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Standard Chartered SME Index for Q3 2015 at 49.6 Slightly Bearish Business Prospection, with Retailers Most Pessimistic

The “Standard Chartered Hong Kong SME Leading Business Index” (Standard Chartered SME Index) for the third quarter of 2015 has slightly increased 0.6 points to 49.6. Announcing the survey findings today (22 July 2015), the Hong Kong Productivity Council (HKPC) noted that the business outlook among local SMEs remains slightly bearish as the Index fails to rebound above the 50 no-change mark. The retail sector is the most pessimistic, with the Industry Sub-Index hitting three-year lows and the recruitment sentiment turning negative for the first time.

Sponsored by Standard Chartered Bank (Hong Kong) Limited (Standard Chartered Hong Kong), the quarterly survey features an Overall Index comprising five Sub-Indices. In this quarter, the Sub-Indices for “Investments” (53.1), “Sales Amount” (49.2) and “Global Economic Growth” (40.7) have gone up, while “Profit Margin” (44.5) remains unchanged as against the last quarter. Although the outlook on recruitment remains bright, the Sub-Index for “Staff Number” (53.9) fails to keep up the growth momentum of the last quarter as being dragged down by the weakening Retail, and Food & Accommodation sectors.

For sectorial findings, all the three major Industry Sub-indices are still below the 50 threshold. The Retail Sub-Index drops significantly to 43.1 (down 6.8 points) - its record low in three years. With negative views towards “Investments” and “Sales Amount”, 40% of the surveyed retailers consider that the decline in the number of Mainland visitors will adversely affect their sales. The usually positive Sub-indices for "Staff Number" and "Investments" have turned negative, with the former Sub-index (48.5) even falling below 50 for the first time. All in all, the industry is quite pessimistic towards the business prospect.

The Manufacturing Sub-Index rebounds to 47.9, below the 50 no-change mark for the fifth consecutive quarter; yet, the outlook for "Staff Number" and "Investments" remains positive, an indication of optimism towards long term business development. The Import, Export & Wholesale sector, on the other hand, took a different view with the industry Sub-index edging down 0.9 points to 46.9. The drop is more marked as compared to the same period last year (50.4).

Mr Kelvin Lau, Senior Economist of Standard Chartered Hong Kong, said, “The disappointing reading of the Retail Sub-Index reflects the continued negative impact of slowing Mainland visitor arrivals and the structural shift in their spending from high-value to lower-value goods. Taking a three-month moving average, Mainland tourist arrivals fall 1.3% y/y as of May 2015, the slowest since August 2009. Given the still-tight labour market underpinning wage growth, we believe Hong Kong households in general have the ability to spend; however, their confidence in spending appears to stay weak in Q3-2015 due to lingering global macroeconomic uncertainty and the recent asset market volatility”

This survey also gauged the views of SMEs on the increasingly popular 3D printing technology and related applications in their business. About 81% of the respondents are "not quite familiar" or "completely unfamiliar" with 3D printing technology. The main reason for their not adopting 3D printing technology is the concern over “capital investment cost”, followed by "insufficient knowledge on relevant industry applications" and "difficulty in selecting suitable printing materials". To master the technology and related applications, 46% and 27% of the surveyed SMEs wish to obtain training and technical support respectively.

Mr Gordon Lo, Director (Business Management) of HKPC, said, “The applications of 3D printing are dynamic, ranging from traditional usage in mold production, to applications in the retail, design, food and beverage, and even biomedical sectors nowadays. HKPC will soon establish the first one-stop 3D printing support centre in Hong Kong to help enterprises utilise 3D printing technology, and create new business opportunities.”

Conducted in June 2015, the survey successfully interviewed 806 local SMEs. To download a 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 2015.

For more details about the Index, please contact HKPC’s Olivia Mak at tel. (852) 2788 5677 or email: oliviam@hkpc.org. For other media enquiries, please contact Chloe Chau at tel. (852) 2788 6158 or email: chloechau@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 on 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 is 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 Communication and Marketing
Tel: (852) 2788 6390
Fax: (852) 2788 5056
Email: jonathanho@hkpc.org
Website: www.hkpc.org

22 July 2015


Mr Gordon Lo (centre), Director (Business Management) of HKPC, announces the survey results of the Mr Gordon Lo (centre), Director (Business Management) of HKPC, announces the survey results of the "Standard Chartered Hong Kong SME Leading Business Index" for the third quarter of 2015, accompanied by Mr Wilson Wong (left), General Manager (IT Industry Development) of HKPC; and Mr Kelvin Lau, Senior Economist of Standard Chartered Hong Kong.