According to a recent survey conducted by CPA Australia, small businesses in South China, especially from Guangzhou and Shenzhen, are leading SMEs in the Asia Pacific region in innovation and technology. CPA Australia’s 10th annual Asia-Pacific Small Business Survey, follow extensive surveying of more than 3,600 small business operators in ten markets, including Australia, mainland China, Indonesia, Malaysia and, the Philippines. The survey results state that innovation and technology is the key reason for the growth of SMEs in Guangzhou and Shenzhen. Guangzhou’s SMEs experienced the most positive outcomes with 77 per cent reporting business growth and 46 per cent increased the size of their workforce. The positive sentiment in Guangzhou is likely to continue, with nearly 80 per cent of small businesses expecting their business to grow in 2019 and over half expecting to increase their headcount. President of CPA Australia South China Committee Mr Willian Huang said that due to an uncertain business ecosystem caused by trade tensions and other issues, small businesses in South China generally performed strongly last year and show confidence in both the local economy and their business growth in 2019. “The survey findings in the Asia-Pacific show that high levels of adoption and utilisation of digital technology is one of the most positive influencers to drive business growth”, he said. “Both Shenzhen and Guangzhou are the top performers in the Asia Pacific for online sales and are also leaders in the adoption of new digital or mobile payment methods in transactions”. Findings also show that the major hurdle that South China SMEs will face is that of increasing costs, especially staff costs amid a shrinking workforce. Approximately 60 percent of survey respondents state that staff costs was the most detrimental factor to their business, ranking top in the surveyed markets. To solve this dilemma, CPA Australia suggests that small businesses revisit their company structure and cost structure and seek to improve their business strategy and operating model.