HKPC Releases “Standard Chartered Hong Kong SME Leading Business Index” Q3 2025 Overall Index at 40.5 Signals Market Adjustment Manufacturing Industry’s Investment Hits 7-Year High Regulations and International Cooperation Emerge as Key SME Growth Drivers to “Go Global”

(Hong Kong, 19 August 2025) The Hong Kong Productivity Council (HKPC) today announced the “Standard Chartered Hong Kong SME Leading Business Index” (“Standard Chartered SME Index”) for the third quarter (Q3) of 2025. The survey results indicated that global economic conditions remained uncertain, with the “Business Condition” (36.6, -5.0) and “Profit Margin” (34.1, -5.0) reflecting a weakened confidence among local SMEs on their business turnover this quarter. The Overall Index fell slightly by 3.3 to 40.5.

Additionally, “Global Economy” sub-index has declined for three consecutive quarters and accumulated a drop of 15.6 since the fourth quarter (Q4) of 2024. The global economic slowdown has been driven by multiple factors, since Q4 2024, shifts in U.S. monetary policy and stimulus measures have failed to fully revive demand, while newly imposed U.S. tariffs this year have further dampened global trade flows. Concurrently, market volatility has driven up business operating costs, intensifying pressure on SMEs.

“Standard Chartered SME Index” Survey Results
Amid global economic uncertainty, Hong Kong SMEs continued to demonstrate adaptability, with several key industries maintaining stable development. In terms of the 11 industry indices, key industries maintained stable development, with “Construction” (42.3, +2.6) and “Accommodation and Food Services” (42.9, +1.7) recording increases. The growth was mainly driven by the gradual completion of large-scale Government infrastructure projects like the Kai Tak Sports Park, which not only boosted demand for the construction industry but also attracted both domestic and international visitors through international sporting events and large concerts. The tourism sector also developed thematic tours, supporting related industries such as accommodation and catering, thereby creating a positive cycle. Notably, the HKSAR Government (the Government) has in recent years actively expanded new industries to enhance the diversification of Hong Kong’s economy. “Manufacturing” industry performed particularly well this quarter, with its global economy sub-index rising by 1.4 points and investment sentiment increasing by 3.5 points to its highest level in nearly seven years, showing that companies were more willing to allocate resources for business expansion compared to the past, while also placing greater emphasis on R&D investment. In the face of ongoing trade frictions and other international challenges, Hong Kong’s industries, particularly manufacturing sector, must continue to innovate and transform for sustainable development.

In addition, the recruitment sentiment of the “Professional and Business Services” rose by 2.9 points, and the profit margin improved by 1.2 points, reflecting sustained growth in demand for high-value-added services. The proportion of SMEs expecting raw materials cost to increase dropped to a five-quarter low of 47%, while the pressure to increase staff salary also eased, falling by 1 percentage point to 19%, creating a more favourable environment for business development. On the other hand, only 17% of SMEs planned to increase the price of their products or services, which is on par with the previous quarter.

In terms of overall investment trends, 92% of surveyed SMEs intended to maintain or increase their investment this quarter, with 5% specifically stating that they would increase their investment. Most SMEs expected to focus their investment on digital transformation, such as “IT System”, “Online Marketing Promotion”, “Training Related to E-commerce or Digital Technology”, “Facilities and Equipment” and “Overall Staff Training”, indicating that companies were actively enhancing their long-term competitiveness.

Recently, the Government released the “Report on Hong Kong’s Business Environment: Unique Strengths under ‘One Country, Two Systems’”. Against the background of global supply chain reallocation, Hong Kong ranked as “the world’s freest economies” by the Fraser Institute in the “Economic Freedom of the World 2024 Annual Report”, confirming the city’s secure and stable business environment. In addition, Hong Kong is actively seizing the strategic opportunity presented by multinational corporations diversifying their regional risks, aiming to attract international capital and enterprises to set up operations in the city. Regarding the key period of economic transformation, the report emphasized that Hong Kong would focus on developing its innovation and technology industries, while also supporting the upgrading and transformation of traditional industries through policy initiatives.

Mr Kelvin LAU, Senior Economist, Greater China and North Asia, Standard Chartered, said, “The ‘Standard Chartered SME Index’ in Q3 2025 fell to 40.5, marking the lowest level since Q2 2022. Despite a challenging business environment, Hong Kong’s GDP performance in the second quarter remained robust. Business confidence continues to be cautious yet stable, demonstrating a spirit of perseverance and determination. Tariff uncertainty remained the primary cause of the fall in ‘Global Economy’. In terms of the 11 industry indices, ‘Accommodation and Food Services’ was among the two exceptions (the other being ‘Construction’) that saw a quarter-over-quarter improvement, reflecting the government’s recent success in driving tourism with major concerts and sport events. It is noteworthy that changes in the five component sub-indices¹highlight the ongoing vulnerability of SMEs to potential economic slowdowns, particularly as the boost from front-loading fades or if local interest rates rise to align with the USD counterparts. Nevertheless, Hong Kong SMEs have demonstrated continuous adaptability and are actively strengthening their operational foundations. The index indicates that the economic growth in the second half is expected to be more moderate, after a stronger-than-expected start in the first half of 2025”.

Thematic Survey Results: Mainland and Asia as Preferred Markets for SMEs to “Go Global” 
The thematic survey of this quarter explored the business challenges faced by local SMEs and their views on “Go Global”. The survey revealed that local SMEs were facing multiple business challenges, mainly including: “intensifying market competition” (50%), “uncertain tariff situation” (40%), and “increase in import-export cost / staff salary” (37%).

Currently, 75%, 63%, 10%, and 25% of SMEs have already engaged in product manufacturing / production, product R&D / testing, outsourcing of professional services and selling of products / services outside Hong Kong respectively, with these business activities mainly focus on the Mainland. In terms of “Go Global” plans, 16% of surveyed SMEs have already planned to go global within the next three years, while another 18% were considering it. Among those with plans to go global, a majority intended to expand to the Mainland (59%) or Asian markets (42%). Both companies that have already expanded overseas and those currently considering doing so identified “lack of familiarity with local regulations, planning, or policies” and “difficulty in finding local business partners” as the major challenges in their “Go Global” journey.

Ms Karen FUNG, Chief Marketing Officer of HKPC, said, “This quarter’s survey reflected that local SMEs were facing challenges such as intensified market competition and rising costs. At the same time, over 80% of those planning to go global had chosen the Mainland or Asia as their first destination, yet the need to understand local regulations and secure business partners remained urgent. HKPC is committed to assist enterprises in expanding into international markets. The newly established “The Cradle – Go Global Service Centre”, partners with three national innovation centres, provides one-stop connectivity, technical support, and professional services, helping enterprises mitigate risks and seize the collaborative opportunities of jointly venturing into the global market, urging SMEs to make full use of the platform’s resources to turn challenges into business opportunities”.

The survey also explored SMEs’ views on “venturing overseas by sharing a boat”. Half (50%) of the surveyed SMEs stated they were already aware of this emerging trend. When asked about its potential impact on their business, 23% believed it would bring positive benefits. Additionally, over a third (34%) of SMEs already had business partners in the Mainland. If invited to collaborate with Mainland companies for joint overseas expansion, approximately one-third (34%) said they would consider it, while another third (34%) said they would not. 11% of SMEs indicated they had never considered this option, reflecting that some still lack understanding of joining hands with Mainland enterprises to develop overseas markets.

Ms FUNG continued, pointing out that the trade war has prompted a reallocation of global capital, with many companies reducing their reliance on the U.S. market, for example, by exploring new markets to rebuild supply chain resilience. She revealed that since the establishment of the "The Cradle", we have received 122 corporate inquiries covering areas such as global market expansion and technological upgrades—reflecting the growing demand from both local and Mainland enterprises to go global. This trend has created unique service advantages and business opportunities for Hong Kong. As an example, HKPC previously assisted a well-known local toy manufacturer and a precision metal company in relocating their production capacity through technological innovation, thereby expanding their manufacturing base to Malaysia. Through its "Six Tactics to Go Global", HKPC provides comprehensive business solutions to address various challenges businesses face during global expansion.

Conducted in July 2025, the Standard Chartered SME Index Q3 2025 survey successfully interviewed 824 local SMEs. The report will be available for download from HKPC website: https://www.hkpc.org/en/about-us/hkpc-publication/industry-insight/scbi.

¹The five sub-indices include “Recruitment Sentiment”, “Investment Sentiment”, “Business Condition”, “Profit Margin” and “Global Economy”.

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At the press conference of Standard Chartered Hong Kong SME Leading Business Index Q3 2025, Ms Karen FUNG, Chief Marketing Officer of HKPC (left) and Mr Kelvin LAU, Senior Economist, Greater China and North Asia, Standard Chartered (right) announced that the Overall Index fell slightly by 3.3 to 40.5.