More local companies are applying tighter spending controls to preserve profits this year amid a modest economic outlook, according to a survey by multinational financial corporation American Express.
About one-third of the respondents said they will take stringent measures to cut costs this year, a significant rise from 10 percent in the previous study, the American Express/CFO Research Global Business and Spending Monitor 2015 showed.
Meanwhile, 19 percent expect the economy to contract, up sharply from 3 percent in the previous year, and no one thinks the economy will see an aggressive expansion, compared with 17 percent previously. However, half of them think the economy is going to expand modestly.
Jacinta Sheahan, vice president and general manager of global corporate payments in Hong Kong and Taiwan, said companies are looking to make every dollar of investment count.
But while seeking to be more prudent in spending amid the modest economic outlook, none of the companies said they would reduce investment, she said.
“Their number one goal is to enter new markets… There is a strong urge for the companies to look for new avenues to grow their business in Hong Kong,” Sheahan said, adding that the four emerging markets where companies want to expand are mainland China, Brazil, Russia and Indonesia.
“They are also investing and spending to remain competitive. They are also looking to protect their share in the marketplace and looking for ways to better meet customer needs,” she said.
The study, conducted in November and December last year, polled 565 senior financial executives worldwide in companies with annual revenue of more than US$500 million. About 5 percent of the respondents are from Hong Kong.
One-third of the respondents said they will be hiring to match their business growth, mainly for production, information technology as well as sales and marketing.
More than 40 percent of them are also looking for ways to reduce employee turnover and upgrade employee skills.
Respondents did not cite social unrest as a business threat, although the study was conducted while the pro-democracy Occupy protests were taking place in Hong Kong.
“When we asked them what was going to impact their business growth, they did point us to the elements around the economies of other markets, the domestic economy and the availability of capital,” Sheahan said.
Regulatory and accounting requirements were also cited as factors that could have a negative impact on their business, she added.
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