Study: HK SMBs optimistic about survival after the fifth wave, expects revenue to remain or grow

The majority of SMBs in Hong Kong are confident they will overcome the city’s fifth wave of the pandemic, but they are advised to increase their investment in technology and innovation, as well as reset their business strategy, according to a study conducted by CPA Australia.

CPA Australia conducted a poll of SMEs in mid-March to examine their sentiment, as well as their current and expected performance. 55% of respondents said they were confident that their business will overcome the fifth wave, with 57% expecting revenue will largely remain the same as normal or grow in the next three months.

Moreover, 42% of respondents believed that the relaxation of social distancing restrictions will have the most positive impact on their business in the next three months, followed by the latest round of the employment support scheme (18%) and the ongoing consumption voucher scheme (12%).

“The pandemic is the major catalyst for transforming business models and consumer spending patterns. In Hong Kong, more consumers are purchasing online and using digital payments. With social distancing restrictions set to relax in mid-April and the rollout of stimulating measures such as the consumption vouchers, small businesses should continue innovating, digitalising and updating their business plans to ensure they are best placed to rebound in the second half of 2022," said Janssen Chan, chairperson of CPA Australia’s SME Committee – Greater China.

When asked about which areas of their business were most negatively impacted by the fifth wave, 35% said business operations, followed by cash flow (26%).

Additionally, only 36% of SMBs in Hong Kong said their business grew last year, with only 16% of them sharing the same idea in 2020. CPA Australia said the reason for the improvement was an increase in the number of local businesses that found their investment in technology in 2021 improved their profitability. Revenue generated from eCommerce also increased. Over half (53%) of surveyed SMBs generated more than 10% of their revenue from eCommerce in 2021, the highest result for the city since 2017.

“Although SMBs in Hong Kong may still fall short of the survey average in technology adoption, another positive to emerge from the 2021 results was that more small businesses embraced digital transformation. Our survey findings indicated businesses that innovate and digitalise were more likely to outperform their competitors," he added.

Moving forward, CPA Australia suggested that SMBs in Hong Kong increase their focus on online sales and new payment technologies, identify and adopt suitable technologies into their business, and innovate through the introduction of new products, services or processes.

Other areas that SMBs can work on include the exploration of expanding sales into overseas markets, and sourcing professional advice such as IT and financial consultants.

Currently, large part of Hong Kong's economy is run by SMBs. According to the previous Visa Global Back to Business Study – 2022 SMB Outlook, 94% of surveyed Hong Kong SMBs are optimistic about the future of their businesses (compared to 90% globally), ranking second among all markets surveyed.

When it comes to payments, 95% of Hong Kong SMBs surveyed said they will accept contactless payment or some form of digital payment option in 2022 (higher than the global average of 82%), and over half (56%) of consumers surveyed expect to use digital payments more often in 2022, with just 2% saying they will use them less.  

An overwhelming 92% of Hong Kong SMB respondents (compared to 84% globally) anticipated being able to shift to relying exclusively on digital payments within 10 years, including 7% that are cashless already. Of those surveyed who planned to accept some form of digital payment option in 2022, 34% said they planned to accept digital currencies such as Bitcoin. 

(Photo courtesy: 123rf)

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