(Yicai Global) June 27 -- China’s micro and small companies are demonstrating a sustained improvement in performance this year, the best since 2021, thanks to better financial support, increased opportunities through e-commerce and more growth channels, according to a recent report.

Profit at these firms jumped 3.7 percentage points in the first quarter from the previous quarter, according to a report published yesterday by MyBank, an online lender focussed on micro and small firms and part of fintech giant Ant Group.

Insufficient demand is the main obstacle to service providers, and manufacturers are mostly struggling with high operating costs, said Zhang Xiaobo, author of the Hangzhou-based firm’s annual report on micro and small businesses.

"Those running micro and small firms are through the worst of it now," said Zhang, who is a professor at Peking University’s Guanghua School of Management and director of its Big Data research center. "But they still need a lot of support from the government and society as their confidence is still quite fragile."

Over half of micro and small companies plan to extend their business hours to after 9 p.m., MyBank said. And more county-level small firms are jumping on the livestreamed e-commerce bandwagon, selling goods to overseas clients through platforms such as AliExpress, Temu and Shopee.

A lot of micro and small companies specializing in high and new techs are emerging, taking aim at elderly people with large spending power to develop customized services such as tourism and smart devices, it said.

The pet and makeup-for-men sectors are bringing new growth opportunities to these firms. The pet sector, which includes pet foods and beauty services, has an annual compound growth rate of over 18 percent. Online stores selling cosmetics and skin care products for men are also enjoying rapid growth. A lot of men are paying more attention to their appearance, spending 2.75 times more than women on average.

There are also more tax and financial policies targeting micro and small firms, and borrowing rates have been lowered for five consecutive quarters, the report said. Micro and small company operators are actively hiring staff, building up stock and expanding their online channels.

Editors: Zhang Yushuo, Kim Taylor