Over 80% of surveyed SMBs embrace digital to grow cross-border selling
HONG KONG, January 6, 2022 – The pandemic has brought significant challenges to Hong Kong businesses, but a recent PayPal study reports that small-and-medium-sized businesses (SMBs) in particular have emerged from this unprecedented event with a positive story to tell. Thirty per cent (30%) of SMBs surveyed in the study reported no negative impact on business. Almost one in five (19%) of respondents even reported a positive impact to their business, with almost half (48%) witnessing an upswing in demand, while 43% attracted more online customers and 33% saw an increase of overseas customers outside from Hong Kong.
The PayPal-commissioned survey revealed how SMBs in Hong Kong have adapted to the challenges of the pandemic and thrived. SMBs are the bedrock of Hong Kong’s economy, accounting for 98% of enterprises and employing 45% of the private sector workforce1. The survey results are proof of their resilience and ability to achieve growth by prioritizing digitalization and cross-border trade. The ability to weather such a storm is a vote of confidence in the long-term potential for local SMBs as they begin to adapt to the new normal.
The evolution of consumer habits
The survey findings suggest that the move to digitalization has been prompted by a change in consumer behavior, as 91% of surveyed SMBs witnessed changes in online sales patterns since the start of the pandemic in 2020. Such changes include a significant move towards younger online shoppers. Among the respondents who observed a shift in customer age group, 73% claimed to have attracted a younger demographic of customers throughout the pandemic. And over half (54%) of the respondents who saw a shift in customer expenditure reported an upswing in spending from their existing customer base.
With 53% of surveyed SMBs reporting an increase in online shopping, 45% reflected that their customers are embracing digital payment options. Of this, 31% cited a greater consumer reliance on online payment, while 26% claimed shoppers were more willing to make larger monetary transactions online.
Strengthening digital presence by building owned eCommerce and social media channels
As digitalization becomes inevitable, the surveyed SMBs are seeking more ways to engage with online customers. Although third-party online marketplaces and eCommerce platforms are often perceived as the simpler path to getting online, SMBs are also keen on developing their own eCommerce websites and apps for greater control. A staggering 87% of surveyed SMBs are already using their own digital channels, including social media, owned eCommerce websites and company-owned platforms, to promote or sell.
Among all online channels, social media is most popular among Hong Kong’s SMBs, with 70% of respondents currently using or planning to utilize it for selling and promotion. In fact, 41% of surveyed SMBs picked social media as their top channel for stimulating business growth throughout the pandemic. Of this, over half (53%) had utilized it as a selling tool to generate revenue for their businesses. This shows that many SMBs have turned to social media, utilizing it as a fast, low-cost and low maintenance channel to further expand their online presence.
Cross-border trade helps SMBs scale
With online shopping set to accelerate further, SMBs in Hong Kong are seeking to take advantage by investing in cross-border trade to reach new customers outside of the city without needing any physical stores.
A staggering 81% of surveyed SMBs have engaged or are planning to engage in cross-border trade to boost growth. While domestic business continues to be dominant for many local SMBs, cross-border trade is growing, accounting for 32% of sales among the respondents. To facilitate more cross-border sales, 39% have utilized social media and 26% have adopted new global payment systems.
Digital payment is clearly a key component for SMBs looking to achieve global expansion. The survey revealed that 86% of the respondents are eager to implement suitable digital payment options to attract new customers (67%), improve customer experience (56%), and increase sales (54%). Among these respondents, over half (51%) expressed an interest in adopting PayPal’s global payments platform.
“Thanks to advances in technology and the increased support available, it is easier now than ever before for SMBs to adapt, build resilience and ultimately grow their business via cross-border trade,” said Tim Fu, Market Leader, Hong Kong, South Korea and Taiwan of PayPal. “As customers around the world become more receptive to online shopping and digital payments, it is important that SMBs are able to provide a seamless, digitally-enabled shopping experience to reach new customers. Trusted digital payments are essential for SMBs to drive conversion. It also provides consumers a convenient and secure payment experience which will leave SMBs the time and resources to focus on growing their own businesses.”
About the survey
PayPal Hong Kong SMB Survey 2021: Hong Kong’s SMBs embrace digitalization to thrive was conducted between September to October 2021 to study the impact of COVID-19 to Hong Kong’s small-and-medium-sized businesses, their responses and post-COVID plans. The results are based on interviews with 210 business decision makers of Hong Kong SMBs which are currently engaged in online selling.
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1 Trade and Industry Department, HKSAR Government: https://www.success.tid.gov.hk/english/aboutus/sme/service_detail_6863.html