A woeful year awaits Hong Kong as 40 per cent of small firms see slump
The findings illustrate how Hong Kong’s economy is heading for a technical recession in the fiscal third quarter ending in December, as four consecutive months of street protests have deterred visitors, dented retail sales and consumption.
Over 40 per cent of Hong Kong’s small and medium enterprises expect the local economy to worsen in the next 12 months from June
70 per cent of them are concerned about global economic growth, compared to 56 per cent of all 13 markets surveyed
Four in 10 of Hong Kong’s small businesses expect the city’s economy to worsen in the next 12 months, according to a survey by Bibby Financial Services and Euler Hermes.
Hong Kong is also the least optimistic about global economic growth among 13 markets surveyed, including Singapore, US and UK, according to the survey of companies, most with fewer than 10 employees.
The findings illustrate how Hong Kong’s economy is heading for a technical recession in the fiscal third quarter ending in December, as four consecutive months of street protests have deterred visitors, dented retail sales and consumption.
Small businesses, which provide employment for 1.3 million people in Hong Kong, or half of the city’s workforce excluding the civil service, are particularly vulnerable to the economic downturn. They comprised up to 98 per cent of all business units in the city as of June, according to the Support and Consultation Centre for Small and Medium Enterprises, a government agency.
Only 16 per cent of respondents found the government’s policies favourable to them, with 38 per cent of them calling for further government support to find funding.
“The government has the intention of helping companies, but it seems to not be doing it the right way,” said Simon Pun, chairman and CEO of PACE Supply Chain International, with 11 employees, in Tsuen Wan. “The worst thing is that we don’t know how long we still need to struggle.”
To help them survive the economic slump, Hong Kong’s government announced in early September that it would guarantee up to 90 per cent of the value of approved loans for small companies for up to five years, with the maximum amount of HK$6 million (US$765,300).
Nine of the city’s biggest banks were meeting officials from the Hong Kong Monetary Authority (HKMA) to find ways to redirect the HK$300 billion released this week from the de facto central bank’s capital buffer to help tie small businesses over their difficulties.
Nearly half of the 150 firms surveyed also said they struggled the most with the timely collection of payment from customers. Hong Kong SMEs had the second-longest average waiting period of 34 days for receiving payment from customers, the survey shows. Over a quarter of them also experienced bad debt over the past year.
“Global insolvencies are expected to rise by 8 per cent in 2020 for the fourth consecutive year, and one in four bankruptcies for SMEs comes from a non-payment,” said Ludovic Subran, global chief economist at Euler Hermes. “It is more important that SMEs have virtuous payment loops to avoid going bust.”
70 per cent of them are concerned about global economic growth, compared to 56 per cent of all 13 markets surveyed
Four in 10 of Hong Kong’s small businesses expect the city’s economy to worsen in the next 12 months, according to a survey by Bibby Financial Services and Euler Hermes.
Hong Kong is also the least optimistic about global economic growth among 13 markets surveyed, including Singapore, US and UK, according to the survey of companies, most with fewer than 10 employees.
The findings illustrate how Hong Kong’s economy is heading for a technical recession in the fiscal third quarter ending in December, as four consecutive months of street protests have deterred visitors, dented retail sales and consumption.
Small businesses, which provide employment for 1.3 million people in Hong Kong, or half of the city’s workforce excluding the civil service, are particularly vulnerable to the economic downturn. They comprised up to 98 per cent of all business units in the city as of June, according to the Support and Consultation Centre for Small and Medium Enterprises, a government agency.
Only 16 per cent of respondents found the government’s policies favourable to them, with 38 per cent of them calling for further government support to find funding.
“The government has the intention of helping companies, but it seems to not be doing it the right way,” said Simon Pun, chairman and CEO of PACE Supply Chain International, with 11 employees, in Tsuen Wan. “The worst thing is that we don’t know how long we still need to struggle.”
To help them survive the economic slump, Hong Kong’s government announced in early September that it would guarantee up to 90 per cent of the value of approved loans for small companies for up to five years, with the maximum amount of HK$6 million (US$765,300).
Nine of the city’s biggest banks were meeting officials from the Hong Kong Monetary Authority (HKMA) to find ways to redirect the HK$300 billion released this week from the de facto central bank’s capital buffer to help tie small businesses over their difficulties.
Nearly half of the 150 firms surveyed also said they struggled the most with the timely collection of payment from customers. Hong Kong SMEs had the second-longest average waiting period of 34 days for receiving payment from customers, the survey shows. Over a quarter of them also experienced bad debt over the past year.
“Global insolvencies are expected to rise by 8 per cent in 2020 for the fourth consecutive year, and one in four bankruptcies for SMEs comes from a non-payment,” said Ludovic Subran, global chief economist at Euler Hermes. “It is more important that SMEs have virtuous payment loops to avoid going bust.”