Seventy per cent of Hong Kong’s Small and Medium Enterprises (SME) say their income has dropped below pre-pandemic levels, despite Covid-19 restrictions being lifted a year ago, a survey has found.
The Hong Kong Small and Medium Enterprises Association and Junior Chamber International Hong Kong conducted a survey in April, interviewing 568 SMEs from sectors ranging from food and beverage to retail. Results released on Thursday showed only 4.4 per cent of the respondents had reported growth since early 2023.
“Factors such as the rising trend of northbound travel among Hongkongers, international trade disputes, the emigration wave, and labour shortages, have brought a considerable impact to the business environment and marketing activities of SMEs,” the two organisations said in a Chinese-language statement.
They found that 71.8 per cent believed that residents spending their holidays in mainland China was a major factor behind falling revenue. Nevertheless, 77.8 per cent said they did not plan to cut staff.
‘Noticeable drop’
According to two restaurants invited to share their experiences at a Thursday press conference about the survey results, income saw a “noticeable drop” in recent months, particularly during evenings.
Theo Yan of the Fresh Seafood Restaurant, which has operated in Tsim Sha Tsui since 2012, said his restaurant’s revenue dropped 25 per cent in April against the previous month.
“On normal days, Tsim Sha Tsui should be packed on Friday and Saturday, but we only have 50 per cent [occupancy rate] nowadays,” Yan said in Cantonese.
Dennis So of Chui Hang Hin, a hotpot restaurant in Tsim Sha Tsui that focuses on providing dinner, said its occupancy rate during the weekends can fall below 10 per cent, adding that the plunge was driven by changing consumption patterns among both tourists and residents.
“The trend that mainland tourists opt for ‘budget travelling’ and not staying overnight in the city was quite noticeable with our evening income,” So said in Cantonese, adding that he did not see a significant rise in income during the May 1 “golden week.”
Hongkongers who travel to the nearby mainland city of Shenzhen during holidays also added to weak local consumption, So said, adding that his restaurant had pivoted to the lunch market to cater for office workers.
“The macro consumption patterns are uncontrollable and irreversible in the short run,” So said. “SMEs should focus on improving their services to retain customers.”
Hong Kong scrapped all pandemic-related travel restrictions last February, but the business community in the city has been concerned about the robustness of the recovery.
See also: Hong Kong struggles to win back long-haul tourists amid fewer flights and travel warnings
In December, the Hong Kong General Chamber of Commerce found that over 60 per cent enterprises did not expect their income to grow in 2024. Among them, 20 per cent expected a decrease in income compared to the previous 12 months.
News about closures of restaurants, shops, and cinemas have flooded social media in recent months, causing concern about the economy.
But Chief Executive John Lee on Tuesday said it was normal that new businesses would replace old ones when the economy changed as he urged residents to focus on the “positive side.”
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