Riccardo PulitiandVictor Fung

Opinion | How Hong Kong can support Asia’s SMEs in era of trade disruptions

Companies along the supply chain must adapt to new consumer and investor demands to access the finance they need to survive change – and thrive

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Riccardo PulitiandVictor Fung

Published: 5:30am, 15 Jul 2024Updated: 11:58am, 15 Jul 2024

Supply chains are becoming increasingly complex and fragmented. While these shifts are resulting in economic benefits for emerging and developing countries with strong manufacturing sectors in the Asia-Pacific, not all businesses are positioned to succeed.

The small and medium-sized enterprises (SMEs) that form the backbone of global supply chains anchored in the region still lack the access to finance they need to adapt to this new, more demanding era of global trade. This includes meeting the environmental, social and governance requirements of consumers and companies they supply, which is becoming essential not only to gaining new clients but to staying in business.

Hong Kong has well-established connectivity to the world, rich history in trade and deep experience in supply chain management, finance, corporate best practice and skills upgrading. This puts it in a unique position to help prepare SMEs for the future. By doing so, Hong Kong can play a crucial role in creating jobs and alleviating poverty across the region.

International trade has come under increasing pressure in recent years from a multitude of headwinds which have disrupted and diverted global supply chains. But this has also dramatically expanded opportunities for the region’s emerging and developing economies.

In 2023, 5,798 greenfield foreign direct investments – where companies establish or expand their operations overseas – valued at US$451 billion were announced in developing economies in Asia. That is a 44 per cent year-on-year rise in overall value and a 22 per cent increase in volume, according to the United Nations Conference on Trade and Development.

Developing countries in East and Southeast Asia were the main recipients. The manufacturing sector enjoyed the biggest gains, with US$240 billion of investment in 2,196 projects, representing a 93 per cent year-on-year increase in value and 52 per cent rise in volume.