Motion on “Stimulating the vigorous development of Hong Kong’s small and medium enterprises with new quality productive forces and actively dovetailing with the country’s high-quality ‘going global’ strategy”
President, I speak in support of Mr Sunny TAN’s motion. SMEs are an important part of every economy, although there are significant differences in the definition of SMEs between Hong Kong and the Mainland: in terms of the number of employees, SMEs in Hong Kong refer to those with fewer than 100 employees in the manufacturing sector and those with fewer than 50 employees in the non-manufacturing sector, while in the Mainland, they are classified according to the industry, with the number of employees ranging from a few dozens to tens of thousands. In terms of turnover, SMEs in Hong Kong generally refer to those with an annual turnover of less than HK$50 million and those in the Mainland with an annual turnover of between RMB500,000 and RMB2 billion. Regardless of how they are defined, SMEs in Hong Kong and the Mainland are the core drivers of innovation, job creation and economic growth.
At present, China is actively promoting the new quality productive forces development strategy which brings unprecedented new opportunities for SMEs. As a matter of fact, the development of new quality productive forces is by no means monopolized by large-scale technology enterprises. SMEs can also enhance their competitiveness through intelligent upgrading and green transformation, thereby strengthening their risk resistance and sustainable development.
To this end, firstly, I am pleased to see that the Mainland and SAR governments have continued to introduce various specialized incentives, including the introduction of technological application subsidies which have significantly lowered the thresholds for SMEs to adopt digital tools such as cloud computing and AI. Moreover, it is suggested to establish a new quality production forces certification mechanism to provide necessary certification for SMEs that have completed transformation, enhance the reputation of their products in the international market, and create a demonstration effect to encourage more other SMEs to follow suit.
The establishment of a comprehensive service ecosystem is crucial to promoting the synergistic development of industries in the two places and attracting more SMEs from the Mainland to establish their foothold in Hong Kong. Hong Kong should fully utilize its unique advantages in professional services, legal advice and cross-boundary resource integration to provide highly efficient commercialization support to SMEs intending to establish their foothold in Hong Kong. For example, Hong Kong should consolidate the existing resources of organizations such as the Hong Kong Productivity Council, the Hong Kong Trade Development Council and Invest Hong Kong, and cooperate with the relevant units in the Mainland to create a one-stop service platform integrating technical assessment, analysis of overseas market policy, and financing matching to reduce the difficulties of cross-boundary development of SMEs in the Mainland. Moreover, we should invite SMEs that have successfully “gone global together” in Hong Kong to share their practical experiences, helping other peers avoid unnecessary detours.
To help Mainland SMEs “go global”, Hong Kong as an international financial centre can make use of its mature financial system to provide these SMEs with the necessary hedging tools, e.g. making use of the products and services of the Hong Kong Export Credit Insurance Corporation and multinational insurance companies to form a multi-lateral insurance channel. Making overseas investment will inevitably involve exchange rate or interest rate risks. Hong Kong currently has diversified financial hedging tools, including currency swaps, interest rate futures, etc., which can provide basic protection for their funding for entering different markets.
Mainland SMEs have different financing channels in Hong Kong, including the capital market, bank loans and venture capital. However, Mainland SMEs that are not medium-sized enterprises are generally small in scale, with insufficient collateral and incomplete credit history, making it difficult for financial institutions to lend to these SMEs. Therefore, I suggest that the Government should introduce more targeted policies, e.g. the regulators can encourage more financial institutions to designate loan quotas for SMEs (including Mainland SMEs) and also provide more support to the operation of SMEs through tax concessions. Of course, financial institutions should also continue to develop products that better meet the transformation needs of SMEs based on their pain points in developing new quality productive forces, including intellectual property pledge loans and global supply chain accounts receivable pledge loans.
President, new quality productive forces have become the key to promoting economic transformation and high-quality development. If Hong Kong can give full play to its strengths and help stimulate the vitality of SMEs in the two places, it can play a more important bridging role in the overall national development. I support the original motion and the amendment. I so submit.