HKPC Announces Standard Chartered Hong Kong SME Leading Business Index 2020 Q1 Results - SMEs’ Business Confidence Improves while Proactively Responding to Challenges in 2020

(Hong Kong, 21 January 2020) The Hong Kong Productivity Council (HKPC) today released the “Standard Chartered Hong Kong SME Leading Business Index” (Standard Chartered SME Index) for the first quarter of 2020, which recorded an increase by 1.7 points from last quarter’s 31.4 to 33.1. All the five sub-indices* of the Overall Index also went up simultaneously, reflecting that SMEs’ confidence towards the business environment has improved when entering 2020.

With regard to the industry sub-indices, a rise in both Manufacturing Industry as well as Import/Export Trade and Wholesale Industry from last quarter was well-noted, whereas Retail Industry read at 25.5, showing a slight drop by 1.8 points. Manufacturing Industry (34.2) increased by 4.9 points from last quarter while all its sub-indices marked an uptick. Among which the Global Economy sub-index (19.3) recorded a relatively significant increase by 12.5 points, probably attributing to the positive impacts of the China-US trade deal. Import/Export Trade and Wholesale Industry sub-index slightly increased by 0.7 points, reaching 30.6.

The survey also looked into SMEs’ business strategic direction, along with their responsive measures and assistance required to address the business challenges ahead in 2020. More than half of the surveyed SMEs (59%) said they would be rather conservative in business strategy this year. Meanwhile, 17% of SMEs claimed to adopt a more progressive approach (2019:10%). In terms of responding to business challenges in 2020, the responding SMEs said they would consider lowering the operation cost (36%), improving customer services (35%), developing new businesses/products (32%), etc. Besides, about 91% of the surveyed SMEs expressed their wish to receive supports when formulating business strategy for 2020, and that 55% of which hoped to obtain funding support.

Dr Lawrence Cheung, Executive Director (Acting) of HKPC, said, “This time the Index recorded the first-ever increase since the second quarter of 2019, reflecting that SMEs see rays of hopes in business environment, thanks to the recent improvement of China-US trade ties. Notwithstanding the prevailing local and global economic uncertainties, the result of featured topic revealed that most of the SMEs are proactively and swiftly addressing the business challenges in 2020. As a trusted partner for SMEs, HKPC will continue to spare no efforts in supporting local SMEs’ industry upgrade so as to boost the development of enterprises in Hong Kong.’’

“The survey also unveils that over half of the responding SMEs aspired to obtain funding support when devising their business strategy for 2020. A new round of enhancement measures of the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund), which came into effect on 20 January, just serves SMEs’ needs by helping them drive productivity and tap into Mainland China and overseas markets by expediting the approval processes. With the aim of further promoting SMEs’ knowledge and adoption of HKSAR Government funding schemes, the ‘SME ReachOut’, a new designated service team operated by HKPC, has commenced operation in January. Through reaching out to the SMEs, the team will introduce the appropriate funding schemes to them and handle application-related inquires in order to make good use of resources for sustainable development,” Dr Cheung added.

Mr Kelvin Lau, Senior Economist, Greater China, Global Research, Standard Chartered Bank (Hong Kong) Limited, said, “The first thing that stood out was the encouraging hints of easing external headwinds, as one would expect amid the recent China-US Phase One deal breakthrough. This is reflected in the rebounding Global Economy sub-index, with further breakdown showing the biggest increase among respondents from the manufacturing sector. This however contrasts with the disappointing Retail Industry sub-index, it being the only industry seeing a quarter-on-quarter drop to a new low, reflecting the expectation of tough times ahead still amid lingering local political uncertainty and weak tourist arrivals. In all, even with the latest improvement, our indices are mostly still deep in the sub-50 territory, meaning that the pressure for economic contraction remains evident at the start of this new year. This matches our forecast that Hong Kong’s GDP could remain deep in negative year-on-year growth territory at least in the first half of 2020.”

Conducted during mid to late December 2019, the survey successfully interviewed 825 local SMEs. The “Standard Chartered Hong Kong SME Leading Business Index” report will be available at www.smeone.org soon.

*The five Sub-categories are "Recruitment Sentiment", "Investment Sentiment", "Business Condition", "Profit Margin" and "Global Economy".

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Dr Lawrence Cheung, Executive Director (Acting) of HKPC (Left); and Mr Kelvin Lau, Senior Economist, Greater China, Standard Chartered Bank (Hong Kong) Limited (Right), announced the Overall Index increased by 1.7 points to 33.1 compared to last quarter, and all the five sub-indices of the Overall Index also went up simultaneously at a press conference of the “Standard Chartered Hong Kong SME Leading Business Index 2020 Q1”, reflecting that SMEs’ confidence towards the business environment has improved when entering 2020.