Hong Kong SMEs Face Triple Squeeze from Rising Costs, Weak Demand and Interest Rates Fluctuations, Dah Sing Bank Survey
- Written by Media Outreach
Dah Sing Bank remains committed to staying close to the needs of SMEs and understanding the challenges and opportunities they face in a rapidly changing business landscape. To gain deeper insights into the latest operating conditions of local SMEs, the Bank commissioned a survey[1] in May 2026 through a major local media outlet, interviewing over 340 Hong Kong SMEs to understand how they are responding to changing consumption patterns and advancing environmental, social and governance (ESG) initiatives under the current economic environment.
Operating Pressures Intensify Under "Triple Squeeze"
The Survey shows that 80% of respondents indicated that their operating costs and profit margins have been affected this year by geopolitical developments, energy price fluctuations or global supply chain instability. Rising costs (79%), weakening market demand (78%) and fluctuations in interest rates (52%) were identified as the most significant external risks.
With cross-border spending and northbound consumption becoming increasingly prevalent, approximately 74% of SMEs reported that their revenues have been negatively impacted, with nearly one in five experiencing declines of more than 20%. Key competitive pressures stem from cross-border e-commerce platforms offering lower-priced daily necessities (45%), increased weekend consumption in Shenzhen (43%), and a rise in outbound travel reducing local spending (30%).
SMEs Step Up Measures to Adapt
In response to the rising costs, SMEs are actively adopting various strategies to stabilise operations, including renegotiating supplier terms (26%), adjusting pricing (24%), and optimising inventory management (20%). At the same time, in light of outbound consumption trends, businesses are strengthening customer retention strategies. While price promotions remain the most common approach (34%), SMEs are also increasingly introducing experiential elements (29%) and strengthening digital marketing efforts (25%) to improve competitiveness.
Against a backdrop of ongoing uncertainty, SMEs are placing greater emphasis on business stability. A stable customer base (30%) and predictable cash flow (22%) are seen as key factors in sustaining operations, alongside lowering operating cost (22%). This reflects growing attention on financial resilience and liquidity management.
Constraints Persist Amid Rising Support Needs
Despite these efforts, SMEs continue to face resource and information constraints in navigating challenges and pursuing transformation. More than half of the respondents have never applied for or are unfamiliar with government support schemes. In addition, while some SMEs are interested in advancing ESG initiatives, 37% consider them burdensome due to costs, and 32% are unsure where to begin, indicating a cautious pace of adoption overall.
Dah Sing Bank Supports SMEs Resilience
In a rapidly changing business environment, Dah Sing Bank believes that enhancing cash flow efficiency and operational flexibility is key for SMEs to address business pressures. The Bank is committed to supporting SMEs through diversified and flexible lending and financing solutions tailored to their business needs. These include a wide range of import/export trade finance services and payment options, as well as the Merchant Receivables Loan – a service designed to provide merchants with quicker access to capital. Such initiatives enable SMEs to strengthen cash flow management and improve the predictability and efficiency of their daily operations.
Furthermore, Dah Sing Bank offers comprehensive hedging tools to help enterprises manage foreign exchange and interest rate risks. This support enables businesses to mitigate financial exposure arising from global economic volatility, enhance resilience, and expand their businesses in both local and global markets steadily. In addition, the newly launched Dah Sing Business Multi-Currency Mastercard Debit Card helps SMEs reduce transaction costs and manage expenses more effectively, providing a one-stop and seamless experience for local and overseas transactions.
Dah Sing Bank Deputy Chief Executive, Senior Executive Director and Head of Group Personal Banking, Ms Phoebe Wong, said: "The Survey shows that Hong Kong SMEs are facing multiple challenges, including rising costs, shifting demand and evolving consumption patterns. At the same time, it is encouraging to see businesses actively adopting measures such as optimising cost structures and enhancing customer experience. In an environment of heightened uncertainty, stable cash flow and operational agility has become even more important. Dah Sing Bank has long been a trusted partner to SMEs, and we remain committed to combining financial services with practical support to help enterprises improve capital efficiency and resilience. Our goal is to empower SMEs to maintain stability in a constantly changing market and lay a solid foundation for sustainable long-term growth."
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