Fast Lane: Australian small businesses lagging behind Asian neighbours when it comes to innovation

Over the next 12 months, 46% of small businesses in Indonesia plan to introduce a product, service or process that is new to their market or to the world.

In China, that figure is around 32%, in Malaysia it is 29% and in Vietnam it’s 26%.

But in Australia, the proportion of small businesses that say they will introduce an innovative product, service or process in the next 12 months is just 5%.

These figures come from CPA Australia’s latest Asia-Pacific Small Business Survey, which surveyed 3000 small business operators in Australia, Indonesia, China, Malaysia, Vietnam, Hong Kong, Singapore and New Zealand in September and October 2015.

The survey also looked at how many small businesses are generating revenue from e-commerce activities and using social media.

It found Australian small businesses were again ranked lower than their international counterparts.

Across the Asian countries surveyed, 83% of small businesses reported generating revenue from online sales, compared to around 37% in New Zealand and 33% in Australia.

More than 40% of small businesses in neighbouring Asian countries said they expect to grow their e-commerce presence but just 8% of Australian small businesses fall into this category.

While 93% of the Asian small businesses surveyed said they use social media, this form of marketing is used by only around 50% of Australian small businesses.

Similarly, the proportion of Australian small businesses that expect to grow the revenue they generate from overseas markets in the next 12 months (6.1%) is lower than the same group of businesses in Asia (24%).

But one of the survey’s more positive findings is that a majority of Australian small businesses do expect their businesses to grow this year.

Among the Australian small businesses surveyed, 57% expect their business to grow this year, which compares to 47% in last year’s survey.

CPA Australia chief executive Alex Malley said in a statement these findings provide “a baseline for our performance upon which businesses, governments and researchers should aim to improve”.

It comes at the same time as Bloomberg Business ranks the Australian economy as the 20th most innovative economy in the world, behind a top five that includes South Korea, Germany, Sweden, Japan and Switzerland.

We know that Prime Minister Malcolm Turnbull is strongly pushing an innovation agenda. Small and medium size businesses are expected to be among the winners from the federal government’s willingness to put innovation on centre stage.

But as with any change in government policy, new initiatives and amendments to legislation don’t happen overnight.

The proposed changes to insolvency laws will be outlined this year but won’t be legislated for until mid-2017, while a prototype for a “Digital Marketplace” to give SMEs and startups improved access to win government contracts will be available some time this year.

Innovation in the business community is not the sole responsibility of government. Business shares the responsibility to continue to innovate – but the regulatory environment created by government matters.

And the adage of “actions speaking louder than words” holds true.

As CPA’s Alex Malley says, “recognition of the issues is one thing – actually operationalising the promised incentives to create a culture of innovation and boost business competitiveness is the real challenge for the government”.