With the pandemic raging for nearly two years, Hong Kong’s small and medium-sized businesses have been pushed out of their comfort zones to find new ways to keep their businesses going. This has driven the growth of digital technology in Hong Kong. In a recent study by PayPal Hong Kong, nearly 90% of small and medium-sized businesses in the city now had a digital presence, using their own digital channels to engage customers. The “PayPal Hong Kong SMB Survey 2021: SMBs in Hong Kong Embrace Digitalization to Thrive” was conducted between September and October 2021 to examine the impact of COVID-19 on Hong Kong’s small and medium-sized businesses and their responses and post-COVID-19 plans.
Amid the pandemic, 50% of respondents said their business had been negatively affected. Of those, 58% reported lower demand. 46% experienced a loss of unconnected customers, and 40% experienced supply chain problems.
However, on the other hand, 30% of survey respondents said that their actions had no negative impact at all.
Nearly a fifth (19%) said they had had a positive experience. Among the respondents with a positive experience, nearly half (48%) experienced an increase in demand, while 43% attracted more online customers, and 33% experienced an increase in overseas customers outside Hong Kong.
In response to the pandemic, 87% of SMEs surveyed were already using their own digital channels such as social media, owned e-commerce sites, and company-owned platforms to promote or sell. Among these SMEs, 48% plan to expand their online presence on these platforms.
Of all the online sales channels, social media has been adopted by Hong Kong SMEs with 70% of respondents using it or planning to use it for selling and promotion. This is followed by owned e-commerce sites (64%), company-owned platforms (60%) and third-party e-commerce platforms (43%).
The study also reported that 91% of the SMEs surveyed agreed that they have seen a change in consumer behavior online. Paypal Hong Kong said that while in-person shopping has always been a source of entertainment and a means of socializing for locals in Hong Kong, the pandemic has forced them to go online more often.
According to the study, there were three main shifts that the surveyed SMEs noticed from their online sales patterns, which were the number of local customers (58%), customer spending (51%) and the age group of customers (35%). Speaking of age groups, among respondents who have seen a shift in customer age groups, 73% claim to have attracted a younger demographic of online shoppers throughout the pandemic. Among respondents who saw a change in their local customer base, 66% reported an increase in local customers. Meanwhile, more than half (54%) of surveyed SMEs who saw a shift in customer spending reported an increase in spending from their existing customer base.
Paypal Hong Kong said this indicates that many small and medium-sized businesses were benefiting from local online shopping even when the city was closed during the pandemic. The study also revealed the trend that consumers were more open to using digital payment with 45% of SMEs experiencing a fundamental shift in consumer behavior in the form of greater consumer acceptance of digital payment options. Of this, 31% indicated an increased consumer reliance on online payment, while 26% claimed that shoppers were more willing to make larger online cash transactions.
Additionally, 86% of respondents said they are keen to implement suitable digital payment options for a variety of different reasons: to attract new customers (67%), improve customer experience (56%), and increase online sales (54%). . Finally, PayPal Hong Kong has suggested that social media is essential to business growth, so SMEs need to consider establishing a social media presence if they hope to expand the business. Also, small and medium businesses are advised to go digital and they should consider which platform is best for their business.
Carousell HK helps small and medium businesses solve logistical challenges and support business growth with GGOX and Atome
56,000 local businesses started in the first half of 2021 as the sentiment of Hong Kong’s SMEs improves