Hong Kong is an important trading partner for Australia. According to the latest statistics issued by the Department of Foreign Affairs and Trade, in the 2012/2013 financial year [AC1] Australia exported goods and services totalling $4.4 billion to Hong Kong, with the major export categories being crustaceans, gold and telecommunications equipment.
Additionally, according to Austrade’s 2014/2015 Hong Kong-Macau Market Plan,, there’s a focus on Australian businesses exporting food, beverage and consumer services, as well as other services and infrastructure, education and inward investment to Hong Kong right now.
Given the close ties between the two nations, the insights of Hong Kong’s mid-sized businesses into the operating environment have implications for Australian firms of the same size.
American Express annually researches the approach chief financial officers are taking toward current market conditions. The recently released report from the Australian market, Game Plan for Growth – CFOs’ imperative to fuel innovation[c2] [EG3] , explores finance chiefs’ approach to innovation and growth.
In Hong Kong, American Express has released similar research, Roadmap to 2020: Making the most of Hong Kong’s advantages[EG4] , exploring mid-sized businesses’ approach to future-proofing their operations. While it’s not possible to directly compare the Hong Kong and Australian surveys, there is value in exploring some of the differences between the results of the two research reports.
Confidence is the key
One of the most positive findings from the Hong Kong research was that 89% of respondents said they were confident the Hong Kong economy would continue to grow. However, 74% of the survey participants have no future-proofing plan in place.
Nevertheless, more Hong Kong CFOs reported taking steps to future proof their business in the current survey compared to the 2015 results, indicating more focus on long-term planning now than in the past.
Four out of five Hong Kong respondents said they had taken future-proofing steps over the last 12 months, compared with less than half of CFOs who reported such activity last year. The most prevalent action for CFOs that had taken steps to future proof their business was to invest in new marketing approaches such as social and digital media, with 49% of respondents having improved their approach to marketing.
In terms of the other strategic imperatives Hong Kong respondents said they were focusing on, the main components included:
- Cash flow and working capital management
- Securing top talent
- Strong leadership
- Appropriate funding
- Customer service
- Innovations in technology and ecommerce
In terms of Australian CFOs’ strategic imperatives, 69% of respondents cited growth generally as their main priority, followed by technological enhancements (57%), operational excellence (50%) and upskilling and hiring staff (44%).
While there was considerable difference between the two surveys in terms of CFOs’ strategic imperatives, the common concerns Australian and Hong Kong CFOs share include gaining access to great talent and ensuring the business has access to the latest technology.
Another area for comparison between the Hong Kong and Australian surveys was innovation. While 69% of Hong Kong respondents said not having a formal strategy is the biggest barrier to innovation, 80% of the Australian survey respondents said innovation was a priority.
For the Australian respondents the key barrier to innovation was funding: 60% of CFOs said they find it challenging accessing capital for growth. Similarly, cash flow remains king for Hong Kong businesses, with 45% stating cash flow is the key to success (up from 40% in the 2015 survey). Access to capital was an especially important consideration for smaller local businesses, while larger businesses found it easier to get access to capital for growth purposes.
China central to success
As might be expected, most (84%) Hong Kong respondents said they were already doing business with China. Additionally, Hong Kong CFOs recognised the advantages of being in close proximity to China, with 26% stating it was an advantage having access to China for sales and 19% stating it was advantageous having access to mainland China to procure for the supply chain.
Two other findings from the research indicate the importance of Hong Kong’s close relationship with China. While 59% of respondents said China’s slowdown is the greatest threat to mid-sized Hong Kongese businesses, 50% recognise the positive impacts on their operations from China’s current economic plan.
Implications for Australia
So what does all this mean for Australian CFOs? Both surveys demonstrate that while growth can be important to ongoing business success, it can also be elusive. And, no matter where the company is located, one of the best ways to pursue growth is by developing a strategic plan.
- Growth opportunities remain in Hong Kong despite a challenging operating environment
- Mid-sized businesses say it’s important to be able to respond quickly to changes
- To do this, they need a road map.