Hong Kong's small businesses highly pessimistic about corporate and economic growth: survey

Why is there a lack of confidence?.

For the second year in a row, a survey by global accounting body CPA Australia has found that Hong Kong small businesses are the least likely of the eight markets surveyed in Asia Pacific to expect their business and their local economy to grow over the year ahead.

According to a release from CPA Australia, these results have come from the sixth annual CPA Australia Asia Pacific Small Business Survey which has also found that business confidence is taking off in Mainland China.

CPA Australia Business Policy Advisor, Gavan Ord, said the results show the continuing effects of global volatilities which are testing the resilience of Hong Kong’s small business operators.

“With its high level of international exposure, Hong Kong is still experiencing the lingering effects of global economic uncertainty and below average domestic economic growth,” Mr Ord said.

“Increasing costs at the domestic level, particularly rent and staff costs, and increased local competition are significant factors in only 39 per cent of small businesses expecting to grow.

“While the result is a little better than last year, when 36 per cent of respondents expected their businesses to grow, our survey shows that Mainland China businesses are much more optimistic with 66 per cent of respondents expecting growth in their businesses a year ahead.”

“Small business confidence in Hong Kong remains low with only 39 per cent of respondents expecting the economy to grow, especially when compared to attitudes in Mainland China where 71 per cent of respondents are confident about the economy next year.”

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Patrick Yeung, Divisional Past President – Greater China, CPA Australia, believes that Hong Kong small businesses need to address their position and look to expand into China for further growth, as well as focusing on business management including cost control, cash flow management and customer retention.

“Trading conditions are certainly challenging and when you see the more positive results in Mainland China and Singapore, it is clear businesses in Hong Kong need to step up to meet the competitiveness challenge.

“The results suggest a widening gap between Hong Kong and Mainland China in not only confidence levels, but digital innovation of business. Mainland China businesses are more likely to expect online sales growth (79 per cent) when compared to Hong Kong (53 per cent).

Hong Kong businesses should further embrace e-commerce to expand their businesses into China where domestic consumption is booming and business confidence is high.

“Integrating a digital strategy into your business also enables you to expand into other developing markets and have a competitive advantage over businesses in digitally underdeveloped countries such as New Zealand and Australia where online sales figures and social media uptake is surprisingly low. Such a strategy can leverage Hong Kong’s language and geographic advantages.”