Standard Chartered SME Index for Q2 2015 Edges Down to 49.0 Regional Competitiveness Hinges on Quality, Human Capital and Market Network

The “Standard Chartered Hong Kong SME Leading Business Index” (Standard Chartered SME Index) for the second quarter of 2015 has edged down 1.1 points to 49.0. Announcing the survey findings today (29 April 2015), the Hong Kong Productivity Council (HKPC) noted a slightly bearish business outlook among local SMEs as the Index drops marginally below the 50 no-change mark. The survey also shows that product and service quality, human capital, and market network are crucial for Hong Kong industries to outperform their rivals in the region.

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-Index for “Staff Number” reaches its record high of 55.3. This reflects a strong recruitment sentiment even into the low season, particularly in the Retail, Information and Communications, as well as Accommodation and Food sectors. The Sub-Indices for “Investments” (51.3), “Sales Amount” (47.3), “Profit Margin” (44.5) and “Global Economic Growth” (40.1) all go down; among which the “Sales Amount” drops most notably by 4.4 points.

For sectorial findings, the Retail Sub-Index rebounds to 49.9, very close to the 50 no-change mark. Both Manufacturing (46.4) and Import, Export & Wholesale (47.8) industries are pessimistic about the business prospects for this quarter, with the Sub-indices both declining 2.3 points. The readings of “Profit Margin” and “Sales Amount” in the Manufacturing Sub-Index register the biggest drop, while the “Investments” sentiment has changed from positive to neutral. The Import, Export & Wholesale Industry, on the other hand, holds a negative view towards “Investments” and “Sales Amount”.

Mr Kelvin Lau, Senior Economist of Standard Chartered Hong Kong, said, “The fact that ‘Sales Amount’ shows the biggest drop among our five key Sub-indices indicates that the current business environment remains challenging. The drop in the Import, Export & Wholesale Sub-index reflects lingering worries towards the global economic outlook, while the rebound in the Retail Sub-Index suggests that our respondents are weathering the slowdown in Mainland tourist spending well. We believe a slowing Chinese economy may continue to weigh on sentiment, despite a more upbeat stock market and a more stable Renminbi.”

This survey also gauged the views of different industries on their relative competitiveness among rivals in Asia, as well as their development plan in e-Commerce business. About 70% of the SMEs surveyed consider their industries relatively less competitive than their Asian counterparts. On the other hand, the Information and Communications, Financial & Insurance, and Manufacturing sectors rate themselves more competitive in Asia.

Hong Kong SMEs consider product and service quality, human capital, and market network as the three major factors conducive to maintaining their regional competitive advantages. To maintain and enhance their competitiveness, most SMEs will step up measures in recruitment and staff retention, followed by business and products development in the upcoming year.

Mr Gordon Lo, Director (Business Management) of HKPC, said, “Although local SMEs treasure talents as important assets, the record high ‘Staff Number’ Sub-Index deserves attention. With rising operation costs, SMEs are facing more difficulties in staff recruitment. In addition to improving human resources management and training to foster a good staff relationship, SMEs can make use of various technologies and IT solutions to streamline operation and optimize manpower deployment.”

In the meantime, there is a rising trend of SMEs using e-Commerce in their businesses. Among those respondents who will engage in e-Commerce in the upcoming year, 35% have started preparation; 64% of them expect a rise in the proportion of e-Commerce sales against the total, with an average increase of 11%.

Mr Lo said, “Before starting e-Commerce, SMEs should have a comprehensive business plan, which covers corporate development strategy, customer relationship management, resources allocation between online and physical shops, as well as inventory management, for effective cost control while ensuring customer satisfaction.”

Conducted in March 2015, the survey successfully interviewed 803 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 July 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

29 April 2015

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 second 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.