Standard Chartered SME Index for Q4 2017 at 46.5 - Business Confidence Hits Two-Year High

The "Standard Chartered Hong Kong SME Leading Business Index" (Standard Chartered SME Index) for the fourth quarter of 2017 has rebounded 2.2 points to 46.5, a record high in two years. Releasing the findings today (31 October 2017), the Hong Kong Productivity Council (HKPC) noted that business confidence of SMEs has moved one step closer towards recovery. The sentiment of the retail industry has improved notably, with the industry Sub-Index also hitting a two-year high.

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, all the Sub-indices have improved. The "Staff Number" Sub-Index (52.5) remains positive, while the Sub-Indices for "Investments" (48.2), "Sales Amount" (47.1), "Profit Margin" (41.5) and "Global Economic Growth" (35.8) have increased 1.2, 3.5, 2.5 and 2.9 points respectively.

For sectorial findings, all the three major Industry Sub-Indices still hover around 40, way below the 50 threshold. The Manufacturing Sub-Index edges down 0.8 point to 41.3, marred by the lowered "Investments" sentiment. On the other hand, the Import, Export & Wholesale Sub-Index rises 4.0 points to 42.0; while the Retail Sub-Index (42.9) hits a two-year high, reflecting a brightening outlook in this sector.

Mr Kelvin Lau, Senior Economist, Greater China, Standard Chartered Hong Kong, said, "Our latest index reading confirms that the Hong Kong economy is heading into the year-end relatively strong. The broad-based improvement of sub-indices is particularly encouraging, reflecting positive spillover from favorable external dynamics. Growth among the Western economies has remained solid while inflation expectations stay low, allowing the market to take Fed hike talks in stride. Expectations of policy continuity, reform acceleration and Renminbi stability following China's 19th Party Congress should help keep business confidence well anchored. Locally there is also hope that the recently announced profit tax cut could offer SMEs relief, further supporting sentiment in 2018."

Separately the survey also explored the investment profile of SMEs in the last year. Nearly 40% of the surveyed companies have invested more than $500,000, with "surplus from business revenue" (75%), "private investment" (31%) and "bank financing" (13%) being the top three sources of capital. They mainly put their investments on "new business models" (53%) and "business expansion" (48%), with the least on "technology adoption" (25%). Among the three major industries, the Manufacturing sector was the most willing to employ technology (34%), with the Import, Export & Wholesale (12%), and the Retail (14%) industries being way behind.

Mr Gordon Lo, Director (Business Management) of HKPC, said, "SMEs are still cautious about technology adoption, despite it is the prevalent way to enhance efficiency and competitiveness. They should embrace innovation and technology to widen their business horizon. To support the development of start-ups, designers and SMEs, HKPC has set up the 'Inno Space' recently to facilitate the sharing of technologies and skills, helping companies translate their innovative ideas into product prototypes or commercialization-ready products. This practical platform also connects SMEs for growth and potential collaboration."

The survey also gauged the impact of accounts receivable on SMEs. In the past three months, 85% of SMEs recorded accounts receivable, among which 67% was greater than or equivalent to their revenue. The majority (93%) of companies managed to receive the delayed payment within three months, but only 35% of respondents agreed that digitalization or e-payment could help shorten the payment period.

Conducted during the second half of September 2017, this survey successfully interviewed 820 local SMEs. To download a report of the "Standard Chartered Hong Kong SME Leading Business Index", please visit the website: www.smeone.org.

This year marked the 20th Anniversary of the establishment of the HKSAR. HKPC and Standard Chartered Hong Kong today co-organized the SME Conference under the theme of "Riding On Changes of the Twenty Years, Heading Wisely to the Future" to offer expert insights on successful business practices and how to put these experience into capturing new opportunities in a smart future. Opened by Mr Edward Yau, Secretary for Commerce and Economic Development of the HKSAR Government; Mrs Agnes Mak, Executive Director of HKPC; and Ms Mary Huen, CEO of Standard Chartered Hong Kong, the event also featured business and industry leaders, representatives from SMEs, economist and academics.

For more details about the Index, please contact HKPC's Kinson Leung at tel. (852) 2788 5795 or email: kinsonleung@hkpc.org. For other media enquiries, please contact Chloe Chau at tel. (852) 2788 6158 or email: chloechau@hkpc.org.

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Justina Shum
Senior Manager
Corporate Development
Tel: (852) 2788 5895
Fax: (852) 2788 5056
Email: justina@hkpc.org
Website: www.hkpc.org

31 October 2017

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 fourth quarter of 2017, accompanied by Mr Wilson Wong (left), General Manager (Information Technology) of HKPC; and Mr Kelvin Lau, Senior Economist, Greater China, Standard Chartered Hong Kong.