1. HSBC Commercial Banking
Hong Kong Small Business Hot Issues Survey
May 2008

2. The HSBC Commercial Banking Hong Kong Small Business Hot Issues Survey
Survey of small and medium-sized enterprises on how their business is affected by the US slowdown, how is buyer demand from the key markets compared to 12 months ago, how companies are managing the risk of non-payment and how companies are increasing cost efficiency in today’s environment.
500 SMEs surveyed by telephone in April and May 2008, including HSBC customers and non-customers
For HSBC Commercial Banking, understanding the issues facing small businesses is essential for our business strategy.
HSBC commissioned Hong Kong University’s Public Opinion Programme to conduct this survey of 500 small and medium sized enterprises in Hong Kong in January The survey asked SMEs what they consider to be the most pressing concerns at the moment, including key cost driver, the US economic slowdown and the tight job market in Hong Kong and mainland China.

3. US Economic Slowdown 68% of SMEs surveyed are unaffected
Figures may not total 100% due to rounding. Graph base=501

4. Impact of US Slowdown
Of the 32% of firms who said they were affected, 44% are experiencing fewer or smaller volume orders from US buyers
Figures may not total 100% due to rounding. Graph base=501

5. Key Markets
The majority of SMEs (68%) say that Hong Kong is a key market, followed by mainland China (59%)
Under 30% believe the US to be of strategic importance to their business
Note: Multiple responses allowed. Graph bas=503

6. Demand in Key Markets
58% of SMEs which call the US a key market (representing a third of sample) say demand is down
Figures may not total 100% due to rounding. Graph base=501

7. Credit Quality
55% of Hong Kong SMEs ‘not concerned’ about credit quality in the current environment
Figures may not total 100% due to rounding. Graph base=503

8. Risk Management Strategies
Over a quarter of Hong Kong SMEs using trade services provided by banks to manage risk
of non-payment
Figures may not total 100% due to rounding. Graph base=501

9. Cost Efficiency
Nearly half of all respondents ‘not doing anything’ to increase cost efficiency
Figures may not total 100% due to rounding. Graph base=502

10. Industry Outlook
Majority feel they will see more or the same amount of business in 12 months time
Figures may not total 100% due to rounding. Graph base=503

11. Summary US slowdown not impacting most Hong Kong SMEs
Small business sector increasingly diversified into markets across Asia whose economies remain robust
Hong Kong and mainland China are key markets for local SMEs
Most of those who do trade with the US are suffering
Many SMEs are engaging banks to help them manage trade risk
Hong Kong’s small business sector has weathered turbulence before and can adapt to changing economic conditions