Guanghua Thought Leadership
Online Survey of Micro-and-small Enterprises (OSOME): Quarterly Report (2021Q4) (I)



Ø Performances of micro-and-small enterprises (MSE) in China deteriorated in 2021Q4, with an average revenue of 129 thousand Yuan, which was still higher than 2021Q1 and 2021Q2.  

Ø Lack of demand and rising costs, especially rental costs, raw materials, and wages, are still the main challenges faced by MSEs.

Ø Tax burdens and uncertainties regarding policies also exert increasing pressures on MSEs.

Ø Supportive policies are gradually withdrawn, with a slightly narrower coverage than the last quarter. Among various policies, universal tax support is still the most comprehensive.


I. Background

In December 2021, Professor Xiaobo Zhang from Guanghua School of Management, Peking University, led a team to conduct the Online Survey of Micro-and-small Enterprises (OSOME) for 2021Q4 in China. The team also received support from the Center for Enterprise Research, Peking University, and the Institute of Social Science Survey Peking University, and in cooperation with Ant Group Research Institute and MY Bank. A total of 15,569 valid responses were collected. The information includes the operation, financing needs and future expectations of micro and small enterprises (MSEs). The sample covers various regions and industries in China and provides a comprehensive picture of the operating conditions, challenges encountered and confidence in the next quarter. This survey is the sixth consecutive quarterly survey that the research team led by Prof. Zhang Xiaobo has put out to China's MSEs since September 2020.


1. MSEs’ revenue declined in 2021Q4 compared to 2021Q3, but stayed relatively stable compared to 2020Q4.

(1) Operations

In 2021Q4, the average revenue of MSEs was ¥129,000, with slight fluctuations compared to the previous two quarters (¥124,000 and ¥131,000, respectively). Nearly half (46.0%) of the MSEs had operating income of less than ¥25,000, keeping its "subsistence" nature. The net profit margin this quarter was approximately 2.5% for MSEs, a slight decrease compared to the second and third quarters (3.2% and 2.7%, respectively). Using the same period in 2019 prior to the outbreak as a benchmark (as shown in Figure 1), the operations recovery 2021Q4 relative to 2019Q4 (for MSEs established before 2019) reached 30.6%, which is 4.8 percentage points lower than the average recovery ratio of 35.4% for the past four quarters relative to the same period in 2019.


Figure 1: Average recovery ratio for the last 5 consecutive quarters relative to the same period in 2019

(2) Cash flow sustainability

In terms of cash flow, the available cash flow can maintain on average 2.7 months, with 33.2% of the MSEs having cash flow that can maintainable operations for no more than 1 month. However, after taking seasonality and other such factors into account, it is about as stable as that during the same period in the previous year (2020Q4). Similar to the distribution in previous rounds of the survey, MSEs generally face a tight cash flow with an average of 2.7 months. Compared with the previous quarter, the average cash flow sustainability for both corporates and self-employed has decreased from 2021Q3, from an average of 2.9-3 months to 2.6-2.7 months.

2. Cost pressure and weak market demand continue to be the main concerns for MSEs

(1) Cost is the biggest pressure faced by MSEs

Operating cost pressure is still the main operating difficulty faced by MSEs. As shown in Table 1, in the manufacturing industry, the percentage of MSEs with operating cost pressure is the highest, reaching 58.8%. Insufficient market demand is the second major operational difficulty faced by manufacturing MSEs, accounting for 46.5%. On the other hand, the service industry is facing more pressure from insufficient market demand.

Table 1 2021Q4 major sources of pressure for MSEs%



Animal husbandry and fishery

Construction, and Processing Manufacturing

Business Services

Consumer Services

Operating Cost






Market Demand






Policy Uncertainty






Loan Repayment






Tax Burden












By employee size, the larger MSEs are more likely to be pressured by operating costs, while the smaller ones are mainly face constraints from weak market demand and market competition. Policy uncertainty is the greatest pressure on larger MSEs, especially those with more than 50 employees. Tax burden has the same characteristics.

(2) Rental, raw material and hiring costs constitute the most important causes of operating cost pressure

By breaking down operating costs into different categories, we find that raw material costs rose significantly in 2021Q4 compared to Q3 (from 43.4% to 50.2%), while utility costs also increased, and hiring costs decreased. Among the four major categories of industries, the consumer services industry is still the most troubled by rental costs, and the construction and processing and manufacturing industries have the largest raw material costs.

In terms of employee size, smaller MSEs felt more pressure from rental costs. Costs of raw material, epidemic prevention, and public utilities also accounted for a larger share of the operating costs of smaller MSEs, while larger ones felt more pressure from hiring, marketing, and publicity.

In terms of operating modes, the costs of MSEs that operate entirely online are lower than those that are entirely offline, especially rent. This demonstrates the role of digital transformation in cutting costs for MSEs. However, MSEs that operate in a blended mode (online and offline) see no significant improvement in rent and raw materials expenditure compared to offline operations, while the cost of hiring labor is 33.5% higher, probably reflecting that combined online and offline operations require more labor, especially employees with different skills.



To be continued in the next issue



Zhang Xiaobo, Kong Tao, Yang Xiaohan, Wang Ranran, Cheng Zijun, Chen Qiuhui, Liu Shuo, Li Zhenhua, Wang Fang, Ma Xiaoyin

Edited by Zhao Ziyi