What Hong Kong SMEs must do to survive the Trump effect

The new US trade tariffs are causing turmoil for markets and businesses. CPA Australia’s recent Asia-Pacific Small Business survey showed that only 57 per cent of Hong Kong small and medium-sized enterprises expected their business to grow. Around one in four SMEs are finding it harder to repay debt.

So far, US President Donald Trump is treating China and Hong Kong as a single economic entity. While only 6.5 per cent of Hong Kong’s exports go to the US, our SMEs must manage their risks by investigating downstream pressures such as slower economic growth and lower consumer confidence stemming from the tariffs.

In this new global trade environment, SMEs can’t afford to wait and see. Survival depends on four aspects: understanding their customers, knowing their place in the supply chain, looking for new opportunities and tapping into government support.

The horror story that is US tariffs isn’t limited to businesses within the consumer goods sector. SMEs providing professional services such as accounting, consultancy, legal and logistics services are often left out of conversations on trade despite being deeply exposed to the knock-on effects of tariffs.

When goods-based clients scale back budgets due to market uncertainty, service providers bear the brunt of delayed payments, contract renegotiations and reduced scopes. SMEs providing business-to-business services often operate on slim margins and cannot diversify their client base overnight. Hong Kong’s role as a re-export hub means SMEs are also susceptible to shifts in regional trade flows.

Those producing goods must examine their place within the supply chain to determine how the tariffs will impact other players in the ecosystem. Knowing their customers and who they sell to, how their goods or services fit into the supply chain, and how they plan to deal with the tariffs is key for SMEs to manage the downstream risks.

  

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