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2020 Q2 Standard Chartered Hong Kong SME Leading Business Index: SMEs Hope for Digital Technology Support amid Weak Business Confidence

(Hong Kong, 5 May 2020) The Hong Kong Productivity Council (HKPC) today announced the “Standard Chartered Hong Kong SME Leading Business Index” (“Standard Chartered SME Index”) for the second quarter of 2020, which recorded a decrease by 6.9 points from last quarter’s 33.1 to 26.2. All the five sub-indices* of the Overall Index went down simultaneously, reflecting that SMEs’ confidence towards the business environment turns weak. However, 41% of surveyed SMEs said they make use of electronic/ online platform for sales or promotion, reflecting that SMEs tend to deploy technology for promoting their business so as to maintain operation in the middle of an adverse economic outlook.

The survey also explored SMEs’ deployment of digital technology for promoting their businesses, and the implementation on remote working. 41% of surveyed SMEs make use of electronic/online platform to sell or promote, of which 63% promote their products/ services through social media. When it comes to facilitating digital technology deployment, 84% of SMEs wish to receive following supports: recommendations for suitable tool and system; corporate cyber security support and relevant training course. Besides, 33% of surveyed SMEs think that their respective industries is suitable to adopt remote working. 

Mr Edmond Lai, Chief Digital Officer of HKPC, said, “In consideration of the global pandemic, SMEs’ confidence towards the business environment turns weak and it is expected to reflect in the record low index reading. It is anticipated that SMEs will face another wave of difficulties in running business under the prevailing local and global economic uncertainties. Many enterprises need to arrange remote working during the outbreak while the survey found that SMEs hope to receive various supports. In view of this, HKPC provides tips to enterprises via ‘SME Remote Office Tips’ and remind them to strengthen cyber security when implementing remote working, helping SMEs to maintain operations and develop businesses during the pandemic.”

For industry sub-indices, all three main industries recorded a drop simultaneously of which the Manufacturing Industry recorded the steepest drop of 8.0 to 26.2 compared to last quarter. Its “Global Economy” sub-index dropped more significantly and it is believed to be attributed to unstable global economy caused by the pandemic. 

“The survey also unveiled that over 80% of surveyed SMEs would like to receive support when facilitating digital technology deployment. SMEs may keep an eye on the ‘Distance Business (D-Biz) Programme’ rolled out by the Government during the second round of ‘Anti-epidemic Fund’, to support enterprises to continue their business and services through the adoption of IT solutions. Besides, the Government has further enhanced the Technology Voucher Programme (TVP) in terms of both funding and project ceilings. To enable enterprises acquire more information on various funding schemes, ‘Fund Fair GO Online’ was organised by SME ReachOut of HKPC through webcast. SMEs are most welcome to view the webinar anytime. Moreover, SME ReachOut will help to resolve any difficulty that enterprises face when applying for Government funding and provide support and matching services for them,” Mr Lai added. 

Mr Kelvin Lau, Senior Economist, Greater China, Global Research, Standard Chartered Bank (Hong Kong) Limited, said, “It is not a surprise that the headline reading of our index and its main components all fell to record lows in Q2, with COVID-19 inflicting severe human and economic toll on a global scale hurting all facets of business expectation. The single-digit ‘global economic outlook’ print reflects widespread worry of a global demand shock, as lockdowns and travel bans pointing to more severe contractions in the coming quarters. We expect China to be the first to emerge from this crisis, but the ongoing recession in the rest of the world is likely to weigh on its recovery, dashing hopes for Hong Kong to see even a modest rebound in external trade, tourism, business investment and financial activity anytime soon.”

“Domestically, Hong Kong was already badly battered in 2019 by the US-China trade war and local protests, leaving it in a weak state to weather coronavirus-related disruptions especially with the recent social-distancing restrictions. The latest survey results confirm unprecedentedly weak sales and margin expectations, but also the likelihood of an accelerated increase in the unemployment rate with an overall 43.2 reading for the ‘hiring’ component. Such challenging backdrop means that even with the additional fiscal spending from the government and lower cost sub-indices based on the latest survey, we believe Hong Kong GDP is still on track to contract by 4.8% in 2020, with Q2 being the worst quarter; aggressive monetary easing globally should eventually lift an open economy like Hong Kong, but this is more likely in 2021, after bankruptcies and the unemployment rate peak,” Mr Lau continued. 

Conducted in early to mid March 2020, the survey successfully interviewed 806 local SMEs. The “Standard Chartered SME 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".

- Ends -

Mr Edmond Lai, Chief Digital Officer of HKPC (Right); and Mr Kelvin Lau, Senior Economist, Greater China, Standard Chartered Bank (Hong Kong) Limited (Left), announced the Overall Index decreased by 6.9 points from last quarter's 33.1 to 26.2 of the Mr Edmond Lai, Chief Digital Officer of HKPC (Right); and Mr Kelvin Lau, Senior Economist, Greater China, Standard Chartered Bank (Hong Kong) Limited (Left), announced the Overall Index decreased by 6.9 points from last quarter's 33.1 to 26.2 of the "Standard Chartered Hong Kong SME Leading Business Index 2020 Q2", reflecting that SMEs' confidence towards the business environment turns weak.