The heated discussion of the Hong Kong FB group "Zhikasa Concern Group" has revealed the difficult reality of the survival of small and medium-sized enterprises. A number of industry professionals and scholars were interviewed by Sing Tao and conducted an in-depth analysis of the current "closing wave". Some voices believe that this is the process of eliminating the weak in the market, and the industry needs to shift from reactive to active to create more valuable goods and emerging markets. However, some experts pointed out that the core of the problem lies in the decline in public consumer confidence and the lack of market demand, even if the operating cost is low, it is difficult to reverse the decline. To this end, they suggested that the Government should adopt measures such as consumption vouchers, lucky draws and tax concessions to stimulate the overall consumption atmosphere.
At the end of last month, the HKMA introduced nine measures to support SMEs, which the Chamber of Commerce recognises as having positive implications for the industry. However, some people in the industry said that these measures came a little late, and many small and medium-sized enterprises have come to the brink of liquidation, and they expect these measures to bring a little respite to the enterprises that are still struggling.
In the "Concern Group on the News of the Closure of Shops in Hong Kong", small and medium-sized enterprises (SMEs) have spoken out one after another, complaining about high rents and difficult business. They said that the monthly rent rose from 149,000 to 238,000, and the business had not encountered such difficulties for decades, and some even regretted closing the business too late and lost millions more. At the same time, landlords have countered that tenants should reduce their labor expenses instead of just complaining about rent. The two sides insisted on their own words, and the discussion gradually lost focus and turned into a war of words in the air.
However, both rent and remuneration are only part of the cost of operating. Kwong Ka-ki, an assistant professor at the Department of Marketing at The Hang Seng University of Hong Kong, admits that even if rents and salaries are cut, these efforts will be meaningless if the market demand is insufficient. He explained that when the economic environment is not good and consumer confidence falls, it is difficult for merchants to make a profit, even if the cost is reduced. In addition, he pointed to the impact of uncertainties such as a weak global economy, rising gold prices, high oil prices, and regional conflicts on corporate investment and consumer confidence.
In this context, the consumption behavior of citizens has also changed. They are more budget-conscious and seek out more cost-effective places to spend. As the Hong Kong dollar is pegged to the US dollar, the appreciation of the Hong Kong dollar has made consumers more willing to spend where the yen and renminbi are relatively cheap, which has further exacerbated the crisis in Hong Kong's retail and restaurant industries.
In the case of the chain of siu mei restaurants, Mr. Lai, the person in charge of the barbecue restaurant Qizi Roast Goose, said that during the Easter period, the business of many peers fell by 30 to 40 percent, and their business also fell by at least 20 percent year-on-year. Chan Keung, chairman of the Hong Kong Catering Management Association, also shared his experience of running only one of the seven mid-to-high-end restaurants he operates. He pointed out that rent, labour costs and food ingredients are the three major expenses of the catering industry, but in recent years, the impact of people's consumption in the north has been more significant. He believes that the situation will only improve if Hong Kong's economic situation and the flow of people improve.
Yuen Yinghan, a lecturer at the Faculty of Business and Economics of the University of Hong Kong, analyzed the issue from a more macro perspective. She pointed out that with the gradual removal of traffic and customs barriers between Hong Kong and the mainland, as well as the vigorous development of Hong Kong's "Great Northwest" region, more and more people choose to travel to the mainland for consumption. This has led to a drop in demand for local shops, which in turn has led to a wave of closures. She believes that this is an inevitable phenomenon in the process of Hong Kong's integration into the mainland. She also predicts that wages and prices will gradually rise as demand increases in areas such as Shenzhen, while wages and prices in Hong Kong may fall due to falling demand. This process may take a long time, but the prices will eventually converge between the two places.
Faced with this situation, some brick-and-mortar stores have begun to try to transform into online stores. However, this also means that they face competition from all over the world. As more and more people choose to shop online, Hong Kong merchants must find a way to stand out from the crowd, Yuen said. She emphasized that the value and quality of goods are the key to attracting consumers.
Huang Yichao, the first executive vice president of the Hong Kong Brand Chamber of Commerce, also agrees with this view. He believes that running an online store requires flexibility and adaptability to consumer behavior and market changes. He described the current "cyber warfare" as intense, with companies constantly innovating and creating new markets to attract consumers. He also pointed out that in the past, businesses could rely on stable basic operations to succeed, but now they need to put in more effort to establish themselves in the market.
The nine measures introduced by the HKMA last month have been recognised by the industry. Huang Yichao said that these measures are positive for the industry, at least providing some breathing space for companies that are still exploring and adjusting their business strategies. However, some industry insiders said that these measures came a little later and may not help companies that are already facing serious difficulties.
In short, SMEs in Hong Kong are facing unprecedented challenges. They need to constantly innovate and adjust their strategies to adapt to changes in the market. At the same time, the government and all sectors of society also need to give them more support and help to jointly promote the prosperity and development of Hong Kong's economy.