Hong Kong SMEs face tougher challenges despite strong overseas revenue growth expectations

In April 2025, a report released by CPA Australia highlights the mixed outlook for small and medium enterprises (SMEs) in Hong Kong following the Asia-Pacific Small Business Survey 2024-25. With 306 businesses surveyed, the results show that while 65% experienced growth in 2024—the highest level since 2017—confidence for 2025 has notably declined. Only 57% anticipate business growth this year compared to 69% last year, indicating growing concerns about economic pressures and tightening financing conditions. This sentiment is reflected in the wider economy, where 68% expect growth, but this is also down from 73% previously. The survey reveals that SMEs are grappling with increased market competition and labor shortages. Many have turned to advanced technology investments, particularly in artificial intelligence, to improve efficiency and reduce operational costs. Last year, a significant 41% of businesses reported major investments in AI, indicative of the urgent need to innovate amidst workforce challenges. Additionally, the report highlights that 72% of SMEs suffered financial setbacks due to cyberattacks, underscoring the critical need for enhanced cybersecurity measures amid rising threats. While 51% of SMEs plan to expand their workforce in 2025, a stark increase from the 42% that reported hiring more staff in 2024 illustrates the competitive labor market. However, the report also underlines a worrying trend, with the percentage of businesses struggling to repay debts rising dramatically from 9% in 2023 to 22% in 2024. This could create long-term challenges for many SMEs as financing issues are projected to persist in the following year. The economic landscape for SMEs in Hong Kong highlights a blend of optimism regarding overseas revenue potential, with 79% expecting growth in exports. Still, local challenges remain. Business leaders are urged to stay vigilant about geopolitical risks and policy changes that could impact their operations. Overall, SMEs are at a crossroads where innovation and adaptability will be essential to thrive in an increasingly complex economic environment.