Most Chinese small- and medium-sized enterprises (SMEs) choose to conduct the majority of their business in the Asia-Pacific region, indicating a renewed confidence in economic growth across the region, according to a UPS Asia Business Monitor report released on Monday.

According to the report, 78 percent of Chinese SMEs currently conduct their business in the Asia-Pacific, compared to 6 percent in the United States and 10 percent in Europe.

More than 70 percent of the surveyed enterprises showed their faith in the region's potential by listing the Asia-Pacific as the top prospect for trade growth and business expansion over the next three years.

The UPS Asia Business Monitor is an annual survey of SME decision-makers' sentiments, issues, concerns and opportunities across the region. This year's survey covered 1,350 SMEs across 13 markets, including China, Australia, India, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

"This year's survey reflects a strong belief in the continued global economic recovery, especially in Asia," said Richard Loi, president of UPS China. He said the growth potential of the region can be reflected by an export volume growth of more than 40 percent in China in the first two quarters of 2010.

Survey respondents were more optimistic on the prospects for continued economic recovery, with 65 percent believing their company's prospects would be much better in 2010 than in 2009.

Furthermore, more than half of the respondents in China anticipate positive economic growth prospects for the region, and another 34 percent expect the economic growth prospects to stay the same as last year. Only 12 percent of SMEs expect the economy to decline this year, which compares well with last year's figure of 61 percent.

According to the survey, nearly half of Chinese SMEs indicated they would "increase their workforce by up to or more than 10 percent" in 2010, compared with 35 percent in 2009.

This year may turn out to be a promising one for Chinese SMEs, as far fewer are encountering financing problems, said the report. Close to a third of survey respondents said they had "no problems" in financing their business, compared to 17 percent in 2009.

Chinese SMEs seem eager to explore business opportunities in other areas. Almost half of respondents felt that market growth, and extending their business into other regions or overseas markets was the type of business opportunity they would be most willing to explore.

With the impact of the global economic crisis in the financial services sector, many businesses, including Chinese SMEs, are looking to other sectors when searching for new opportunities, listing building and construction, information technology, and manufacturing as the top three, according to the report.

The report also reaffirmed the competitive edge of Chinese SMEs, with 78 percent of surveyed SMEs in the Asia-Pacific rating Chinese counterparts as "much more competitive" or "more competitive" than SMEs in their own countries.

Regarding the perception of their own competitiveness, one in four Chinese SMEs cited "flexibility" as their key competitive advantage when competing with multinationals.