A survey of executives in 506 SMEs was conducted in October by Kadence Asia-Pacific, which found 56 per cent of businesses in Singapore and 67 per cent in Hong Kong are expecting worsening prospects in the next 12 months.
Due to the global financial meltdown and ensuing downturn, the overall Kadence Business Confidence Index has fallen from 66 in January to just 35 in October.
Due to the global financial meltdown and ensuing downturn, the overall Kadence Business Confidence Index has fallen from 66 in January to just 35 in October.
Challenges affecting Singaporean SMEs in 2009 include loss of revenue (81 per cent), pressure to reduce prices (77 per cent) and lack of access to financing (46 per cent) while 46 per cent of respondents faced increased rental and facilities costs.
In Hong Kong, major challenges include reduction of revenue (82 per cent), pressure to reduce prices (64 per cent), unfavourable market forces leading to increased prices from suppliers (58 per cent) and higher rental or facilities costs (67 per cent).
Despite the drop in business confidence, SMEs are reacting quickly to current economic conditions. In Singapore, 46 per cent might restructure their business and put greater emphasis on finding new markets.
Most respondents intend to review their product range (65 per cent), implement new sales and marketing activities (73 per cent), and/or undertake joint ventures or mergers (31 and 14 per cent respectively), while half of the respondents intend to look for new markets overseas.
In Hong Kong, 62 per cent of businesses will look for new markets, including 84 per cent of wholesale traders who account for a significant proportion of enterprises. Forty-five per cent will review their product range, 40 per cent will implement new sales and marketing activities while 12 per cent might look to joint ventures, 17 per cent mergers with competitors.
Only 24 per cent of SMEs in Hong Kong planned on restructuring their businesses compared to a significant 46 per cent of businesses in Singapore.
“Although the survey shows that SMEs in Hong Kong might have an advantage in terms of financial liquidity, human resources and more stable prices, it will be the ability of businesses to reinvent themselves that will make the difference. The increased sales and marketing activity planned by Singapore SMEs may well give them a competitive advantage when the recovery starts,” said Piers Lee, MD of Kadence Asia-Pacific.
