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NZ SMEs lag Asia-Pacific peers on digital tech

NZ SMEs lag Asia-Pacific peers on digital tech, survey shows

By Pattrick Smellie

March 15 (BusinessDesk) - New Zealand small businesses are technology laggards compared to their peers in a swag of other countries in the Asia-Pacific region, with owner satisfaction one of the few areas where Kiwi SMEs show above average scores, according to the CPA Australia 2017 Asia-Pacific Small Business Survey.

Published this morning and coinciding with the release of new research for Microsoft on the transforming impact of digital technology in the region by research house IDC, the CPA Australia report suggests New Zealand firms are comparatively complacent about the risk of cyberattacks, less geared up to drive sales through digital channels, have the second lowest level of expected product innovation with only Australia lower, and low percentages of revenue received from digital payment options.

New Zealand firms also stand out for having the lowest export sales growth expectations in the region.

The CPA Australia survey of business conditions for small businesses in 2017 took its results from 2,952 businesses across Australia, mainland China, Hong Kong, Indonesia, Malaysia, New Zealand, Singapore and Vietnam, of which 606 were Chinese, 511 were Australian, and 306 were New Zealand SMEs. The random sample poll was taken in October and November last year.

The survey also found a marked drop in business confidence among New Zealand SMEs, but the survey authors suggest this was likely a reflection of uncertainty created by the fact that a new government was being created at the time.

More positively, New Zealand SMEs recorded their best results for growth and growth expectations since 2014, outperforming Australia and Singapore, in a survey that claims to be New Zealand’s "longest-running longitudinal study of small business performance and sentiment".

New Zealand SME owners were also more satisfied than the average for the survey, with 32 percent very satisfied versus 23 percent across the region.

However, the report found that "New Zealand’s small businesses continue to be significantly less likely to use social media for business purposes, compared with businesses from Asia, with 40.8 percent stating that they do not use social media", compared with only 4.8 percent of businesses from mainland China.

They also continued to be significantly less likely to earn revenue from online sales, with 52.6 percent reporting no income from that source, compared with 6.8 percent of mainland Chinese businesses.

Even New Zealand's embrace of cashless payment options at point of sale was "not translating into the adoption of new digital payment technologies, such as Apple Pay, AliPay and WeChat Pay, with 29.1 percent of businesses having new digital payment technologies available to customers, compared with 65.5 percent of Chinese businesses", CPA found.

At 2.6 percent, New Zealand’s small businesses "are the most prudent in their adoption of bitcoin and other cryptocurrencies as a payment option", and only 19.6 percent saw a cyber attack as likely, compared with a survey average of 45.6 percent.

The IDC report for Microsoft, also published this morning, predicts digital products and services will add an estimated NZ$9.6 billion to New Zealand’s gross domestic product, and increase GDP growth by 0.7% annually by 2021.

"Within the next four years, it is predicted that 55 percent of New Zealand’s GDP will be derived from digital products and services created through using digital technologies, such as mobility, cloud, Internet of Things (IoT), and artificial intelligence (AI)," said Russell Craig, National Technology Officer, Microsoft New Zealand, in a statement.

“Organisations are increasingly deploying emerging technologies such as AI as part of their digital transformation initiatives, and that will accelerate growth even further,” Craig said.

The survey of 1,560 business decision makers in 15 Asia-Pacific countries included 100 New Zealand respondents. It found that only 7 percent of the New Zealand firms identifiably engaged in their own 'digital transformation' could be classified as leaders showing best practice.

"The study indicates that leaders experience double the benefits of followers, and these improvements will be more pronounced by 2020," said Craig. Characteristics of leaders in digital transformation included a focus on "competitors and the emergence of disruptive technologies, business agility and a culture of innovation, and measuring digital transformation success".

On export growth, the CPA Australia survey found only 8 percent of New Zealand firms expect strong growth in 2018 and 19 percent expect to grow a little, compared with 7 percent and 21 percent respectively in Australia, which showed the second slowest export growth expectations. Vietnam had the strongest export growth expectations this year, with 51 percent of firms expecting strong growth and another 36 percent expecting a little growth in export sales. Indonesia (44 percent and 29 percent respectively) was next most bullish, followed by mainland China, at 17 percent and 45 percent respectively.



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