Hong Kong's small and medium- sized businesses community is the most bearish on prospects for business growth among seven surveyed by HSBC (0005). "Hong Kong is deeply entrenched in the global economy and therefore strongly impacted by the slowdown in global trade and overall uncertainty," HSBC global head of trade and supply chain Lawrence Webb said.

Forty-six percent of Hong Kong SMEs expect trade volumes to fall in the next three months. By contrast, 54 percent of trading firms in Vietnam, and 42 percent of mainland firms, expect business to expand, the survey showed.

Many local SMEs are worried about payment problems, with 31 percent expecting higher risk of default over the next three months. "Buyers are less likely to make payments before they are certain that all terms in a trade agreement are met," Webb said. "Suppliers are anxious about getting paid on time, or getting paid at all."

Seventeen percent of Hong Kong firms said they will ask for advance payment to deal with the risk of being bilked. Fifteen percent said they are doing less business with specific buyers, while 13 percent said they are tightening payment terms.

The international survey, conducted in April and May, covered 2,102 trade-focused businesses in Australia, India, Hong Kong, the mainland, Singapore, the United Arab Emirates and Vietnam.

Volatile exchange rates were cited by 54 percent of local SMEs as the biggest growth hurdle.

Insufficient margins were cited by 42 percent as the biggest barrier to expand, while 35 percent saw lack of demand as the key issue.

BenjaminScent andDana Bruce
Thursday, June 04, 2009

Source:The Standard