Hong Kong SMEs Achieve Decade-High Performance Driven by Stable Economy and Digital Transformation
HONG KONG SAR – According to CPA Australia’s Asia-Pacific Small Business Survey 2025–26, small businesses in Hong Kong experienced their strongest performance in a decade during 2025, with confidence for the upcoming year reaching unprecedented levels. The survey indicates that 68% of small and medium-sized enterprises (SMEs) in Hong Kong reported growth last year, a notable increase from 65% in 2024, marking the highest recorded figure to date.
Record Growth and Optimism
The positive trend is expected to persist, with 71% of SMEs anticipating further growth in their businesses and 76% expecting an upturn in the local economy—both figures representing record highs. Key factors contributing to this robust performance include enhanced customer loyalty and a strong workforce.
Mr. Cliff Ip, a Councillor of CPA Australia’s Greater China Divisional Council, emphasized the importance of Hong Kong’s improving business environment in fostering SME growth. He noted that the region’s business confidence and economic growth were bolstered by strong capital markets, a rebound in tourism and consumption, and signs of stabilization in the property market. “Against this stable and supportive backdrop, small businesses not only benefited from increased business activity but were also able to expand in a healthy and sustainable manner,” Mr. Ip stated.
Navigating Challenges Ahead
Despite the encouraging outlook, Mr. Ip acknowledged that global geopolitical tensions and external uncertainties pose challenges for SMEs. He pointed out that rising geopolitical risks could create obstacles for sectors like trade and logistics due to increased fuel costs and supply chain disruptions. Nevertheless, he remains optimistic about Hong Kong’s business landscape in 2026. “As many regions become more unpredictable or less secure, Hong Kong’s stable and consistent business environment, along with supportive policy settings, including the city’s low and simple tax regime, stand out as significant advantages for attracting international companies and investors,” he remarked.
These developments also open new avenues for local SMEs, particularly as heightened international interest allows for the formation of partnerships and expansion into new markets. “This environment also creates favorable conditions for younger entrepreneurs to explore emerging markets and pursue new business opportunities,” Mr. Ip added.
Improved Solvency and Financial Health
The enhanced performance of SMEs has led to a significant improvement in their solvency. The proportion of businesses reporting difficulties in meeting debt obligations plummeted from 22% in 2024 to just 3% in 2025. Furthermore, only 4% of SMEs expect to face financial challenges this year, a sharp decline from 26% in the previous year. Consequently, Hong Kong small businesses are now the least likely among surveyed entities to express solvency concerns.
Mr. Ip noted that the solvency of many SMEs has improved markedly due to stronger cash flow from enhanced business growth, a robust capital market, and a recovering property market over the past year. “This healthier cash flow has supported easier access to external finance and reduced the need for such finance,” he explained.
Technology Investments and Cybersecurity
Hong Kong SMEs have also bolstered their capacity to invest in technology that enhances profitability. In 2025, 64% of SMEs reported that their technology investments contributed to improved profitability, up from 59% in 2024. Notably, two in five SMEs invested in artificial intelligence (AI) last year, making it the leading technology investment among local businesses, followed by customer relationship management (CRM) software.
Cybersecurity has also seen improvements, with the percentage of businesses reporting losses from cyber incidents dropping from 72% in 2024 to 43% in 2025. However, as digitalization accelerates, cyber risks remain high, with nearly 60% of SMEs expecting to face cyber threats this year, exceeding the survey average of 42%.
Mr. Davy Leung, Deputy Chairperson of CPA Australia’s SME and Entrepreneurship Committee of Greater China, highlighted the role of AI tools in enhancing productivity and customer experience. He noted that the growing maturity and availability of these tools are enabling SMEs to reduce operating costs.
Government Initiatives and Support
In response to rising digital fraud and the increasing reliance on digital banking, the Hong Kong Government has significantly strengthened banking security and cybersecurity resilience over the past year. Initiatives such as the Cybersec One Programme and the ongoing implementation of the ‘9+5’ SME support measures have been rolled out to enhance security. The decline in cyberattack-related losses reported in the survey reflects the effectiveness of these measures.
Mr. Leung urged SMEs to leverage available resources, including free website risk assessments and vulnerability identification services, to bolster their cybersecurity defenses. He also suggested that the Government consider revamping the Technology Voucher Programme to support broader digitalization efforts, including the adoption of both AI and non-AI technologies.
Cost Challenges and Workforce Dynamics
Despite the positive trends, rising costs remain a significant challenge for Hong Kong SMEs in 2025, with 29% reporting negative impacts on their businesses. This figure is the second-lowest among all surveyed markets, highlighting Hong Kong’s relatively low inflationary environment. Notably, the percentage of SMEs citing staff costs as a negative factor rose from 35% to 42%, making it the most significant cost pressure for businesses in 2025. This increase may explain the decline in the proportion of SMEs hiring additional staff, which fell from 42% to 38%.
Mr. Leung stated that while headcount growth has moderated, overall staff costs have continued to rise as businesses invest in higher-value talent. “Greater digitalization and automation have helped ease labor constraints in Hong Kong. When SMEs do add staff, they are increasingly recruiting employees with digital and AI capabilities or creating new roles to support business transformation,” he noted. These positions typically command higher salaries, contributing to the overall increase in staff costs despite slower hiring growth.
The annual survey gathered insights from 4,166 small businesses across 11 Asia-Pacific markets, including Singapore, the Chinese Mainland, and Australia, with 305 respondents from Hong Kong.
Source: www.zawya.com
Read all the latest developments and breaking updates in the Latest News section.
Published on 2026-04-23 12:09:00 • By the Editorial Desk
