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A guide for Hong Kong SMEs navigating a digital-first world
SMEs are the lifeblood of Hong Kong’s economy, but the evolving business landscape and the digital age are posing new challenges to which they must adapt. Through tailored business support and a wide range of digital banking solutions, HSBC can assist these vital businesses in managing financial complexity, enhancing operational efficiency and fostering growth.
In the current economic landscape, small and medium enterprises (SMEs) face a multitude of corporate challenges that can hinder their growth journey. From fluctuating market conditions to the rapid pace of technological change, SMEs need to adapt to an increasingly complex environment to remain competitive.
This article explores the unique business challenges enterprises are facing, highlights the importance of digital transformation, and provides a guide to how HSBC can support SMEs through our innovative banking and financing solutions.
Taking the pulse of Hong Kong’s SME landscape
To be defined as an SME in Hong Kong, a manufacturing company must employ fewer than 100 employees, while a non-manufacturing company must employ fewer than 50 employees. 1
As of September 2024, Hong Kong was home to approximately 360,000 SMEs, representing more than 98% of the city's enterprises and employing approximately 45% of the private sector workforce. 2 The distribution was as follows:
Industry | 
No. of SMEs | 
No. of employees |
|---|---|---|
Manufacturing | 7,433 | 42,314 |
Mining & Quarrying; Electricity & Gas Supply, and Waste Management; and R2 Construction Sites | 1,827 | 17,225 |
Import/Export Trade and Wholesale | 90,355 | 327,421 |
Retail | 50,819 | 133,043 |
Transportation, Storage, Postal and Courier Services | 8,529 | 48,963 |
Accommodation and Food Services | 16,004 | 122,070 |
Information and Communications | 16,845 | 58,732 |
Financing and Insurance | 35,007 | 67,660 |
Real Estate | 19,881 | 36,955 |
Professional and Business Services | 59,338 | 169,417 |
Social and Personal Services | 52,340 | 178,636 |
Total | 358,378 | 1,202,436 |
Source: Census and Statistics Department, HKSAR Government
The resilience of these SMEs continues to play a vital role in the overall recovery and growth of Hong Kong’s economy, particularly in light of disruptions caused by the pandemic, slowing consumption, geopolitical tensions, and various economic uncertainties in recent years.
A significant portion of SMEs – 77% – report that their income remains below pre-pandemic levels. 3 This reflects the scale of the economic challenges that SMEs must overcome and underscores the need for targeted support to assist them in their recovery and growth endeavours.
Four key challenges facing SMEs in Hong Kong
1. Current economic flux
Hong Kong is recognised as an international hub for innovation and entrepreneurship. However, evolving macroeconomic conditions – including supply chain shifts, rising operational expenses and tempered growth projections – have led to volatility that is contributing to financial strain.
2. Cash flow conundrum
Recent surveys highlight that many SMEs are grappling with cash flow issues, with 74.3% citing these as their primary concern.⁴ Compounded by limited access to financing – a significant obstacle for these enterprises – nearly half of SMEs reported facing hurdles in securing necessary funds. This funding gap leaves many small businesses without the capital they need to grow their operations, intensifying their financial struggles.
3. The quest for talent
Attracting and retaining skilled employees is another challenge for SMEs, compared to larger companies able to offer better remuneration packages. While the local labour force is projected to grow to 3.56 million by 2028, the rising demand for talent means that, in the same year, the manpower shortage is expected to reach 180,000 workers.⁵
4. Shifting consumer trends
The aftermath of the pandemic has seen a transformation in consumer spending habits. During the first eight months of 2024, Hong Kong residents made 67.6 million trips,⁶ compared with just 30 million trips by inbound tourists.⁷ On the back of ‘revenge tourism’, many Hong Kong residents have opted to spend their holidays across the border, resulting in a decline in local consumption. Consequently, some local F&B and retail businesses are witnessing declines in revenue and facing challenges in maintaining business viability.
Innovating today for a prosperous tomorrow
Despite this turbulence, the seeds of opportunity and success lie ready for the bold and innovative. Digital transformation plays a vital role in helping SMEs to drive continued growth and remain competitive in the evolving digital landscape, and government initiatives are underway to facilitate this transition. By embracing e-commerce, SMEs can also expand their reach and boost revenue, tapping into online platforms to connect with a wider audience.
Emerging technologies such as artificial intelligence (AI), big data and open application programming interfaces (Open APIs) are reshaping traditional business models. By integrating these technologies into their workflows, SMEs can optimise the efficiency of operations, gain valuable insights from their data, make cost savings and empower their workforce to focus on strategic decision-making and innovation, driving business growth.
The burgeoning open innovation in the SME ecosystem in Hong Kong also heralds a new era of collaboration and value co-creation. By tapping into this interconnected network of entrepreneurial support and expertise, SMEs can forge partnerships, access new markets and pave the way for a dynamic and prosperous future.
HSBC's digital solutions for SMEs
At HSBC, as a close partner of SMEs and a ‘super-connector’ in the business community, we are committed to providing innovative digital services that enable businesses to operate with greater flexibility and swiftly capture new opportunities.
From mobile account opening services and day-to-day banking to financing and payment solutions, we’ve been investing heavily in our digital capabilities and continually developing new solutions to meet the distinct needs of SMEs. A few recent highlights include:
1. Interbank Account Data Sharing (IADS) programme: Improving financing access for SMEs
We’re one of the first banks launching in the Hong Kong Monetary Authority’s IADS programme. Under the programme, with customers’ consent, we can access their account information from other participating banks, streamlining the loan assessment process and providing SMEs with more timely access to bank financing.
2. HSBC Merchant Financing Programme: Streamlining loan applications with commercial data
Under the HSBC Merchant Financing Programme, we can evaluate merchants’ commercial data from e-marketplaces – including but not limited to sales amount, sales performance trends, inventory turnover, etc. – for credit assessment and loan drawdown. This facilitates faster, simpler and more accessible trade financing solutions for online merchants, uplifting their capital and financial liquidity to capture potential growth opportunities.
3. Payment Tracker: Increase your international payments' visibility
Our Payment Tracker provides tracking of international payments, ensuring transparency and reducing uncertainty for SMEs during cross-border transactions. Our tool reduces hassle for SMEs by allowing them to monitor the real-time status of their international payments. In turn, the tool helps SMEs improve their cash flow management and operational efficiency. Beneficiaries can also use the Payment Tracker to view the status of incoming payments, reducing payment enquiries for SMEs.
4. Digital servicing forms: Streamlining business operations
When a company wants to update its business information or apply for certain banking services, it may need to submit banking service request forms by post or in person at a branch. These traditional methods of submission require time and effort, hindering efficiency.
We’re introducing a simpler, faster and more secure way for businesses to submit certain banking forms through Business Internet Banking 24/7, whether they are located in Hong Kong or overseas. This online approach involves three tools:
an intuitive smart search function that helps customers quickly locate the right form and guides them to the appropriate channel to submit their request. |
customers can submit 50+ eligible bank forms via Business Internet Banking with digital authenticated approvals anytime, anywhere, without visiting a branch.
| our tracker provides businesses with a centralised view of the status of their requests, which give added clarities and peace of mind. |
5. Automatic Bank Feeds: Improving bookkeeping efficiency
This free tool, exclusively for HSBC Business Internet Banking users, automatically feeds records of a company’s bank transactions to its professional accounting software daily. Following an easy one-time setup, the tool can retrieve up to 180 days of account data, enabling companies to reduce the resources needed for bookkeeping, saving them time, and helping avoid errors in data entry.
6. Mobile account opening: Opening an account in as fast as 3 days
Our digitised, end-to-end account opening services allow new customers to open business accounts in as little as three days*, and receive their account number instantly without the need to submit physical documents or visit a branch. This process can be conducted entirely through the HSBC HK Business Express mobile app, and is available for owners of Hong Kong-registered companies who hold a Hong Kong identity card, a mainland China resident identity card, or a passport issued by one of 14 countries and territories**.
How to get started with an HSBC business account
With a history of 160 years in Hong Kong, we can be your trusted strategic partner– providing you with insights, helping you spot opportunities and risks, and guiding you through an ever-changing business landscape. No matter what stage your business is at, our business integrated account solutions can offer you a range of banking and trade services via a single account – helping you simplify business financial management anytime, anywhere.
*Subject to eligibility and upon providing all required documents or information. Terms and conditions apply. The new business account will only become effective once the account application process is complete.
**The service is available to Hong Kong-registered companies of which the directors/authorised signatories hold a permanent Hong Kong identity card, a mainland China resident identity card or a passport issued by Australia, Belgium, Canada, India, Ireland, Italy, Jersey, Mexico, the Philippines, Singapore, South Africa, the UK, the USA or Vietnam.
1 https://www.success.tid.gov.hk/english/aboutus/what_are_sme.html
2 https://www.cedb.gov.hk/en/business-environment/sme-support.html
3 https://www.chamber.org.hk/en/media/press-releases_detail.aspx?ID=3777
4 https://www.chamber.org.hk/en/media/press-releases_detail.aspx?ID=3777
5 https://www.lwb.gov.hk/en/highlights/manpower_projection/2023mp_report_en.pdf
6 https://www.itehk.com/travelexpo/doc/press/HK_Outbound_Report-Oct24_en.pdf
7 https://www.info.gov.hk/gia/general/202409/16/P2024091600432.htm
