Business Confidence Rises in Hong Kong

A sharp decline in business confidence in many rapidly-growing economies is raising a warning flag that global business may face continued uncertainty for some time to come.


However, Hong Kong bucks the trend, recording a 7-point rise in business confidence (from 111 to 118) since April this year, according to the latest Regus Business Confidence Index, a global barometer of business sentiment based on the views of more than 24,000 senior businesspeople from 92 countries.


The proportion of Hong Kong companies reporting revenue increases rose from 47% in April 2012 to 53%, with profits also growing from 40% to 44%.


Just over half (54%) of Hong Kong respondents reported they were satisfied with their government's support strategies for business.


Hong Kong's result contrasts starkly with that of China, where confidence levels fell by 20 points (from 130 to 110). Small and medium-sized businesses, in particular, recorded gloomier outlooks, citing the lack of access to affordable credit and cash-flow management.


Business confidence in some of the world's fastest-growing economies has dropped significantly over the last six months; down two percentage points to 111 since April 2012.


Despite the fall, levels of business confidence in many such economies remain well ahead of the levels recorded in mature economies – but the fall should send a warning signal to businesses across the world to stay nimble and expect further volatility before any general upturn.


Among small businesses, confidence levels have flatlined in both mature and developing economies, a particular concern given their role as growth engines and job providers in many markets.


Major challenges faced by small businesses and start-ups are cost of marketing and promotion (39%); cash-flow (38%); sales (37%); and lack of suitable office space for client meetings (28%).


As in China, access to credit and cash-flow management were among their biggest concerns, highlighting the need for flexible, pay-as-you go business services that enable businesses to be flexible and agile.


Respondents also highlighted key measures for government to introduce that would substantially help small businesses and start-ups. These are tax exemptions (57%); low interest loans (49%); and better information services (44%).


"It's clear that there's been a stagnation in business confidence, and indeed significant falls in some rapidly-developing economies, since our last BCI report in April," said Regus' Hans Leijten, Regus' vice-president, East Asia. "This suggests that slowing trade with Europe and Western economies, combined with a host of national factors, is taking its toll. If there is some good news it's that, globally, the proportion of companies reporting revenue growth is stable while profits increased slightly.


"We were particularly struck by the lack of any improvement amongst entrepreneurs and small businesses," adds Leijten.


Respondents identified affordable and flexible business services – especially for overheads such as workspace, meeting space, administrative support and sales/marketing – as ways that they could improve their cash situation.


For example, 45% of respondents said that one of the major burdens during the downturn has been inflexible property leases.


"Flexible services allow businesses to be more agile, freeing up cash for investment without needing to borrow, given their current difficulties in obtaining credit," says Leijten.

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