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Small businesses in Asia confident over 2008 prospects

An HSBC survey of business confidence among SMEs shows the regionÆs domestic economic growth is expected to remain strong despite the threat of a US recession.
Considering that fund managers are placing their hopes on AsiaÆs domestic economy, HSBC Commercial BankingÆs latest survey of small businesses in the region may give them the boost that they need during this period of high market volatility.

The Asia-Pacific small business confidence survey shows that small businesses are remaining positive over the prospects for the regionÆs economic growth this year. The survey, conducted for HSBC Commercial Banking by research company TNS in the fourth quarter last year , covered 2,700 small- and medium-sized enterprises (SMEs) in Hong Kong, China, Taiwan, Singapore, India, Vietnam, Korea, Malaysia and Indonesia.

Companies were asked about their local economic outlook for the next six months, their plans to increase or reduce capital investment and staffing levels, as well as their expectations about trade volumes with China, the rest of Asia and the rest of the world.

ôIn the face of growing economic uncertainty in the US, emerging markets still
see great opportunity for growth, as intra-Asian trade grows and the small business sector is learning to adapt quickly to changing global conditions,ö says Margaret Leung, global co-head of Commercial Banking at Hongkong and Shanghai Banking Corporation Limited.

The survey results point to the resilience of the SMEs in Asia, in line with investment themes of many fund managers in this region.

Vietnam small businesses are the most optimistic in the region, followed by India and China, according to the survey.

Among Hong Kong SMEs, the majority û or 68% of the respondents û expect local economic growth to be sustained at the same pace over the next six months, while 26% are more bullish and note that they expect faster growth.

Small businesses in Vietnam and India are acting on their positive economic outlook with increased capital investment in the first half of 2008. Hong Kong SMEs are more cautious, with 61% planning to maintain the same level of capital expenditure as last year.

Around 72% of SMEs across Asia plan to maintain current staffing levels. In Vietnam, 59% are planning to hire more workers.

Small businesses that engage in cross-border trade were asked about their expectations of trade volumes with China, the rest of Asia and the rest of the world. Vietnam and India SMEs are the most optimistic about trade growth with China as well as trade with the rest of Asia. Hong Kong SMEs have the highest level of involvement in China trade among all the areas surveyed, but 65% of those SMEs say trade volumes will remain the same as last year.

VietnamÆs small businesses, closely followed by those in India, are also the most optimistic on trade growth with the rest of the world in the next six months. The majority of Hong Kong SMEs expect trade levels to remain the same.
¬ Haymarket Media Limited. All rights reserved.
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