Three in five SMEs operate in Hong Kong only.
Almost half or 47% of small and medium enterprises (SMEs) in Hong Kong have no interest in expanding their footprint beyond Hong Kong, according to a new research study commissioned by general insurer QBE Hong Kong.
A majority of SMEs surveyed or 59% were found to operate in Hong Kong only, are broadly optimistic about their business despite cost pressures and having a negative outlook on the local economy. According to the study Hong Kong’s SMEs’ ambitions rest mostly within the domestic market, therefore missing out on expansion and growth opportunities in the international market.
The study, which surveyed 415 Hong Kong-based SMEs, showed that more than half of respondents or 54% in Hong Kong expect the economy to worsen in the year ahead, attributing it to increasing international trade disputes (67%), operating costs (54%) and global competition (46%).
“This, however, does not appear to be reflected in their business expectations as almost three quarters or 74% of SMEs forecast their revenue to remain stable or even increase this year,” QBE Hong Kong noted. “In fact, only 7% cited an economic downturn or international trade disputes as the biggest top-of-mind challenge for their business.”
For the other half, however, the most popular destinations for cross-border expansion included the Greater Bay Area (46%), mainland China excluding the Greater Bay Area (41%), the US (26%), Singapore (21%), Taiwan (20%) and Japan (18%).
Meanwhile, the study noted that some of the top barriers cited by SMEs included insufficient staff or skills to expand international footprint (31%), a lack of knowledge of overseas markets (30%), insufficient funds (25%), and a lack of familiarity with overseas law and regulations (21%).
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