SME Business Index Soars to Two-Year High

The overall index on business operating environment for local small and medium-sized enterprises (SMEs) for the second quarter of 2007 has risen to 13.81% - the highest since January 2005, according to the latest findings of a survey conducted by the SME Centre of the Hong Kong Productivity Council (HKPC) in April 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 522 SMEs were interviewed, of which 297 were from the services sector and 225 from the manufacturing sector.

Commenting on the findings, Dr Vincent Li, General Manager (Productivity Training Institute) of HKPC, said: "SMEs continued to be optimistic towards the overall business environment in the second quarter, mainly due to positive outlook on external risk and operating cost factors. This is the highest Index reported since January 2005. Despite fluctuations in the sub-indexes covering market opportunities and risk assessment, all other factors displayed a positive and stable trend."

"Due to recurring uncertainties over the global economy and the exchange rate movements, the trading, garment and plastics sectors were more cautious in their forecast," he added.

In this study, the respondents were also asked about their business performance in the past six months. Nearly half of the respondents reported growth in both operating income and profits.

This survey also gauged the views of local SMEs on their business strategies for the next six months. 24% of the respondents said they would consider business expansion. Of the group, 29% said they would increase investment in their Mainland operation while 15% would spend the sum locally.

In addition, the respondents identified movements in raw material cost, rising operating cost in the Mainland and competition from Mainland enterprises as the three most crucial factors that affect their operation.

"As more SMEs expand their business to the Mainland, they should consider to adopt process improvement measures, information technology, and brand building strategy to raise their competitiveness," Dr Li added.

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

22 May 2007


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