- Hong Kong’s small businesses have high expectations for growth
- A record nine-in-10 small businesses expect to innovate in 2023
- Revenue from overseas sales and innovation will support recovery and long-term growth
More of Hong Kong’s small businesses expect to grow this year than at any other time since 2011, after bouncing back from COVID-19. They have record expectations for innovation and overseas sales in 2023, according to one of the world’s largest professional accounting bodies.
Driven by improvements in Hong Kong’s economy, CPA Australia’s latest Asia-Pacific Small Business Survey shows 66 per cent of local small businesses expect to grow this year. This annual survey collected views from 4,280 small businesses in 11 Asia-Pacific markets including 312 respondents from Hong Kong.
The reopening of borders and improved economy resulted in the highest percentage of Hong Kong small businesses (74 per cent) expecting to grow overseas sales on record. The annual survey began in 2009. This result exceeded all other surveyed markets.
Growing confidence also led to another record-busting result, with 89 per cent planning to innovate in the next 12 months.
“This optimistic sentiment can be partly attributed to the recovery from the low-base of the past three years,” said Cliff Ip, Deputy Divisional President of CPA Australia – Greater China.
Small businesses in Hong Kong bounced back to 2018 growth levels. More than half (56 per cent) grew in 2022. The 2023 outlook is upbeat, with 65 per cent expecting economic growth.
“Bolstered by government relief measures, small businesses in Hong Kong overcame a particularly challenging period and recovered quickly in the second half of 2022. Those that maintained innovation and technology at the heart of their business and sought external support weathered COVID-19 the best and are most likely to thrive in 2023.”
“As an export-oriented services economy, the government is looking to drive tourism and attract foreign investment. Hong Kong’s full reopening presents exciting opportunities for small businesses. They can expand by introducing new products and services. Helping that expansion are government incentives to tap into emerging markets, especially countries in ASEAN and the United Arab Emirates.”
Business optimism this year is also prompting a new recruitment wave. More than half (58 per cent) expect to increase headcount this year, up from 26 per cent in 2022.
“The government’s Employment Support Scheme encouraged employers to retain and hire staff, with 54 per cent of Hong Kong small businesses increasing employee numbers last year. As Hong Kong returns to normality, businesses are more eager to hire staff. This is an obvious recovery signal. However, market competition for talent has become fierce and many will need to rely on technology to manage staff shortages.”
Revenue from online sales grew significantly in 2022. Seventy-eight per cent of Hong Kong’s small businesses earned more than 10 per cent of revenue from e-commerce, up 25 percentage points from 2021.
Eighty-four per cent received more than 10 per cent of sales through digital payment technologies, such as Octopus, Alipay and PayMe. This was up from 59 per cent in 2021. Over six-in-10 said their technology investment improved profitability.
“The government’s HK$10,000 e-consumption voucher scheme was a major incentive to encourage digital transformation,” Davy Leung, Deputy Chairperson of CPA Australia’s Small and Medium Enterprises Committee – Greater China, said.
An easing financing condition is another positive factor that helped Hong Kong small businesses manage their liquidity in the difficult time. Last year, 74 per cent sought external funds, largely from banks and government grants. Seven-in-10 found it easy to access these external funds.
“More than a quarter of local small businesses nominated government grants or funds as their main source of external finance last year. Among these respondents, 92 per cent found it easy to access such funding. This implies that government measures, such as the SME Financing Guarantee Scheme and those under the Anti-Epidemic Fund, were well designed.
“A record number of small businesses (91 per cent) are planning to seek external funds this year. Small businesses have benefitted from a better financing environment but they shouldn’t rely solely on short-term measures introduced by the government. Maintaining liquidity and improving cashflow are essential, especially when costs are increasing.”
Seeking external advice is another noticeable characteristic. Ninety-three per cent of Hong Kong’s small businesses sought advice in 2022, with most having consulted with a bank or finance company and IT consultants.
“Technologies, business conditions and regulations can change quickly. Professional advice is important to small businesses to put them on the right track to overcome challenges.”
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