By Parco Yau • 03/07/2025 • 4-minute read
Comprising 98% of Hong Kong's businesses, local small and medium enterprises (SMEs) are struggling more than ever in the economy today. Despite the city's vibrant business environment encountering common obstacles such as market saturation and high operational costs, core sectors grapple with their own unique set of challenges.
Retail:
- Growing online shopping behavior post-Covid
- Rising competition in Japan, Korea, and neighboring Chinese cities, such as Shenzhen
Trading:
- Increasing tax and cost of raw materials
- Decreasing global demand for exports
- Rising competitive edge in neighboring regions including China, Korea, Japan, etc.
Services:
- Growing need for investment in technology and talents
- Intense competition in the saturated market
From the surge in online shopping and international competition in retail to rising material costs and fluctuating global demand in trading, and the need for tech investment in services, the pressures are mounting. While we can't speed up the global economy with a single man's power, there is plenty to do for us to innovate and find ways to thrive.
Having spent the last decade immersed in the ERP and business management sector, navigating various local economic cycles and market shifts, I've witnessed firsthand how strategic foresight and adaptive measures can turn daunting obstacles in the business environment into pathways for growth.
It is precisely in these moments of adversity that the need for innovation becomes most critical, pushing companies to redefine their business operations and embrace new paradigms. This brings us to a pivotal area where Hong Kong SMEs can not only survive but truly thrive: digital transformation.
Why Digital Transformation is Critical
to Survive this Economic Downturn
Some view digital transformation as a preventable expense; we see it as insurance for future business success. Especially in the dire economy, digital transformation is no longer a choice but a must for three reasons:
1. Keeping up with the trends in the Era of Change
Studies by the Legislative Council and the Hong Kong General Chamber of Commerce have revealed key trends in digital transformation among local businesses following the pandemic.
86%
86% of respondents agree digital technology deployment as a business development trend
40%
40% of businesses now adopt work-from-home or remote working arrangements
37%
37% of businesses increased presence in overseas market
Due to a shift in employee demands, companies are increasingly adopting flexible work arrangements to boost productivity and allow employees access to data from anywhere. This is particularly true for finance and insurance businesses, many of which have expanded online or internationally to find new markets, attract more customers, and unlock additional revenue streams. Online Enterprise Resource Planning (ERP) tools are proving especially valuable, offering businesses the ability to quickly adjust their operations—whether scaling up or down—in response to changing market conditions.
2. Streamlining operations for Resource Optimization
On a daily basis, these online business management services automate and streamline day-to-day business processes, optimizing resources. For instance, digitally transforming a trading business means saving operation time on approval while improving the accuracy of traceability of the source of goods with a reliable record of every transaction. Similarly, a retail business benefits from improved customer retention rates through the use of technology-driven Customer Relationship Management (CRM) systems and automated marketing strategies, improving customer experience.
Importantly, digital transformation presents one single, centralized source of truth and frees the team from paper-based operations that are often prone to human error and miscommunication. During the economic downturn, managing cash flow and operational costs become significant concerns. Digital solutions can help businesses optimize resources and reduce expenses, such as rent, by streamlining workforce and facilitating a shift toward online sales, leading to a higher survivability rate. With a workforce well-trained and adaptive to new technologies, Hong Kong businesses can navigate periods of change with far fewer obstacles.
"We experience fewer errors in inventory control on Odoo. The incoming and outgoing stock count is more than 90% accurate."
3. One Step Ahead of Your Competitors
Beyond simply keeping pace with current business trends, digital transformation provides an excellent strategy for ensuring the long-term effectiveness of your business management as modern technology advances.
Business management software, such as online ERP systems, are frequently updated and integrated with other services. This allows you to tailor your management practices to your company's size and requirements, avoiding the limitations of inflexible, outdated software that cannot connect with other systems.
Moreover, these systems also store comprehensive records of past sales, enabling data-supported sales forecasts. By analyzing this information, even small businesses can identify market trends, understand customer behavior, and predict future sales, gaining a competitive advantage. These analytics also allow companies to develop targeted marketing and sales plans, optimize resource allocation, and make faster, more informed business decisions.
Successful Digital Transformation Case Studies See moreInterested in knowing more? Schedule a call with us to learn more about digital transformation in Hong Kong and Odoo ERP.
About the Author
Parco Yau
Head of Channel Sales (East Asia)
With a decade's experience in the software industry, Parco is dedicated to helping Hong Kong businesses scale and thrive.