Businesses trailing on revenue growth
Chinese SME operators in New Zealand are confident the local economy will improve in the next 12 months, but less sure of their own revenue in the year ahead, according to a nationwide survey.
The latest MYOB Business Monitor survey of over 1,000 business owners and operators, conducted by Colmar Brunton, saw 48% of Chinese business operators express confidence in the economy in the year to August 2015. Only 35% of all SMEs are as positive. Around 5% of the businesses operators included in the research identified themselves as Chinese.
Although they are confident about general economic conditions, fewer Chinese operators report their own businesses are improving. In the 12 months to August 2014, less than a quarter (23%) of Chinese operators saw their revenue increase, while almost the same number, 22%, saw revenue fall. An average of 39% of all SMEs reported revenue growth in 2014.
Looking at the year ahead, expectations of growth are little changed, with 24% expecting revenue to improve in 2015, and 19% expecting falls. Almost a fifth of those surveyed don’t know their current or future revenue position – pointing to a large number of new businesses in the survey group.
MYOB NZ Sales Manager Business Division Scott Gardiner says while it is good to see confidence strong among Chinese SME operators, its clear many are not seeing the growth levels currently enjoyed across the SME sector.
“Revenue growth has definitely come off the pace in the second half of this year for Chinese business operators,” says Scott Gardiner.
“In March, 30% were reporting annual revenue improvements and 42% were expecting revenue to be up this year, so we’ve definitely seen conditions tighten,” he said.
Pressures creeping up
Mr Gardiner says operators need to be aware of key pressures building, especially as revenue is more constrained.
“Particularly concerning are rising interest rates – which is seen as a pressure by nearly twice as many Chinese business operators,” he said. “Also, the number of operators worried about meeting tax obligations points to a need for a greater focus on good accounting systems.”
Top three pressures for Chinese business operators in 2015:
- Interest rates – 42% (21% SMEs overall)
- Exchange rates – 22% (14% SMEs overall)
- Meeting tax obligations – 20% (15% SMEs overall)
Lower wage growth
As Chinese business operators prepare for slower growth, fewer are likely to increase wages and salaries for their staff, with just 14% planning to increase pay rates in 2015.
Employment intentions, however, are slightly higher than average, with 12% intending to take on more full time staff over the next 12 months, compared to 10% of all SMEs.
Despite pressure on revenue, only a small percentage of Chines business operators intend to increase prices in the coming year: 13% compared to the SME average of 25%.
More Chinese business operators embrace the online economy
According to the survey, Chinese business operators have one of the highest levels of online presence for business in the country, with only 42% not online, compared to 47% of all SMEs. 44% also use social media to promote their business.
“It is very positive to see Chinese business operators embrace the opportunities of the internet,” says Scott Gardiner. “We know from the wider survey that online businesses earn more revenue, so we hope that increasing use among the Chinese business community will help improve earnings in the coming year.
“However, one thing that is concerning is how few Chinese operators are satisfied with their work / life balance,” says Scott Gardiner. “Just 29% are satisfied with the balance they’ve been able to achieve – considerably fewer than the 53% of all local business operators.
“While we know it can be difficult to find time for other aspects of life when you are working hard in tightening conditions, its important for business owners to find time for other aspects of life – not just as a way to relax but also to find energy and inspiration for the year ahead in business.”
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About the MYOB Business Monitor
The MYOB Business Monitor is a national survey of 1,000+ New Zealand small and medium business owners and managers, from sole traders to mid-sized companies, representing the major industry sectors. It has run since 2009, commissioned to independent market research firm Colmar Brunton. This most recent survey ran in July/August 2014. The Monitor researches business performance and attitudes in areas such as profitability, cash flow, pipeline, technology usage and the government. The weighting of respondents by both geographical location and sector is based on overall market proportions as established by Statistics New Zealand and is drawn from an independent survey group, which includes both MYOB clients and non-clients.