significantly larger number of small businesses from Guangzhou in the past 12 months. These significantly easier financing conditions are being experienced throughout China, with small businesses in Guangzhou having the easiest access to finance across all the markets included in this survey. These easier financing conditions may have had some impact on the demand for finance in the past 12 months, with the number of small businesses from Guangzhou seeking external finance increasing 7.5 percentage points to 85.0 per cent. The Australian and New Zealand results, however, demonstrate that relatively easy access to finance does not necessarily translate into increased demand for finance. While government policies to encourage more lending to the sector by the nation s banks would have contributed to an easing of finance conditions, small businesses in Guangzhou, like the other cities from the mainland of China included in this survey, remain highly likely to seek finance outside of the banking sector. In fact, of the markets surveyed, Guangzhou s small businesses were the least likely to source finance from a bank, with only 23.2 per cent stating that was their main source of finance compared with the survey average of 43.9 per cent. Guangzhou s small businesses were highly likely to have sought external finance to assist with business growth, followed by borrowing to fund the purchase of a capital asset. The number of small businesses from Guangzhou that sought external finance for growth jumped from 22.7 per cent in 2014 to 50.4 per cent in 2015. KEY FINDING Accessing finance became significantly easier for many of Guangzhou s small businesses in 2015..

23 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT APPENDICES GUANGZHOU DATA SNAPSHOT COMPARISON WITH HONG KONG, SHANGHAI AND SINGAPORE Business and economic growth 80% Small businesses that expect their business to grow - Guangzhou against survey average 80% Guangzhou small businesses that expect their business to grow against small business growth expectations for China's economy 70% 70% 60% 60% 50% 50% 40% 40% 30% 2014 2015 30% 2014 2015 Guangzhou Survey average Expect their business to grow Expect local economy to grow Guangzhou Shanghai Hong Kong Singapore Businesses that grew in the last 12 months 75.6% 79.5% 63.8% 58.7% Businesses that expect to grow in the next 12 months 74.8% 76.9% 55.1% 56.5% Businesses that expect the local economy to grow in the next 12 months 74.1% 71.1% 52.1% 48.1% Jobs creation Guangzhou Shanghai Hong Kong Singapore Increased employee numbers over the PAST 12 months 39.5% 39.7% 32.5% 19.7% Plan to increase employee numbers in the NEXT 12 months 57.1% 45.5% 32.8% 27.7% Innovation Definitely expect to introduce a new product, service or process unique to their country or the world Guangzhou Shanghai Hong Kong Singapore 32.0% 25.0% 17.7% 15.2% Online sales and social media Guangzhou Shanghai Hong Kong Singapore Earned revenue from online sales 91.8% 92.3% 80.4% 63.6% Expect to grow their e-commerce presence to a large extent in the next 12 months 34.0% 29.5% 42.6% 19.4% Used social media for business purposes 98.6% 96.2% 93.2% 79.6%

24 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT Exporting Expect revenue from overseas markets to grow strongly over the next 12 months Guangzhou Shanghai Hong Kong Singapore 19.7% 10.9% 22.3% 17.7% Improved business management Improved business management had a major positive impact on their business Guangzhou Shanghai Hong Kong Singapore 34.0% 32.1% 20.4% 20.3% Costs Increasing costs had a major negative impact on their business Rent was the cost increase most detrimental to their business Guangzhou Shanghai Hong Kong Singapore 34.0% 39.1% 41.9% 36.1% 37.4% 41.7% 41.9% 32.6% Access to finance Guangzhou Shanghai Hong Kong Singapore Definitely will seek external funds over the next 12 months 41.5% 36.5% 31.3% 15.8% Found it easy or very easy to access finance 65.6% 57.1% 43.5% 34.1% Demographics Guangzhou Shanghai Hong Kong Singapore Business is 10 years old or younger 64.6% 66.7% 58.9% 65.5% Respondent is aged 39 or younger 62.6% 64.8% 63.4% 47.7%

25 THE CPA AUSTRALIA ASIA-PACIFIC SMALL BUSINESS SURVEY 2015 GUANGZHOU REPORT ABOUT THE SURVEY The CPA Australia Asia-Pacific Small Business Survey 2015 is part of a longitudinal annual study of small business conducted by CPA Australia since 2009. This report presents a cross-market comparison between the eight markets surveyed and, where applicable, a comparison of results from 2009 onwards. The survey was conducted between 24 September and 14 October 2015. The mainland of China and Vietnam were included in the survey for the first time in 2014. Indonesia and New Zealand were included in 2011. The survey in the mainland of China was conducted in Beijing, Chongqing, Guangzhou and Shanghai. All data for China excludes Hong Kong, which is shown separately. Interview method In each market, the online survey was conducted amongst a random sample of small business owners/managers. The sample was obtained through online panel provider Research Now and their Asian panel partner ipanelonline. To qualify for the survey, participants were required to be an owner, a senior manager (defined as being a director, a principal, a CEO, a CFO, a senior manager or a managing director) or a qualified accountant of a business with fewer than 20 employees. Sample In total, 2932 participants completed the survey, including 510 from Australia, 610 from the mainland of China, 265 from Hong Kong, 306 from Indonesia, 310 from Malaysia, 311 from New Zealand, 310 from Singapore and 310 from Vietnam. Of the 610 participants from the mainland of China, 155 were from Beijing, 152 were from Chongqing, 147 were from Guangzhou and 156 were from Shanghai. Questioning Questions on small business confidence, employment, social media, costs and access to finance were drawn from previous surveys. Some slight modifications to question wording were made to a number of those repeated questions. Questions on innovation, major influences on the business environment, e-commerce, spending on marketing and assets and exporting are new in this survey. Questionnaires in Australia, Singapore and New Zealand were administered in English. The Hong Kong questionnaire was administered in traditional Chinese, the questionnaire for Malaysia was administered in both English and Bahasa Malaysia, Indonesia s questionnaire was administered in Bahasa Indonesia, China s questionnaire was administered in simplified Chinese, and Vietnam s questionnaire was administered in Vietnamese. Rounding All percentage results shown in this report have been rounded.

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