Small businesses in Taiwan are anticipating a rebound this year, reflecting growing confidence in the domestic economy, according to a new survey conducted by CPA Australia. The annual Asia-Pacific Small Business Survey reveals a significant V-shaped recovery in economic confidence among Taiwan’s small businesses. This year, 58% expect the local economy to grow, up from 39% in last year’s survey, marking the highest result for Taiwan since its inclusion in the regional survey in 2018.
An improving domestic economy has boosted small business confidence. Nearly two-thirds (63%) of Taiwanese small businesses expect to grow in 2024, a notable increase from 48% in the previous survey.
Mr Elic Lam FCPA (Aust.) Honorary Taiwan Adviser at CPA Australia commented: “Trade is a pillar industry for Taiwan’s economy. With international trade gradually improving, small businesses in Taiwan have resumed exporting after a difficult period brought on by the pandemic. There has been a rapid increase in global demand for high-tech products, particularly semiconductor. This creates opportunities for big and small Taiwanese enterprises as they play an indispensable part in the technology supply chain, ranging from R&D to manufacturing, and logistics.”
Additionally, over half (56%) anticipate an increase in sales to overseas markets this year. The improving business conditions are driving labor demand, with 31% of small businesses increasing their staff last year—the highest result for Taiwan since the survey began. This trend is expected to continue, with 41% planning to expand their headcount this year, surpassing previous records.
“Hiring more employees last year was one of the proactive actions many small businesses undertook as they experienced signs of recovery. Only when small businesses are confident in the future and the environment is predictable, are they willing to employ new staff and increase their focus on innovation. Facing a competitive employment market, employers should consider strategies to retain good staff to address talent shortages and use technology to control increasing staff costs.”
Despite rising confidence, concerns over increasing costs have also grown. Last year, 31% of respondents identified cost control as crucial for their businesses, while 32% cited increasing costs as their top challenge. The most detrimental costs were staff expenses (33%), followed by materials (29 percent) and rent (22%).
A record-breaking 62% of surveyed businesses sought external funds in 2023, primarily to fuel business growth, with banks being the main source of capital. This momentum is expected to continue into 2024, with three-quarters of respondents indicating they will or may seek external funds this year.
Access to finance has notably improved, with 57% of respondents last year finding it easy or very easy to seek external finance, up from 30% in the previous survey. Half of the respondents anticipate this favorable condition to continue.
“Taiwanese small businesses should actively seek advice from professionals to help them in expanding their digital transformation and improve financial performance, such as in managing financing costs and optimizing cash flow.”
Last year, 21% of surveyed businesses sought professional advice from accountants, and 24% from banks and finance companies.
The survey also highlights unprecedented levels of innovation and digital tool adoption among Taiwan’s small businesses. Among them, 67% plan to innovate in 2024, the highest result for Taiwan. Additionally, 59% reported generating over 10% of their revenue through online sales last year, while 57% received over 10% of their revenue via digital payment methods.
“The profound shift in consumer behavior towards online platforms, spurred by the pandemic, has been pivotal in driving the uptake of digital tools by small business. With this shift evident in many other markets, Taiwanese small businesses should continue to leverage Government support schemes such as ‘Increasing the competitiveness of small and medium-sized enterprises’ to strengthen their digital capabilities to trade online abroad.”
CPA Australia surveyed 4,222 small business owners or managers across 11 Asia-Pacific markets, including Australia, Mainland China, and Malaysia, with 311 respondents from Taiwan.
