Small businesses in Hong Kong remain downbeat about their growth prospects due to the lingering effects of the global financial crisis and rising costs at home, a survey showed.
For the second year in a row, Hong Kong small firms were the least optimistic among eight markets surveyed in the Asia-Pacific region about the prospects for their businesses as well as for the local economy, according to the annual CPA Australia Asia Pacific Small Business Survey.
Only 39 percent of small firms in the city expect their businesses to grow in the coming year, the survey by the professional accounting body showed.
The result marks a slight improvement over last year, when a mere 36 percent said they expect improved growth, but points to an overall grim environment.
“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,” Gavan Ord, business policy advisor at CPA Australia, said in a statement.
“Increasing costs at the domestic level, particularly rent and staff costs, and increased local competition are significant factors” in contributing to the pessimistic mood, he said.
In contrast to the despondency in Hong Kong, small businesses in the mainland were confident about their prospects, with 66 percent saying they expect their businesses to grow in the coming year.
Seventy-one percent of the mainland respondents expressed confidence about the broader economy.
Patrick Yeung, Greater China president at CPA Australia, says Hong Kong small businesses need to address their position and look to expand into the mainland for further growth, as well as focus 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,” he said.
“The results suggest a widening gap between Hong Kong and Mainland China in not only confidence levels, but digital innovation of business,” Yeung said.
According to the survey, mainland businesses are more confident about online sales growth (79 percent) when compared to Hong Kong (53 percent).
Hong Kong businesses should further embrace e-commerce to expand their businesses into the mainland where domestic consumption is booming and business confidence is high, Yeung said.
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