Standard Chartered Bank recently released the Q3 2024 "Standard Chartered Hong Kong SME Leading Business Index," which reflects businesses' views and confidence regarding the operating environment, as well as the global economic impact on them. We've distilled key insights from the report and actionable tips for your business to thrive despite market conditions. Want to know how to achieve growth in a challenging economy? Read on!

Comprehensive and sectoral data

Sponsored by Standard Chartered Bank (Hong Kong) Limited, this quarter’s survey by the Hong Kong Productivity Council involved 814 SMEs from 11 sectors. The composite business index for Q3 2024 stands at 42.5, marking a quarterly drop of 4.8 points and the lowest since Q3 2022. Since the index is below the neutral level of 50, the surveyed businesses generally hold a negative outlook on the current business environment, reflecting the biggest challenge since the end of the pandemic.

Sector-wise, the most affected industries are "Manufacturing," "Import and Export Trade and Wholesale," and "Retail," with indices of 40.5, 40.5, and 39.3, respectively. All sub-indices such as business conditions, profitability, and global economic impact show declines. Among the 11 sectors, only "Construction" saw a slight increase (+1.8). The sectors experiencing the largest declines include "Real Estate," "Information and Communication," and “Finance and Insurance.”

Insight 1: Over 90% of SMEs continue investing in e-commerce and digital technology

In terms of overall investment trends, more than 90% of surveyed SMEs plan to maintain or increase their investments this quarter. Notable increases are observed in the "Retail," "Accommodation and Food Services," and "Professional and Business Services" sectors. The top investment areas include "E-commerce or digital technology training," "Machinery and equipment," "Offline marketing," and "IT systems." Additionally, 14% of SMEs plan to "enhance online sales" in the next six months, and 13% will "invest in cost-reducing technologies" in the coming 7-12 months, echoing the above data.

Despite the challenging business environment, SMEs remain optimistic about the future. Continued investment in digital technology underscores the importance of seizing online opportunities in the post-pandemic era. The government's fiscal budget this year includes measures such as the "Digital Transformation Support Scheme" and "E-commerce Facilitation," which are expected to accelerate SMEs' digital transformation.

Business tip 1.1: Implement O2O marketing strategies to expand online channels

When in-store performance lags, many businesses invest in expanding their online sales channels to achieve simultaneous online and offline sales. This not only boosts brand exposure but also drives traffic from online customers to physical stores, optimising O2O marketing strategies.

For store owners frequently communicating with customers via messaging apps, a payment link is ideal. No programming or website is required—simply input the amount and transaction details in the KPay App to create your payment link. This allows payments to be completed anytime, anywhere, simplifying the process and reducing time costs. For instance, after a customer confirms an order through a social platform or messaging app, provide an immediate payment link in the chat window, allowing for quick payment and store pickup. This method streamlines the payment process without requiring customers to switch platforms, increasing store foot traffic and boosting repeat purchases.

Business tip 1.2: Use mobile payment tools and POS systems to seize every opportunity

SMEs are keen on investing in offline marketing, such as hosting in-store events, participating in markets, and distributing flyers. Post-pandemic, local malls and venues host creative markets and exhibitions, attracting consumer spending. Many businesses need a mobile and reliable payment tool for such events, making KPay’s QR code payment functionality a perfect fit.

For startups or cash-strapped micro-businesses, QR code payments are ideal. With just transaction fees and no need for additional hardware, power, or internet, you can start at a very low cost. Print QR codes in advance and collect payments anytime, anywhere—especially suitable for exhibitions, markets, and pop-up stores. The KPay App’s payment reminder feature confirms transactions easily, reducing customer wait times and the need to show payment pages. QR code payments streamline collections and boost efficiency, unaffected by external factors.

The KConnect merchant management platform offers over 100 professional business systems and tools, including POS systems like Storeberry, Boutir, and Eats365, suitable for various industries and mobile devices. These advanced systems eliminate the need for cumbersome traditional POS equipment at events, saving time and costs, and enhancing operational convenience for managing sales and transactions.

Insight 2: 30% of SMEs struggle to maintain healthy cash flow

The survey reveals that about 30% of SMEs feel high interest rates negatively impact their cash flow, with the most affected sectors being "Transport, Warehousing and Courier Services," "Retail," "Manufacturing," "Real Estate," and "Construction." Reduced consumer spending due to the macroeconomic environment impacts sales, particularly affecting retail and real estate sectors.
 

Business tip 2.2: Shorten settlement cycles for flexible and stable cash flow

Currently, most merchants wait 2 to 7 business days to receive settlement funds, which can be further delayed by weekends or public holidays. This extended cycle exacerbates cash flow issues, potentially jeopardizing business survival.

KPay’s Fast Payment Account supports T+1 express settlement. Simply activate the payment service and set up the Fast Payment Account as your settlement account to enjoy T+1 settlement. Transactions made today are settled tomorrow, ensuring more stable cash flow and flexible fund turnover.

During the promotional period, open a Fast Payment Account to enjoy T+1 settlement, fee waivers for the first 250 FPS transfers (worth HKD1,250), and reduced fees for FPS transfers during the promotion. Other account benefits include:

Contact us to learn more

In addition to the T+1 express settlement suitable for new merchants, qualifying KPay merchants can also access T+0 instant settlement. Withdraw pending settlement amounts immediately at minimal fees for T+0 settlement. Qualified merchants can apply via the KPay App by selecting the "T+0 Instant Settlement" option. If the T+0 application option is not visible in your KPay App, contact our customer service hotline at (852) 3706 7828 to check eligibility and arrange activation.

Insight 3: Nearly 20% of SMEs face challenges in securing new funding

The survey shows that nearly 20% of SMEs find it difficult to secure loans or new funding, primarily due to "tighter lending conditions." In a slow-growing economy, banks and other lenders tighten borrowing requirements to ensure cash flow and reduce bad debts. Long-term, 10% of SMEs hope to "strengthen relationships with financial institutions to obtain better financing solutions," highlighting the critical role of financing for SMEs.

Business tip 3: Choose flexible financing solutions

In the current economic climate, SMEs urgently need funds to navigate challenges, but tight lending conditions and reduced credit limits pose significant obstacles. KPay offers various revenue-based financing solutions to support SMEs in quickly accessing capital and ensuring business stability.

KFund’s data-driven financing solutions find the best unsecured revenue financing options available. KPay’s experts tailor the most suitable plan based on your operational data. The plan includes fully automated repayment features, so you don’t have to track repayment dates or amounts yourself—we deduct repayments from your settlement amounts, allowing you to focus on growing your business.

For more information on our products and services, contact us today, and a specialist will follow up on your inquiry soon!