Business confidence in Hong Kong is waning

Less than half of Hong Kong firms are reporting revenue growth, another symptom of the sagging confidence among the city’s businessmen.

The global Regus Business Confidence Index revealed that the number of companies reporting revenue growth fell to 47% from 72% six months ago. The number of firms reporting profit growth has also dropped to 40%, a fall of 20% compared to six months ago.

In response to global economic uncertainties, the survey suggests that businesses are looking for new ways to contain costs. Shortening supply chains, making increased use of IT cloud applications and increasing flexible workspace were all cited by respondents as most effective ways in cutting costs without damaging longer-term growth prospects.

Other notable findings from the survey:

• Hong Kong firms said that broadening their customer base (47%); having access to cost-effective capital (36%) and providing more flexible working conditions for staff (31%) would be the most effective ways to ensure business stability and lay the ground for future growth;

• Globally, the Index recorded lower levels of business confidence for small businesses (107) than for large firms (124);

• When asked to look back at the last few years, Hong Kong companies identified high office rents (53%) and lack of access to capital (53%) as the main reasons for corporate distress during the global economic downturn.

"Although it was only minimally affected by the significant setbacks experienced in other economies between March and September 2011, Hong Kong business confidence has now recorded a dip, underscored by a smaller number of businesses reporting either revenue or profit growth," said Hans Leijten, Regus' Vice President, East Asia.

"In the current climate, I believe they are right to focus on controlling their costs, but it's interesting to note that they are doing so in ways that won't constrain future growth. From harnessing efficient IT solutions through to providing more flexible working conditions for staff, Hong Kong businesses clearly recognize the need to be nimble and scalable. This perhaps implies a greater level of underlying confidence than these results suggest."