According to a new research study, commissioned by QBE Hong Kong, most small and medium enterprises (SMEs) in Hong Kong are optimistic about their business despite weak economy and cost pressures.
The independent study conducted last year draws on a survey of 415 SMEs. The findings are significant because Hong Kong has around 340,000 SMEs which account for nearly half of those employed in the city.
Findings of the study:
- 54% of SMEs expect the economy to worsen in the year ahead, connecting it to
- 67% increase in international trade disputes
- 54% of operating costs
- 46% global competition
Despite their worries, around 74% of SMEs still forecast their revenue to remain stable or even increase this year. Only 7% cast an economic downturn or international trade dispute as their business’s biggest challenge.
Insurance plays a part in SMEs’ International expansion and growth opportunities
Insurance plays an important part in building confidence in SMEs and is not a barrier holding them back. SMEs with professional liability insurance are able to mitigate risks so they can focus on capitalising on opportunities to grow their business. Instead, some top barriers holding SMEs back are insufficient staff or skills to expand international footprint (31%), lack of knowledge of overseas markets (30%), insufficient funds (25%), and a lack of familiarity with overseas law and regulations (21%).
59% only operate in Hong Kong. And 47% have no interest in expanding their businesses beyond Hong Kong. The rest cited interest in the following destinations: Greater Bay Area (46%), Mainland China (41%), U.S (26%), Singapore (21%), Taiwan (20) % and Japan (18%).
The findings reveal 80% of SMEs are currently using or looking to invest in digital technologies with the aim to raise productivity (39%), make processes more efficient (35%), reduce internal costs (35%), and reduce reliance on manpower (33%).
Going digital comes with some challenges: high costs (39%), shortage of digital and IT skills (30%), data security (26%) and a lack of funds (26%). And while 86% of SMEs are aware of cybersecurity risks, 23% do not have any protection measures in place.
The findings revealed that SMEs are underinsured. While SMEs are concerned about the loss of income due to business interruptions (62%) and liabilities to third-parties (59%), only a small portion of SMEs have the right insurance protection against business interruptions (21%) and liabilities to third-parties (16%). 14% do not have any insurance protection, making them vulnerable to risks that could potentially disrupt their business. This is despite 73% of SMEs having experienced at least one business issue in the past year, such as equipment breakdown, damage or loss of inventory, and property damage.
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