SMEs have been identified as “an important driving force in Hong Kong’s economic development” by the city’s Trade and Industry Department for good reason. Today, the segment represents 45 per cent of private-sector employment in the city and accounts for 99 per cent of all its businesses.
Importantly, in terms of physical distribution and cultural authenticity, Hong Kong SMEs span every corner of the city, from the tourism hotspots to the bustling neighbourhoods.
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Mainland Chinese social media Xiaohongshu highlights unlikely tourism spots in Hong Kong
Mainland Chinese social media Xiaohongshu highlights unlikely tourism spots in Hong Kong
These days, tourists flocking to the city tend to be urban adventurers looking for iconic street scenes, locales and experiences. And occupying these locales are Hong Kong’s SMEs, embedded in communities and reflecting the city’s unique culture. These SMEs are ready to do business and generate value.
Connecting the products and services provided by the vast number of SMEs with the needs of the abundant new wave of mainland tourists will surely help Hong Kong find a new vein of economic opportunity.
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‘King of Kowloon’: uncovering the work of late Hong Kong graffiti writer Tsang Tsou-choi
‘King of Kowloon’: uncovering the work of late Hong Kong graffiti writer Tsang Tsou-choi
These local, mostly owner-operated businesses do not need to be aggregated into shopping malls or curated into thematic complexes and districts. They can be found right where they are – by tourists seeking that very experience of discovery.
The power of an SME-led recovery in tourism is that these businesses generally have lower start-up and operating costs, and are able to adjust much more quickly. And one of Hong Kong’s greatest economic assets is the enterprising and inherently commercial nature of the local culture and its small business operators. I have every confidence that we will see results if we put this to work to help solve the challenge of finding value from changing tourism trends.
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Shop occupancy recovers in Hong Kong, but vacant stores still visible across the city
Shop occupancy recovers in Hong Kong, but vacant stores still visible across the city
Notwithstanding the strong growth rates since 2020, the statistics tell a story of how Hong Kong’s hotel room capacity has not been reined in despite the volatility of the past few years. Consequently, the hotel industry’s cost base clearly does not match the new normal.
Hotel rooms have increased by 14 per cent since 2017 and visitor arrivals are down by 42 per cent – yet the average room price remains much the same. The clear oversupply of rooms and inflexibility in price suggests a major financial dilemma for the large operators constrained by property-centric high-cost business models.
The common belief is that, together with the reduction in visitors, the average length of stay now and how much tourists are spending are the major problems. The statistics show otherwise. The average length of stay in Hong Kong has increased by 13 per cent, both for mainland visitors and overall. Also, per capita spending for overnight visitors has increased since 2017, by 8 per cent. These are positive signs that should guide the city’s tourism strategy.
Finally, with over 90 per cent of Hong Kong’s gross domestic product coming from services and about 20 per cent from the financing and insurance sector, business travel is a natural strength for the city.
Hong Kong is working to expand its position as an international finance centre and domicile for global financial groups. It follows that there is an opportunity for government departments and the private sector to work hand in hand to leverage business travel as a high-yield hedge on luxury tourism.
Damian Green is a Hong Kong based financial services executive. He has served as president and CEO of Manulife Asia and before that was the CEO of Manulife Hong Kong and Macau
