Hong Kong's SME Ecosystem

With over 340,000 SMEs in Hong Kong, which constitute more than 98% of the city’s business establishments and 45% of its workforce in the private sector, SME performances and resiliency are important to the COVID-19 recovery and growth of the economy.

In 2019, Hong Kong was listed as the third most innovative location in South East Asia, East Asia, and Oceania in the Global Innovation Index, and is a new entrant in the world’s top 25 start-up hubs in the Global Start-up Ecosystem Report. lnvestHK’s own 2019 start-up survey reports a significant increase over 2018 on all key parameters, with a total of 3,184 start-ups (+21 %) employing 12,478 employees {+31 %) across 92 co-workspaces, incubators and accelerators. The group of multi-cultural start-up founders, who are the backbone of Hong Kong’s start-up ecosystem, continues to create job opportunities for the Hong Kong economy. The number of co-work spaces, incubators and accelerators, which is supported by a strong network of ecosystem builders and stakeholders, has also shown remarkable increase over the years.

SMEs enjoy advantages such as lower start-up and operating costs with new technologies, greater flexibility, and the ability to reposition and adjust themselves quickly in response to market and economic changes. They can rapidly expand or contract, pursue new opportunities or exit where there is an over-supply. However, SMEs also face a number of challenges including lack of access to financing and capital, high cost of doing business in Hong Kong, strong competition, and technology application, among others.

Hong Kong, as a world class city, offers key competitive advantages – strong legal and regulatory system, simple and low taxation, ease of doing business, international connectivity and accessibility into the Greater Bay Area and mainland China, just to name a few – that have transformed into an international hub for entrepreneurship and innovation for multinational companies, SMEs and start-ups. Also, this vibrant ecosystem had cultivated a new generation of entrepreneurs who are purpose-driven and passionate in driving impactful corporate social responsibility in Hong Kong.