HK SMBs adopt digitalisation to reduce internal costs, boost productivity

Hong Kong SMBs have accelerated digitalisation over the past few months to reduce costs and boost productivity. According to a survey conducted by QBE Hong Kong, more than half (57%) of the respondents said they had digitalised during the past 12 months to reduce internal costs, boost productivity and reach more customers. The majority of the respondents (88%) said they used digital technologies or intended to invest in them. The top three areas that they hoped to invest in included collaborative software for staff (40%), marketing through social or online media (40%) and eCommerce (38%).

ECommerce has become an important business channel for SMEs, with 80% of them buying and selling goods and services online. In fact, the proportion of revenue generated by eCommerce compared to traditional means rose to 45% in 2021 from 35% in 2020. This figure is expected to reach almost half (49%) within the next 12 months.

Despite the strong outlook, SMEs said greater competition, data security threats and rising customer expectations were the main challenges for eCommerce. As a result, there was a surge in cyber risk awareness among SMEs, which jumped to 43% from 24% in 2020. SMEs took protection against cyber risk in several different forms, including software solutions and staff training, but particularly, 39% used insurance as a form of protection.

“The findings show that SMEs are catching up quickly in utilising digital technologies to help achieve their evolving business goals," said Lei Yu, CEO North Asia and regional head of distribution at QBE Asia.

Moreover, in the rapidly changing business environment, growing sales amid reduced customer spending became a key priority for SMEs (21%), followed by customer acquisition and retention (18%). SMEs were also concerned about staff acquisition, training and retention, as well as logistical and export-import issues, reflecting that maintaining sales performance and ensuring business continuity were critical.

About a fifth of SMEs surveyed (21%) held insurance against customer fraud online, up from 11% in 2020. Many SMEs also bought a cover for loss of money due to dishonest employees (19%), protection against cyberattacks (18%) and theft of sensitive data online (16%).

QBE Hong Kong said SMEs not only digitalised their business operation, but also in their insurance purchase process. More than one-third of them (37%) preferred buying insurance online, particularly for group life, loss of income due to business interruption and unauthorised computer access. Nevertheless, a significant number of them (29%) still preferred buying insurance through an agent, citing better service, preference on human contact and clear information as major reasons.

Since the start of the pandemic, SMEs have put more attention on business resilience and protection. The survey found that over a third (36%) of Hong Kong SMEs had purchased more business insurance since the pandemic. Notably, the four key areas of insurance coverage included damage to business property, customer fraud, loss of money by third parties and loss of money due to dishonesty by employees.

However, SMBs were still under-protected in certain key risk areas. They are concerned about the types of business risk that could cause the loss of income, with the top three being damage or loss of inventory, liability to others due to product or service issues, followed by loss due to equipment breakdown. Despite these concerns, only 17% of the respondents said they had the appropriate insurance for each of the three scenarios.

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