How to Overcome Challenges for SMEs in Hong Kong

Running a small or medium-sized enterprise (SME) in Hong Kong offers incredible opportunities, but it also comes with its fair share of hurdles. Even though the city is known for its pro-business environment, SMEs still face structural and financial obstacles that can affect long-term growth. By understanding these challenges and how to address them, you can make all the difference in building a sustainable business in one of Asia's most dynamic economies. SMEBrother will guide you to overcome any challenges in Hong Kong SMEs.

What are the biggest challenges faced by SMEs in Hong Kong?

SMEs in Hong Kong face a unique mix of challenges due to the city's compact size and global economic exposure. Some of the biggest and most persistent challenges include: High operating costs especially rent, talent shortages and staff retention, unaware of government funding, intense market competition, regulatory and compliance burden, cash flow management, and slow digital adaptation.

To overcome some of the major issues mentioned above, you must have practical and localized solutions. For example, to overcome high operating costs, consider remote work or hybrid models to reduce office space requirements, use coworking spaces or shared offices, outsource non-core functions, and apply for the BUD Fund to cover expansion or marketing costs. For other major issues, we'll explain them in the questions below.

How can SMEs survive during economic downturns in Hong Kong?

There are several practical strategies that local SMEs can apply to survive during economic downturns:

• Diversify revenue streams

Explore new customer segments, services, or products that meet changing market demands. Expand into cross-border e-commerce with help from the BUD Fund.

• Embrace digital transformation

Use digital tools to automate operations and reach more customers. Set up or improve our online presence with website, social media, and e-commerce. Use free or low-cost tools to keep overhead low.

• Communicate and engage with customers

Stay visible and build trust by communicating regularly via social media and messaging apps. Show empathy and flexibility in your offerings like promotions or adjusted service hours. Don't forget to ask for feedback and use it to improve.

• Retain key talent

A company's financial stability is crucial. If downsizing is necessary, do it strategically. Retain top performers by offering flexible arrangements and transparent communication. Upskill your team using government-subsidized training programs.

What should SMEs do to improve cash flow management?

Improving cash flow management is essential for SMEs to adapt to Hong Kong's high-cost and fast-moving business environment. You can monitor cash flow regularly by tracking all incoming and outgoing cash weekly or monthly, not just during tax season. Next, reduce unnecessary expenses by auditing your recurring costs like (subscriptions, utilities, storage) and cutting what's not essential. If necessary, consider remote work to reduce office expenses and outsource instead of hiring full-time staff for non-core tasks.

Build a cash reserve by saving a portion of monthly revenue into an emergency fund. Aim to have at least 3-6 months of operating expenses in reserve. Lastly, don't forget to get professional advice. Work with a financial advisor or a part-time accountant who is familiar with Hong Kong's tax and business environment. They can help with forecasting, reporting, and cash flow optimization.

How can SMEs in Hong Kong access government funding?

SMEs can access government funding through various subsidy schemes and loan guarantees designed to support business development, digital transformation, export, R&D, and more. The table below is some accessible government funding programs in Hong Kong:

Most of these programs require the SME to be registered in Hong Kong under the Business Registration Ordinance, be non-listed and locally owned and managed, meet the SME definition with manufacturing fewer than 100 employees and non-manufacturing fewer than 50 employees, have substantive business operations in Hong Kong.

Prepare the necessary documents such as Business Registration Certificate, Proof of local operations, latest audited financial statements, project proposal, and company bank account information.

Are there government schemes to support hiring or training staff in Hong Kong?

Yes, there are multiple government schemes to help SMEs with hiring or training staff, with the Employment Program for the Elderly and Middle‑aged (EPEM) and New Industrialization and Technology Training Program (NITTP). For NITTP, it will subsidize companies to train their employees in advanced technologies on a matching basis. It provides up to HKD 250,000 in funding per enterprise per financial year. 

Things to Know About BUD Fund and EMF Hong Kong

For EPEM, employers receive up to HKD 4,000 per month per employee for the training period, which is generally 3 to 6 months for ages 40-59 and receive up to HKD 5,000 per month per employee for the training period, which is generally 6 to 12 months for ages 60 and above.

Where can I find support or advice for my SME in Hong Kong?

SMEBrother is one of the most helpful platforms you can turn to. Unlike many generic resources, we are designed specifically with Hong Kong SMEs in mind, offering tailored insights on funding schemes, business strategy, auditing, opening bank accounts and compliance, all in one place. 

We'll help you cut through the noise with actionable guidance, real-life case studies, and updates on government support programs. We have over 10 years of experience solving SME challenges and provide you with the clarity and direction to move forward with confidence.

Why must SMEBrother? We aim to be cost-effective for small enterprises, with service prices about 20% lower than many competitors, with a focus on making high-quality support accessible to SMEs with limited budgets. Our full‑service business support platform that specializes in serving Hong Kong SMEs with a wide range of services from company registration, accounting and tax filing, secretarial services, subsidies and grant applications (like BUD, EMF, TVP) to marketing and HR services.

Check our website for complete details. It's time to solve all your SME problems and overcome them with us!