Small and medium-sized businesses (SMBs) around the CBD and airport in Singapore and Hong Kong have had to grapple with the effects of COVID-19. According to the Recovery Insights: Small Business Reset report by Mastercard Economics Institute, SMBs in Singapore's CBD area saw their spending drop to around 13% of their pre-COVID levels (2019) in April 2020 and bounced back to 74% of their pre-COVID levels by August 2021. Large businesses in the country's CBD area witnessed a more dramatic shift - from 28% of pre-COVID spending levels in April 2020, to 129% of pre-COVID levels by August 2021.
On the other hand, both SMBs and large businesses outside of Singapore's CBD area have outperformed their pre-COVID levels, with large businesses and SMBs' spending levels at 104% and 129% of their pre-COVID levels.
According to the report, the support for businesses in Singapore comes from the government's push to promote domestic tourism. In July 2020, the Singapore Tourism Board launched the SingapoRediscovers voucher, which allowed locals to book hotels, attractions, and tours. Singapore's gradual reopening to international tourists, coupled with its strong vaccination performance and a return of workers to offices, should mean some reversal of fortunes over the next year or two; the report said.
Hong Kong's CBD also suffered the most during the pandemic and remains the slowest to recover. The businesses around the airport are underperforming with international travel restrictions and Hong Kong residents preferring staycations and visiting local theme parks and restaurants, the report found.
In Hong Kong, location in a commercial business district versus less commercial areas impacted SMBs and large businesses about the same. But the most significant recovery has been with large businesses outside of commercial areas, jumping to 103% of their 2019 levels in August 2021. According to the report, the main concern for Hong Kong is the relatively slow pace of vaccinations so far, which could impact the pace of recovery.
Looking at 19 markets around the world, including Australia, Hong Kong, Malaysia, New Zealand, Philippines, Singapore, and Thailand, the report revealed that sales at SMBs lagged behind larger companies by up to 20% at the peak of the pandemic. In the APAC region, small businesses that closed early in the pandemic were about twice as likely to remain closed long term, compared to larger businesses. Smaller businesses elsewhere fared worse, as they were three times as likely to remain closed after six months, compared to larger businesses. A third of small businesses that closed in April 2020 remaining closed after six months, while only a fifth of larger businesses still closed after 12 months.
David Mann, chief economist, AP and MEA at the Mastercard Economics Institute, said that while businesses of all sizes were adversely impacted by the pandemic, reliance on local SMB support and lack of digital infrastructure saw SMBs in the APAC region experience far greater hardships at the outset. “Against a backdrop of mobility restrictions and zero covid strategies, eCommerce was a lifeline for organisations to ride out the pandemic. However, the accelerated shift to digital has paved the way for the next generation of entrepreneurs, and we’ve seen a surge in newcomers seizing an opening amidst the disruption," he added.
This year saw a gradual climb for SMBs, as total sales increased by 4.5% from the start of the year to August 2021, compared to the same period in 2020; and global eCommerce sales saw a 31.4% growth. The number of businesses going online each month tripled from pre-pandemic levels and peaked in July 2020; reflecting the increased demand for online sales channels. The APAC region saw about 35% more small retailers establish operations in 2020 than in 2019; slightly higher than the global average of 32% and over eight times the 4% of large firms created.
The report also noted that while sales are suffering for small businesses in commercial districts, those within residential neighbourhoods saw an uptick in their sales. In the APAC region, small lodging businesses outperformed larger ones by a wide margin through 2020 and 2021.
On the flip side, SMB eateries underperformed compared to larger eateries by 17% through August 2021 - except in Hong Kong, where SMB eateries have increased their outperformance over larger eateries in 2021. Hong Kong saw over 56,000 newly registered local companies during the first half of 2021, bringing the total number of registered local companies to about 1.38 million. At the same time, 662 non-Hong Kong companies were newly registered as well, bringing the total number of registered non-Hong Kong companies to 14,044 as of June 2021.
Photo courtesy: 123RF
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