Local SMEs Positive on Business Outlook for First Quarter of 2007

Local small and medium-sized enterprises (SMEs) maintain the same level of optimism towards Hong Kong's business operating environment for the first quarter of 2007, with the SME Index remaining the same (10%) as that of last quarter's, according to a survey conducted by the Hong Kong Productivity Council (HKPC) in January 2007.

The survey on "Business Operating Environment Index for SMEs", initiated by HKPC in 1998, is conducted quarterly to gauge the views of Hong Kong's SMEs in the areas of market opportunities, financial and investment situation, operating costs, human resources and risk assessment. In the latest survey, a total of 577 SMEs were interviewed, of which 317 were from the services sector and 260 from the manufacturing sector.

Commenting on the findings, Mr Vincent Li, General Manager (Enterprise Value & Logistics Consultancy) of HKPC said, "Despite the positive outlook, SMEs are concerned about the destabilizing factors such as the uncertain international market sentiment, trends in interest rates and oil prices, an indication that SMEs are cautiously optimistic towards the business environment in the coming months."

In this study, a special report on the salary adjustment planning of local SMEs in the coming year was also included. "As the local economy continues to improve, many SMEs have started to adjust their remuneration package in order to retain staff with good performance. Half of the respondents stated that the salary level of their local operations would remain unchanged, while 41% of the SMEs indicated plans for salary increase. In addition, the survey found that 43% of the SMEs are likely to offer year-end bonus or cash rewards to their staff," Mr Li said.

The survey also gauged SMEs' views on investment and operations on the Mainland. "We found that 40% of the SMEs have investments on the Mainland. Among them, 33% stated that their investment history ranges from 4 to 10 years and 60% of the SMEs have been investing on the Mainland for over 10 years. 33% of them expressed that they have encountered difficulties, and only 9% stated that it is easy to develop the market. 66% of the respondents have reported less than 10% growth in their Mainland business last year," he added.

"Clearly, for SMEs, the Mainland has presented both business opportunities as well as challenges. SMEs need assistance in marketing and management in order to expand their business on the Mainland," he said.

For media enquiries, please contact:
Ms Betty Lee
General Manager
Corporate Communications & Events
Tel: (852) 2788 5036
Fax: (852) 2788 5056
E-mail: rebeccat@hkpc.org
Website: www.hkpc.org

6 February 2007

Remark:
Index = % of respondents holding a positive outlook - % of respondents holding a negative outlook