Most small to medium-sized enterprises (SMEs) in Hong Kong are confident they will overcome the city’s fifth wave of the pandemic. However, to take advantage of expected improvements in conditions, small businesses may need to increase their investment in technology and innovation, and reset their business strategy. That’s according to dual studies by CPA Australia on the impact of the fifth wave on local SMEs and a broader survey of Asia-Pacific small businesses.
In light of the fifth wave of COVID-19 in Hong Kong, CPA Australia conducted a poll of SMEs in mid-March on their current and expected performance. This was a follow-up to a more in-depth survey of Asia-Pacific small businesses in November and December, which focused on the characteristics of high growth small businesses, business confidence and access to finance.
Fifty-five per cent of respondents to the March poll were confident that their business or employer will overcome the fifth wave, with 57 per cent expecting revenue will largely remain the same as normal or grow in the next three months.
Forty-two per cent of respondents believe that the relaxation of social distancing restrictions will have the most positive impact on their SME in the next three months, followed by the Employment Support Scheme (18 per cent) and Consumption Voucher Scheme (12 per cent).
When asked which areas of their business were most negatively impacted by the fifth wave, over one-third (35 per cent) nominated business operations, followed by cash flow (26 per cent).
Mr. Janssen Chan, Chairperson of CPA Australia’s SME Committee – Greater China said, “We are aware that many small businesses are suffering during the fifth wave of COVID-19, but they are also demonstrating resilience and adaptability during this period.
“The pandemic is a major catalyst for transforming business models and consumer spending patterns. In Hong Kong, more consumers are purchasing online and using digital payments. With social distancing restrictions set to relax from mid-April and the roll-out of stimulus measures such as the e-consumption vouchers, small businesses should continue innovating, digitalising and updating their business plans to ensure they are best placed to rebound in the second half of 2022.”
CPA Australia’s November/December survey of Asia-Pacific small businesses showed that while the percentage of Hong Kong small businesses that grew in 2021 was below the survey average of 47 percent, it rebounded strongly from 16 per cent in 2020 to 36 per cent in 2021, the same level recorded in 2019. Hong Kong was the only market of the 11 surveyed where small business performed better than expected in 2021.
Helping drive this improvement was an increase in the number of local businesses that found their investment in technology in 2021 improved their profitability (40 per cent in 2021 compared with 25 per cent in 2020). Revenue generated from e-commerce also increased. Over half (53 per cent) generated more than 10 per cent of their revenue from e-commerce in 2021, the highest result for the city since 2017.
Chan explained, “Although Hong Kong small businesses overall may still fall short of the survey average in technology adoption, another positive to emerge from the 2021 results was that more small businesses embraced digital transformation. This bodes well for the future with the survey results showing that high growth small businesses are significantly more likely to be using digital technologies in many aspects of their business.
“Over the past two years, the pandemic has adversely impacted all surveyed markets. Our survey findings indicate that those that innovate and digitalise were more likely to outperform other businesses. I’m delighted to see that nearly seven in ten Hong Kong small businesses will or may innovate in 2022, the highest result since 2017.”
Based on the characteristics of high growth small businesses from the survey results, we recommend that Hong Kong businesses:
- increase their focus on online sales and new payment technologies
- identify and adopt suitable technologies into their business
- innovate through the introduction of new products, services or processes
- explore expanding sales into overseas markets
- seek professional advice such as IT and financial consultants.
“The SAR government offers a range of support mechanisms to small business such as the Anti-epidemic Fund, Employment Support Scheme and incentives to innovate and digitalise. We encourage businesses to consider these as they should increase the chances of your business succeeding,” says Chan.
About the research
In light of the fifth wave of COVID-19 in Hong Kong, CPA Australia polled SMEs on their current and expected performance in mid-March. Nearly 300 Hong Kong-based accounting and finance professionals who provide services to or are working in SMEs participated in the poll. CPA Australia’s 13th Asia-Pacific Small Business Survey surveyed 4,252 small business owners or managers, including 310 from Hong Kong, across 11 Asia-Pacific markets. The survey was conducted to understand their business conditions and confidence, and was conducted from November to December 2021.
Carmen Pan, +852 5318 9655 / 2202 2722 or email: [email protected]
Iris Luo, +852 5517 4514 / 2202 2715 or email: [email protected]
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