Inaugural Standard Chartered Hong Kong SME Leading Business Index

The Hong Kong Productivity Council (HKPC) today (24 July 2012) released the inaugural “Standard Chartered Hong Kong SME Leading Business Index” (Standard Chartered SME Index), which reports an Overall Index at 42.9 – reflecting the pessimistic business sentiment of local small and medium enterprises for the third quarter of 2012. The survey, however, noted a positive sign in terms of SMEs’ intention to increase investments and staff.

Conducted independently by HKPC and sponsored by Standard Chartered Bank (Hong Kong) Limited (Standard Chartered Hong Kong), the quarterly survey enables the public and SMEs to get an insight into the forthcoming business climate for better forward planning. The Overall Index comprises five areas, including local SMEs’ outlook on their ‘sales amount’, ‘profit margin’, ‘investments’, ‘staff number’, and ‘global economic growth’ for the next quarter. In this survey, telephone interviews with 844 SMEs in eight industry sectors were conducted between May and June 2012.

Among the five surveyed areas, the Sub-Indices for ‘sales amount’, ‘profit margin’, and ‘global economic growth’ were below the 50 no-change mark, indicating a pessimistic sentiment for the third quarter; while the Sub-Indices for ‘investments’ and ‘staff number’ scored above 50 (indication of optimism). In terms of industry sectors, the Retail Industry Sub-Index posted 37.4, while the Import/Export/Wholesale Industry Sub-Index and Manufacturing Industry Sub-Index scored 45.6 and 41.5 respectively.

Commenting on the findings, Mr Leo Lam, Director (Business Innovation) of HKPC, said, “Hong Kong is an export-oriented economy which is subject to changes in the external economic environment. SMEs, the target group studied here, are especially sensitive to these fluctuations. Hampered by the economic slowdown in traditional EU and US markets, SMEs in the import/export and manufacturing industries are more pessimistic about the third quarter. The retail sector also feels the heat as the Government statistics revealed that the spending of Mainland tourists continue to shrink. SMEs are urged to review their business operations and make appropriate strategic move and resource allocation in order to brace for the challenges ahead.”

The respondents were also surveyed about possible changes in three cost factors, namely, raw material, employee salary, and financing. The results showed that 14.9% of SMEs expect to see an increase in the salary levels of their employees; among them, 54% forecast an increase of 3% to 5%, while close to 30% expect a raise of 5.1% to 10%. Furthermore, 75% of respondents expect an increase in material cost, while 80% SMEs envisage the financing cost to remain unchanged.

“Traditionally, SMEs are more sensitive to swings in global and local business cycles; hence a reading in the low 40s this time is in line with recent economic data that have been on a moderation trend as well,” said Kelvin Lau, Senior Economist of Standard Chartered Hong Kong. “Overall, we believe the Hong Kong economy will grow at 2.3% this year before recovering to 5.0% in 2013. Being a likely beneficiary from China’s recent and impending policy easing, as well as domestic demand remaining to be a bright spot; however as suggested by the Index, there will be contagion and pockets of stress likely to persist in the SME space.”

Mr Lam said, “Local SMEs foresee an increase in operation costs and express a somewhat pessimistic business sentiment. They are advised to leverage the funding schemes offered by Hong Kong and Mainland governments, and ride on the support services of HKPC’s SME One to enhance their efficiency and competitiveness.”

To download the report of the “Standard Chartered Hong Kong SME Leading Business Index”, please visit the website: www.smeone.org. Results of the next survey will be released in October 2012.

For more details about the Index, please contact HKPC’s Gary Cheng at tel. (852) 2788 6178 or email: garyc@hkpc.org. For other media enquiries, please contact Justina Shum at tel. (852) 2788 5895 or email: justina@hkpc.org.

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About “Standard Chartered Hong Kong SME Leading Business Index”
The “Standard Chartered Hong Kong SME Leading Business Index” is a forward-looking survey of local SMEs’ outlook on the overall business environment for the next quarter. For each quarterly survey, HKPC’s professional team interviews more than 800 local SMEs from the manufacturing, import/export trade and wholesale, retail, accommodation and catering services, information and communications, finance and insurance industry, professional services, and real estate industries. It covers SMEs’ outlook on their ‘sales amount’, ‘profit margin’, ‘investments’, ‘staff number’, and ‘global economic growth’ for the next quarter.

The Index will be announced in January, April, July and October to provide a useful reference for the public and SMEs in making strategic decisions and resource allocation amid the changing business environment.

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Mr Jonathan Ho
General Manager
Corporate Communications
Tel: (852) 2788 6390
Fax: (852) 2788 5056
Email: jonathanho@hkpc.org
Website: www.hkpc.org


24 July 2012

HKPC Director (Business Innovation), Mr Leo Lam (centre), and Consultant, Mr Gary Cheng (left), release the inaugural “Standard Chartered Hong Kong SME Leading Business Index”, with Mr Kelvin Lau, Senior Economist of Standard Chartered Hong Kong