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GBA activity improves, but businesses cautious


Cross-border e-commerce trade expands despite challenges, quarterly GBA survey finds.


Business activity in Guangdong-Hong Kong-Macao Greater Bay Area showed solid gains in the first quarter of this year, but expectations remained unchanged, indicating businesses remained cautious.

Standard Chartered and the Hong Kong Trade Development Council (HKTDC) released the Standard Chartered GBA Business Confidence Index (GBAI) survey for January to March, which also showed that GBA businesses were expanding cross-border e-commerce.

The survey, conducted between February and March, shows that the current performance index for business activity in the GBA rose to 54.3 in the first quarter of this year from 51.4 in October to December last year, the highest reading in 11 quarters.

The GBAI expectations index remained largely unchanged at 54 in the first quarter, from 54.1 previously. The figures indicate that current business conditions are improving, but this did little to lift the outlook.

At city level, Guangzhou and Shenzhen were the only two cities that registered improvements in both current performance and expectations sub-indices. Guangzhou’s current performance sub-index rose to 57.1 from 51.7 in the previous quarter, while Shenzhen increased to 55.9 from 49.5.

Hong Kong fell to 43.3 from 50 in its current performance sub-index, the steepest drop among GBA cities.

Industry-category performance was mixed with manufacturing and trading at 54.7, up 3.2 points, and retail and wholesale rising 3.4 points to 53.9, while innovation and technology gained 3.2 points to 57.8 in Q1. I&T remained in top spot for a third consecutive quarter.

The current performance index for financial services dropped a sharp 10.2 points to 42.4, while professional services shed 5.2 points to 45.6, both falling below the neutral mark of 50.

Kelvin Lau, Senior Economist, Greater China, Standard Chartered, said: “Our GBAI current performance index rebounded in Q1, driven by strong profits, new orders and production/sales performance, indicating a solid start to 2024. However, the inability of the expectations index to benefit from better current performance is a clear sign of still-cautious business sentiment.”

The survey also captured the GBA companies’ current participation and plans in cross-border e-commerce or online sales. A collective 44.6% of respondents said they had online operations, with over half reporting that online sales accounted for 21% to 40% of total sales.

Among respondents that had cross-border online sales, the top three locations of their buyers were Mainland China (86.4%), the rest of Asia (including Japan and Korea, 42.2%) and the United States (32.9%). Furthermore, respondents that already had or will have cross-border online sales expect that the mainland, ASEAN and the rest of Asia would be the three most attractive e-commerce markets in the next two years.

Putting the Index’s findings into perspective, Irina Fan, Director of Research, HKTDC, said: “It is clear that e-commerce is an integral part of the business operation of many GBA companies. As a result, a high proportion of companies are now targeting new markets via cross-border e-commerce.

“Along the way, they are encountering a range of new challenges, including a lack of online marketing expertise, intense price competition or narrow margins and shortage of appropriate technical support.”

The GBAI is the first forward-looking quarterly survey in the market that looks at business sentiment and synergistic effects in cities and industries across the GBA. It is compiled based on a survey of more than 1,000 companies in the GBA covering the manufacturing and trading, retail and wholesale, financial services, professional services and innovation and technology sectors. The index enables investors and businesses to better understand the current business climate, gauge future performance prospects and formulate their market strategies for the GBA.

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