How local firms in Hong Kong can achieve growth in 2013

On the face of it, things don't look great for Hong Kong's economy this year. As I write this, I've just read that business bankruptcies in Hong Kong were up in March compared to February, and also year-on-year, blamed on weak demand in overseas markets. Unemployment, traditionally low in Hong Kong compared to elsewhere, has also increased slightly, and it looks like government policies to rein in the once-buoyant housing market are starting to take effect.

The Regus Business Confidence Index, an annual barometer of global business sentiment that surveyed over 26,000 business people globally, appears to support this. In Hong Kong, a slight rise (from 118 index points to 121) was recorded. This mirrored the global average increase from 111 to 114. Both globally and in Hong Kong, it is hard to interpret such a small increase as a sign that businesses expect things to improve anytime soon.

But some of the other findings of our research suggest that this gloom may be overblown – or at least that, while things may not be great now, businesses do not expect the tough times to last. Asked about hiring intentions, a striking 86 per cent of businesses in Hong Kong said they planned to increase or maintain headcount in 2013. And if the global findings are in anything to do by, their optimism may not be misplaced in a globalised world: 85 per cent of business worldwide said the same thing. Indeed, one in four respondents said their companies planned to increase employee numbers by five per cent or more.

This would be a strange move if companies that saw themselves continuing to struggle this year – particularly given that, in Hong Kong, 59 per cent of companies said that the new recruits would be additional sales and marketing personnel. If anything, you would expect businesses to be slashing marketing budgets and headcount to reduce their overheads.

Instead, it looks like businesses are preparing to beat the doldrums by taking a much more active approach: after years of weathering the economic storm, they're planning to sell their way back to full health.

Our research also showed that Hong Kong is not alone in taking a more aggressive approach to achieving growth: the intention to hire sales and marketing staff was particularly strong among major Asian economies. In India, Japan and the mainland, over 65% expect businesses to expand this part of their operations. It looks like some of Hong Kong's biggest trading partners are looking to grow at the very moment that local businesses emerge into the daylight.

Based on Regus' experience of expanding our business globally and watching our customers' businesses do the same, I believe that local companies would do well to keep the following three guiding principles in mind.

1. Look for new directions and markets
For the second year running, Regus' research has shown that companies that export into overseas markets fare better than those that stick to their own domestic markets: 50% of exporting companies around the world saw profits rise, compared to only 38% that trade only domestically.

2. Learn from previous mistakes
As firms start implementing their hiring and expansion plans, they should remember the lessons of the downturn. For example, 43% of large businesses and 47% of small businesses said fixed, inflexible overheads such as property costs were a major cause for concern during the global downturn.

3. Build in the ability to adapt
Taking on new staff in a bid to expand is a sign of healthy ambition, but flexibility is crucial to managing risks, particularly for small companies. Consider how this can be achieved – for example, by hiring more temporary or part-time staff, minimizing supply chains, or flexible property arrangements.

Bearing in mind the optimistic signs that are starting to appear among Hong Kong's trading partners, it seems to me that, if local businesses adopt the right mind-set and business processes, the future may be bright. Achieving growth this year may not be as tough a challenge as local businesses think.