Time to eye long-term growth opportunities as the pandemic recedes

No industry has been immune from the challenges posed by the pandemic in the past two years. But as the fifth wave gradually comes under control, Hong Kong’s economic recovery is underway with government’s stimulus measures and ongoing relaxation of Covid measures. We are at the point where business community needs to think about putting in place long term plans and strategies.

There are over 340,000 small-and-medium-sized enterprises (SMEs) which accounted for more than 98% of the number of enterprises in Hong Kong. They employ over 1.2 million staff that play an irreplaceable role in keeping Hong Kong’s economy running. Supportive measures that have rolled out such as the Employment Support Scheme, Special 100% Loan Guarantee, and tax reliefs are certainly timely measures that can alleviate pandemic-induced pressure on employers and business owners. The new round of the consumption vouchers scheme will also stimulate consumer spending. Banks have also been doing their part. One example from HSBC is that since February 2020 we have already introduced a series of measures to help commercial clients with their cashflow, providing more than HK$320 billion of liquidity relief in total.

While these measures may have successfully provided SMEs with the breathing space they need to meet the challenges ahead, eventually companies will have to switch mindset from survival back into growth, and start investing for the future. Over the years, Hong Kong has seen many ups and downs, but having gone through all these the city has remained resilient. Within the Dual Circulation strategy of Beijing’s 14th Five Year Plan, Hong Kong will continue to play its unique role connecting the mainland and overseas markets. This will cause more opportunities to arise when border restrictions are lifted, and HSBC stands ready to support businesses in that regard.

As the mainland market continues to expand, it represents enormous potential, not least from its huge domestic demand. While the authorities are striking the balance between facilitating economic growth and fighting the pandemic, the recently concluded “Two Sessions” – the annual meeting of China’s main political bodies – has already clearly laid down directions for the mainland economy in the period ahead. Three key areas have been highlighted to propel steady growth: middle- and high-end manufacturing, sustainability projects and technology, alongside stimulating domestic demand and consumption growth. Apart from these foci, the innovative areas of biomedical sciences and health services are expected to see growth, driven significantly by the sheer size of China’s population.

The Greater Bay Area (GBA) is certainly unmissable for businesses wanting to expand on the mainland. The high concentration of middle- and high-end manufacturers, tech firms and personal wealth provides great potential not least for those in IT, manufacturing and trade. From this year, developments in Shenzhen’s Qianhai, Zhuhai’s Hengqin, Guangzhou’s Nansha and Hong Kong’s Northern Metropolis will create further economic and wealth potential, providing a launchpad for more new developments.

Digitisation has become a necessity for most businesses following the pandemic. This is particularly relevant in land-scarce Hong Kong where many resource-restricted SMEs may not even have a physical store. To overcome such limitations, they tend to rely on social media and third-party platforms to reach local consumers. However, it is equally important for SMEs to embrace the wider application of digital tools in their operations such as big data and cloud technology. Automation and availability of analytics will help businesses in their strategy planning at the same time as boosting their competitiveness.

There was a notable increase in digital channel usage since the fifth wave of the pandemic. Given the recent trends and needs of SMEs, HSBC has doubled its efforts in accelerating the digitisation of its services. Examples include strengthening its real-time remote support and launching a new mobile cheque deposit service that facilitate businesses to manage their finance remotely.

Over a long time Hong Kong enterprises have many times shown themselves to be resilient and adaptable. To rise from the challenges posed by the pandemic, it is important for firms at this point not to lose sight of the long-term trends and recognise the opportunities that are opening in front of them if they are properly prepared.

A version of this article was originally published in Chinese.

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