Small business innovation in Asia

Posted on February 8, 2016 by ATB Chartered Accountants

Small businesses in Asian economies, including Indonesia and China will be introducing new innovations into their markets over the next year. A recent survey by the Asia-Pacific Small Business Survey has indicated that over 25% of all businesses in Indonesia, China, Malaysia and Vietnam are planning for the introduction of innovative materials into their markets. In Indonesia in particular, up to 46% of small businesses are preparing to launch a new product, service, or process in the next 12 months. This proportion of small businesses places Indonesia at number one innovative country for small businesses within the Asia-Pacific region.

The survey also indicated that 92.6% of small businesses in Asia reported that they make use of social media throughout their businesses. This high proportion can be compared to Australia’s average social media use for small businesses being reported at 50.2% and New Zealand at 56.5%. For Asian small businesses, 82.3% of businesses utilised e-commerce, comparable to 33% and 37% from Australia and New Zealand respectively. GlobalWebIndex have estimated that on average, Indonesians spend 3.5 hours a day on mobile internet. Given the amount of time spend online by consumers, it makes a great deal of sense that these businesses are maintaining an active online presence for their target markets, something that Australian and New Zealand small businesses are lacking.

When it comes down to innovation, Australia as a whole is being outperformed by New Zealand and East Asian competitors. While there are some small businesses who use a high level of innovation, these are unfortunately the exception, whereas innovation should be the rule if we are to remain competitive. In countries with high levels of innovation such as Indonesia and Vietnam, there is also high expectations of growth for both individual businesses and for their local economy. Indonesia reported an average of 84% of businesses expecting their local economy to grow in 2016, and 94% expecting their own businesses to grow in the next 6 months. Vietnam saw an average of 90% of small businesses expecting the local economy to continue growing, whereas only 44% of Australians reported the same thing.

The percentage of businesses that will introduce a new product, service or process in the next 12 months that has never been seen in their markets before are listed below for the top 8 economies in the Asia-Pacific region can be seen below.

Indonesia 45.8%
China 31.6%
Malaysia 29%
Vietnam 26.1%
Hong Kong 17.7%
Singapore 15.2%
New Zealand 6.5%
Australia 5.1%

The table below indicates the proportion of businesses which believe their local economy will grow in the next 12 months, with comparisons to the previous year.

Country Current Year Previous Year
Vietnam 90% 80%
Indonesia 84% 89%
China 71% 71%
New Zealand 53% 62%
Hong Kong 52% 39%
Singapore 48% 61%
Malaysia 47% 68%
Australia 44% 44%

Below you will find a table highlighting the proportion of businesses which expect their business to prow in the next 12 months, in comparison to last year.

Country Current Year Previous Year
Vietnam 94% 89%
Indonesia 93% 91%
China 78% 77%
Malaysia 70% 69%
New Zealand 66% 56%
Australia 57% 46%
Singapore 57% 59%
Hong Kong 55% 64%