(Yicai Global) Nov. 3 -- China’s micro and small businesses reported their highest revenues in nearly a year in the third quarter, according to a new report by Peking University.

Average revenue was CNY131,000 (USD20,500) at such operators -- companies or the self employed -- in the three months ended Sept. 30, the report showed. The micro and small operators’ confidence index also remained in positive territory for a third quarter in a row, it said.

Compared with the previous quarter, operating incomes and cash flows were steady, but profit margins narrowed, said Zhang Xiaobo, an economics professor at Peking University who lead the study.

Operating costs have become the biggest burden on micro and small businesses, the report noted, with higher raw material prices the main pain point in agriculture, forestry, animal husbandry, fisheries, side-line production, construction, processing and manufacturing. In the service sector, it is rent.

About 60 percent of operators could only keep their cash flows going for less than three months and had tight budget, the study found.

Confidence indexes for demand and revenue among micro and small operators have been in an optimistic range in recent quarters, but the cost confidence index is in a pessimistic range even though it is recovering, according to Li Zhenhua, director of Ant Group’s research institute.

The employee size confidence index is predicted to be stable, Li added, noting that the confidence of micro and small operators, especially the self employed, is generally stable and outlook optimistic due to their economic resilience.

The report also noted that nearly half of these businesses have gone digital, using such technologies to boost quarterly revenue by about 34 percent. In fact, online financing has become the major way to raise money for micro and small operators.

The report is based on an annual online survey of active micro and small operators that use Alipay’s QE code-based payment services. Some 14,567 operators responded to the study. Ninety percent were micro and small businesses, with 80 percent of them from the service industry.

By the end of April, China had over 44 million micro and small firms and more than 95 million individual businesses. They are the country’s employment mainstay.

Editor: Peter Thomas