(Hong Kong, 11 November 2020) The Hong Kong Productivity Council (HKPC) today announced the “Standard Chartered Hong Kong SME Leading Business Index” (“Standard Chartered SME Index”) for the fourth quarter of 2020, which recorded an overall index at 37.5, representing an increase of 7.7 compared to the previous quarter and indicating a continuous uptrend for two consecutive quarters. While “Business Condition”, “Profit Margin” and “Global Economy” were the major growth drivers, the overall index and sub-indices still remained at a level below 50, reflecting the persistent challenges to SMEs in business operations amid the new normal. Hence, HKPC and Standard Chartered Bank (Hong Kong) Limited co-organised the SME Conference on “Innovation: The Key to Business Success in the New Normal” on the same day, diving deep into the latest technology trend and topics related to doing businesses.
The “Standard Chartered SME Index” in Q4 2020 is 37.5, with all five component sub-indices* continued to rise. Among which “Global Economy” increased by 7.9 to 23.2, reflecting an improvement in SMEs’ confidence towards the business environment. This was echoed by the uplift of all the three key industry indices - Import / Export Trade and Wholesale Industry recorded an increase of 8.9 to 36.2, of which the “Recruitment Sentiment” sub-index edged up to 50; Retail Industry climbed up 7.0 to 32.7, though the “Recruitment Sentiment” sub-index slightly dropped to 46.4; Manufacturing Industry bounced back to 37.3, of which the “Global Economy” sub-index recorded a remarkable surge of 27 to 36.6, compared to 9.6 in last quarter. The survey also unveiled that 48% of surveyed SMEs expected an increased or unchanged turnover in Q4, showing a rapid growth of 17% as compared to last quarter.
Mr Edmond Lai, Chief Digital Officer of HKPC, said, “The overall index in Q4 continued the uptrend for two consecutive quarters, though still at a level below 50. Despite this, most of the indices recorded a rather significant uplift, reflecting a ramp up of SMEs’ confidence in overall business environment. Moreover, SMEs that expected an increased or unchanged turnover in Q4 rose 17% as compared to last quarter, among which ‘Accommodation and Food Services’ surged by 28% to 54%, indicating that the sector has boosted confidence in transforming operation models to cope with the new normal. It also illustrates that some particular sectors stand ready to seek transformation or take responsive measures against the backdrop of the new normal. As 2021 is just around the corner, HKPC will host the ‘Foresight 2021’ webinar from 23rd to 27th of November, drawing upon industry heavyweights and experts to shed light on transformation, trend of future technology development and new economy in 2021. We hope to offer a thought-provoking vision for industry practitioners to sketch out their future development plan and unlock the full range of business opportunities”.
This survey also featured a topic relating to SMEs’ business deployments amid the new normal. More than half of surveyed SMEs (58%) expected the persistent COVID-19 to be a long-term negative impact on businesses, while 77% of them holding positive or neutral attitude towards the pandemic-driven new normal like home economy and digital office. As many as 84% SMEs said they have taken action(s) or planned to cope with the new normal, and that the top three actions are: expansion of online sales; applying loans / funding schemes; and strengthening of information security / cyber security. Amid the new normal, the areas of support most wanted by SMEs are: funding; talents & professional skills; and system, hardware & facilities.
“Under the prevailing pandemic and global political uncertainties, over 80% SMEs have taken action(s) to cope with the headwinds and explore the new path for future development. HKPC, as a trustworthy partner to SMEs, has not been standing down from bolstering SMEs with various measures to support the industries, ranging from Industry 4.0 and Enterprise 4.0 solutions, talents trainings, cyber security as well as secretariat services for various government funding schemes. To tackle SMEs’ business pain points amid the pandemic, HKPC has endeavoured to organise several events, including ‘SME ReachOut: Fund Fair Everywhere 2020’, ‘HKPC Sourcing Fair 2020’ and ‘Fund Fair GO Online’, to name a few. All these served to seek optimal opportunities for local enterprises to sustain their operations, and also advancing their developments under the new normal”, Mr Lai added.
Mr Kelvin Lau, Senior Economist, Greater China, Global Research, Standard Chartered Bank (Hong Kong) Limited, said, “The latest readings point to a continued economy recovery in the coming quarter, albeit from a very low first half 2020 base. Also, the expected ease in contractionary pressure is likely to be very modest, as the headline print of 37.5 remains well below the 50 neutral mark. The quarter to quarter improvement appears to be broad-based, with sub-indices that better reflect short-term business performance (‘Business Condition’ & ‘Profit Margin’) catching up with those more reflective of long-term business confidence (‘Recruitment Sentiment’ & ‘Investment Sentiment’). The 15.2 points increase in the ‘Global Economy’ component is in line with a steady recovery in the China economy in recent months, but also the rest of the world probably moving past the worst point of their respective economic cycles”.
“That said, the risk of persistent pandemic disruptions and lingering US-China tensions look to limit further sentiment gains from here. Industry-wise, the almost 13 points jump in score for ‘Accommodation and Food Services’ to 42.5 – a close third after the usual outperformers in ‘Information and Communications’ and ‘Financing and Insurance’ – was a positive surprise, possibly a reflection of the sector adjusting well to challenges by, say, providing delivery services and capturing staycation demand”, Mr Lau added.
With the aim of providing SMEs with more market insights, HKPC and Standard Chartered Bank (Hong Kong) Limited co-organise the “Innovation: The Key to Business Success in the New Normal” SME Conference 2020 on the same day, focusing on how SMEs can generate new business opportunities by unleashing innovations, leveraging on technologies and transforming business models to counter challenges.
The conference kicks off with opening remarks by Dr Bernard Chan, Under Secretary for Commerce and Economic Development, HKSAR Government. Mr Willy Lin, Chairman of HKPC and Ms Mary Huen, Chief Executive Officer, Hong Kong, Standard Chartered Bank (Hong Kong) Limited, deliver welcome speeches. Dr Lawrence Cheung, Chief Innovation Officer of HKPC, together with other industry heavyweights, SME representatives and economists then analyse current market situation and business environment from multiple perspectives, revolving around the theme of “The COVID-19 Pandemic: How to Turn Crisis into Opportunities”.
Conducted in September 2020, the survey successfully interviewed 816 local SMEs. The “Standard Chartered SME Index” report is available at HKPC website: https://u.hkpc.org/scbi-en
*The five component sub-indices are "Recruitment Sentiment", "Investment Sentiment", "Business Condition", "Profit Margin" and "Global Economy".
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