A Report on Support Measures for Small and Medium Enterprises

Appendix 7

Major support services for SMEs provided by
the Governmment and other support Organizations

Major support services provided directly or indirectly for SMEs by the Government and other support organizations are set out in the following paragraphs.

Maintaining a business-friendly environment

2. Trade and Industry Department (TID) is the front-line Government department supporting SMEs. Its SME support services include the SME Information Centre, the Virtual SME Information Centre, the Pilot Mentorship Programme, and the issue of trade licences. TID also closely monitors the trade policies and regulations of our trading partners, and ensure timely dissemination of such information to local enterprises. Besides, it protects Hong Kong's trading rights and interests through active participation in bilateral and multilateral negotiations. Information that SMEs and business starters can obtain from the SME Information Centre and the Virtual SME Information Centre include information on and application forms for various Government licences required for operating different businesses; information on services and facilities provided by SME support organizations; as well as tariff information of Hong Kong's trading partners.
   
   

3. The Business and Services Promotion Unit (BSPU) co-ordinates and supports Government departments' initiatives under the Helping Business Programme and the Services Promotion Programme, with a view to maintaining Hong Kong as the best place in the world for business and as a premier service centre in the region. Through the Helping Business Programme, more than 300 initiatives have been implemented. Many of them have facilitated the operation and development of SMEs.
   
   

4. The Business Start-up Centre of the Vocational Training Council (VTC) provides a well-equipped working environment for business start-ups to prepare for and develop new business. It also helps them explore new business ideas, develop entrepreneurship and implement business plans.
   
   

5. The SME Centre of the Hong Kong Productivity Council (HKPC) is a business service hub for SMEs. It provides different kinds of services including free consultation, expert hotline, business development plans, managerial training, IT application and networking services. It also conducts SME surveys, organises the Hong Kong SME Award and the SME Business Solution Expo, and provides managerial tools and information in its website. Its SME Operational Environment Index, which is released every three months, increases SME owners' understanding of the overall business conditions in the market and hence helps them map out appropriate development plans. Besides, its Powerhouse, which comprises the Service Quality Centre and the Asian Benchmarking Clearinghouse, provides one-stop integrated business enhancement and development services for SMEs.
   
   

6. The Hong Kong Trade Development Council's (TDC) Customer Service Centre, Business InfoCentre and SME Service Stations provide a comprehensive range of customised services for SMEs, including trade enquiries, market information, business contacts, market seminars and workshops. Its trade advisory service, provided by experienced TDC staff and industry experts, offer free one-on-one consultation for SMEs on marketing and other business problems. Besides, a China Business Advisory Unit will be set up by the TDC to help SMEs solve problems encountered in their business operation in the Mainland, and to further provide consultancy services on developing China trade and grasping new business opportunities. The TDC Business InfoCentre houses a rich collection of books, catalogues and periodicals on world markets. Dedicated sections in the Business InfoCentre, including the Electronic Data Centre, the Multimedia Centre, China Trade Information Centre and other business facilities, also provide quality information services to SMEs. The TDC will also set up the China Trade and Investment Resource Centre to provide comprehensive information on the Mainland market, including the investment and trade information of different provinces.

Financing

7. To encourage innovation, technological research and technology application by SMEs, an Innovation and Technology Fund (ITF) of $5 billion was set up in end 1999 by the Government to support projects which contribute to innovation and technology upgrading in industry. Under the ITF, there is a Small Entrepreneur Research Assistance Programme (SERAP) which aims to provide pre-venture capital-funding on a matching basis to technology-based SMEs with good research ideas to enable the SMEs to carry out research projects with commercial potential. Government's contribution to each project will be up to $2 million.
   
   

8. The Government has also established a $750 million Applied Research Fund (ARF) which provides capital in the form of equity participation for promising technology businesses and applied research development programmes.
   
   

9. To encourage creativity and originality, the Innovation and Technology Commission has set up a Patent Application Grant to encourage companies and individuals to apply patents for their inventions. All local registered companies and individuals are eligible to apply provided that they have never owned any patents before. For each applicant, a grant of not more than $100,000 or 90% of the total cost of the patent application, whichever is the less, will be provided.
   
   

10. Through the Hong Kong Export Credit Insurance Corporation (ECIC), the Government provides a wide range of export credit insurance facilities, with credit periods up to 180 days, to local exporters, including SME exporters, for transactions with overseas buyers on credit terms. Under the principle of prudent risk management, the ECIC also provides different percentages of indemnity for individual cases or different sectors in a more flexible manner according to the levels of risks involved.
    
    

11. In collaboration with some financial institutions, the ECIC launched an ECIC Supported Export Finance for SMEs in late May 2000. For details, please see Chapter 4 of the report.
    
    

12. Apart from insurance services, the ECIC also provides a credit advisory service to advise exporters on the form and extent of credit to be offered to buyers so as to minimise exporters' risk and loss.
    
    

13. Immediately after the Asian financial turmoil, banks and financial institutions tightened their lendings. As a result, it was difficult for SMEs to obtain loans. Some had their credit facilities cut. This led to liquidity problems for SMEs. In response to the situation, the Government launched a Special Finance Scheme for SMEs in August 1998. Under the scheme, Government acts as SMEs' guarantors, providing a guarantee amount up to $2 million or 70% of the loan approved by banks or finance institutions, whichever is the less.
    
    

14. With the gradual recovery of the economy, money supply is back to normal and banks become more ready to do business with SMEs. The Government decided to stop accepting new applications in April 2000. 9　912　SMEs have benefitted from the SFS, securing total loan facilities of $9.16　billion, of which $5.81　billion was guaranteed by the Goverment.
    
    

15. Also, TID and other support organizations organise symposiums and seminars to enhance SMEs' awareness and know-how on financial management, with a view to helping them meet the lending requirements of financial institutions and therefore enhancing their prospects of securing loans. The SME Centre of HKPC has also set up a Finance Net to provide online financial assessment, and information on interest rate and online banking. It also organises various financing seminars and networking activities.

Human resource development

16. Through various educational institutions, higher education institutions and support organization, the Government provides SMEs with a trained workforce. It also assists SMEs to identify, train and develop new human resources through various means, including　:

1. In 2000/01, the Government allocated $28.7 billion to basic education and $14.2 billion to tertiary education, which made up 23% of Government's total recurrent expenditure. The eight tertiary education institutions, which receive subsidies from the University Grants Committee, are providing a total of 14　500 first-year first-degree places and more than 6 700 sub-degree places a year.
   
   

2. To meet the manpower needs of a knowledge-based economy, the Chief Executive announced in his 2000 Policy Address the target that, within ten years, 60% of our senior secondary school leavers will receive tertiary education. By then, we will be providing about 28 000 additional places for higher education.
   
   

3. The VTC received $2.11 billion from the Government in 2000/01 to deliver training for different sectors. Its Hong Kong Institute of Vocational Education provides higher diploma, diploma, higher certificate, certificate and craftsman courses in nine disciplines, viz. applied sciences; business administration; child care; computing and mathematics; construction; design, printing, textiles and clothing; electrical and electronic engineering; hotel, service and tourism studies; and mechanical, manufacturing and industrial engineering. In 2000/01, the Hong Kong Institute of Vocational Education offered 22 279 full-time places, 9 074 part-time day release places as well as 22 381 part-time evening places.

Also under the VTC, there are 20　training centres, which provide outside job basic skills training and advanced studies. The training courses cover a wide scope of areas including vehicle maintenance, electrical and mechanical services, electronics, hotel, printing and precision tooling. The VTC has also set up the Financial Services Development Centre, the Information Technology Training and Development Centre, the Wholesales/Retail and Import/Export Trades Training Centre, the Chinese Cuisine Training Institute, and the Hospitality Industry Training and Development Centre. In 2000/01, these centres provided 28 010 full-time and 35 090 part-time elementary and advanced training places.

The Management Development Centre of the VTC promotes managerial effectiveness. The Centre offers various training courses such as the Owner-Manager Course, and the Business Start-up Course, which are particularly suitable for SMEs. Besides, in order to cater for the needs of SMEs which are active in China trade, the Business Start-up Course covers a two-day study tour to the Mainland. Three interest groups, namely the Hong Kong Owner-Manager Association, the Hong Kong Business Start-up Association, and the China Business Association are also established to pool SME owners and business starters together for experience sharing.

4. Since its establishment, the Employment Retraining Board (ERB) has received a total of $1.6 billion capital injection from the Government. The ERB is currently providing various retraining courses in over 100 training centres, involving over 50　training bodies. These courses fall into six major categories, viz. core courses on job search, job-specific skills courses, computer and language courses, elderly courses, courses for the disabled and tailor-made courses. ERB also refers suitable retrainees to employers in order to ease the latter's difficulties in recruiting junior staff. In 2000/01, the ERB offered over 97 000 retraining places. Starting from 2001/02, the Government will provide $400 million recurrent subvention for the ERB.
   
   

5. The Clothing Industry Training Authority was set up to provide skilled workforce for the clothing industry. Its two training centres organise a wide range of full-time and part-time training courses of craftsmanship and technician level. The full-time courses include merchandising, pattern making, fashion design and co-ordination, information technology and practical skills training. The part-time courses are mainly designed for employees in the industry. The Authority also provides specially designed in-house training in accordance with the request of companies. In 2000/01, 900 full-time and 4 600 part-time students were trained by the Authority.
   
   

6. The Construction Industry Training Authority provides the industry with skilled craftsmen, operators and technicians, and provides in-service construction personnel of different grades with continuing education courses on practical skills, management and construction safety. The Authority mainly provides three types of courses, viz. one-year full-time courses, full-time adult short courses and various part-time-courses. In 2000/01 training year, these three types of courses provided 1 940, 5 941 and over 85 800 places respectively.
   
   

7. The SME Centre of the HKPC organises over 100 tailor-made courses, workshops and seminars on information technology, business management, production management and quality management for SMEs every year. In 2000/01, the HKPC organised over 1 500 training courses with over 30 000 participants (most of them are from SMEs). Besides, the HKPC's hkseminar.com is the first-of-its-kind seminar hall in Hong Kong. Some of the seminars are available free and online for SMEs to attend and view. Furthermore, through the six service centres of the Powerhouse, the HKPC assists SMEs to make use of the latest management models and tools.
   
   

8. The SME Business Training Programme of the TDC offers more than 140 training courses a year. Focusing on export promotion and marketing in the international arena, these courses are designed to enhance the export marketing capabilities, business knowledge and trading skills of SMEs.
   
   

9. Under the TID's Pilot Mentorship Programme for SMEs, more than 40 successful businessmen nominated by nine trade and industrial organizations act as mentors and provide one-on-one free counselling service to local SMEs with a history of less than five years and fewer than 20 employees. The Programme provides an opportunity for SMEs to learn the key to success and minimises their chances of making unwise decisions at their early stage of development. The Programme is on trial for one year. It has over 70 SME participants.
   
   

10. To assist the local employees with secondary 5 education level or below to improve their skills and competitiveness, the Government has allocated $400 million for the Skills Upgrading Scheme to provide various training in the coming two years.
    
    

11. The Government has also launched many different training programmes to improve the quality of Hong Kong's human resources. These programmes include the Youth Pre-employment Training Programme, the Project Springboard, and the Workplace English Campaign. The objective of the Project Springboard is to provide secondary 5 school leavers and adults learners with programmes which combine academic pursuits with training in practical skills. The Workplace English Campaign is targeted at enhancing the standards of workplace English.

Technology application

17. To support innovation and technology application by enterprises, the Government has set up the ITF and ARF (please refer to paragraphs 7 and 8 for details) to encourage the development and application of new technologies.
    
    

18. The Government had allocated $250 million to set up the Hong Kong Industrial Technology Centre Corporation. It has now been merged with the Hong Kong Industrial Estates Corporation and the Provisional Hong Kong Science Park Company Limited to form a new company called the Hong Kong Science and Technology Parks Corporation. Its Technology-based Business Incubation Programme provides fully serviced office space and facilities to new high-tech firms, so that the latter can put all their resources on research and development. Besides, its Techlink database, business matching services and business networking services help local technology-based SMEs seek capital, market and technology partners all over the world.
    
    

19. The services provided by the HKPC to assist enterprises in skill upgrading include product development, training, technology support and transfer. It also provides tailor-made consultancy services on the application of new and advanced technologies, and organises seminars and workshops to promote various advanced technologies. The TechMart of the HKPC is a technology showcase and resource centre. It co-ordinates the technology centres under the HKPC to assist SMEs to turn new ideas into successful products.
    
    

20. Through the $100 million New Technology Training Scheme, the Government offers a training grant to cover up to 75% of the total training cost to encourage employers to send their staff to undergo new technology training in Hong Kong or overseas, which would be useful to their businesses. A wide range of courses on information technology, plastics, metals, electronics, environment and food technology are eligible for the grant.
    
    

21. To support SMEs in the application of information technology, in particular the adoption of e-commerce, the Government endeavours to provide well-established and essential infrastructure for enterprises, including :

1. The Electronic Transactions Ordinance was enacted in January 2000 to provide clear legal framework for electronic transactions.
   
   

2. The Hongkong Post takes the lead in establishing the Public Key Infrastructure (PKI) in Hong Kong. It acts as a public Certification Authority in Hong Kong to provide a secure and reliable environment to facilitate electronic transactions.
   
   

3. The Electronic Service Delivery Scheme, launched in December 2000, provides enterprises and individuals with more than 70 electronic public services by over 20 Government departments and public organizations. Through the Internet, enterprises are now able to use this service to register their businesses, pay government fees, access TID's Business Licence Information Service and SME Information Centre, etc.
   
   

4. A comprehensive E-government policy was launched to encourage businesses and the public to conduct electronic transactions with the Government with a view to increasing businesses' efficiency, competitiveness, and reducing operating cost. The Government aims to provide e-option for 90% of public services amenable to the electronic mode of delivery by end 2003.
   
   

5. Various electronic procurement initiatives are actively implemented to reduce the transaction cost of both the Government and the suppliers. The Government sets the target to carry out at least 80% of the tenders through electronic means by end 2003.
   
   

6. The Information Technology and Broadcasting Bureau, the Information Technology Services Department and other support organizations join force to promote the adoption of e-commerce to SMEs. Their promotional activities include: promoting the awareness of digital certificate and its application through seminars, phone calls and visits so that SMEs can have up-to-date information on e-commerce and information security; organising large-scale exhibitions, distributing promotional leaflets, publicising through television and radio to promote the wider adoption of e-commerce; publishing and distributing free booklets and VCDs on useful reference materials on information technology and e-commerce; and providing information on support services through relevant Government websites.

22. Besides, the Government provides the following information technology support through different support organizations　:

1. In 2000/01, $19 million was allocated to the Information Technology Assistant Training Programme, co-organised by the EMB, the VTC and the ERB, to train 900 junior information technology staff. The Programme aims to provide enterprises with trained manpower that are able to assist in handling tasks related to information technology application and e-commerce.
   
   

2. The DigiHall 21 of the HKPC provides up-dated information technology application solutions, including the Hong Kong Product Online and the Hong Kong Industry Online systems. These systems assist manufacturers, suppliers and retailers in obtaining updated information as well as mastering online purchase and delivery skills. The DigiHall 21 also offers training courses on tradelink and consultation services.
   
   

3. The HKPC and other trade and industrial organizations organise various symposiums and expos to encourage further application of information technology among SMEs. They also take the initiative to cooperate with software producers or suppliers, internet service providers and application service providers to offer SMEs with suitable software solutions at reasonable prices.

Market expansion

23. The Government mainly works through the TDC to help local enterprises promote their products and services, expand overseas markets and build up business partnership. In 2000/01, the Government allocated $300 million to the TDC for its trade development activities. The extensive range of activities organised by the TDC include :

1. More than 300 local and overseas trade fairs and other promotional events are organised every year.
   
   

2. 14 product magazines are published every year with a worldwide circulation of more than 4.5 million. These magazines allow SMEs to promote their products and services to more than 60 countries in a cost-effective manner. Besides, the Hong Kong Enterprise Internet provides a one-stop service for SMEs to advertise their products online.
   
   

3. A trade matching service which handles about 1 million trade enquiries every year. The service helps companies around the world to find suitable Hong Kong suppliers and seeks overseas business partners for Hong Kong companies. The TDC's databank contains information on more than 600,000 local, overseas and Mainland traders and suppliers.
   
   

4. In-depth studies on world markets are regularly conducted, and research reports produced, to keep SMEs posted on international market trends, overseas trade restrictions and emerging business opportunities. The TDC also publishes a monthly newsletter Business Alert-China to provide timely information on important trade issues and changing policies and regulations in the Mainland market. Besides, it will conduct an in-depth market analysis on the South China region. Recently the TDC has launched two new services, SME News Flash and Market News Express, which are trade leads sent to SMEs by e-mail to update them on market and product news as well as on urgent changes in trade regulations.
   
   

5. A trade portal, "tdctrade.com", was launched to further enhance the connections between enterprises and their trading partners around the world and to increase business opportunities through the Internet.
   
   

6. The TDC Design Gallery helps to showcase Hong Kong-designed products, encourage creativity, and promote innovative Hong Kong products to overseas buyers.
   
   

7. To meet the needs of SMEs, the TDC organises various activities aimed at enhancing their competitiveness. The large-scale exhibition, SME Market Day, to be held in July 2001, is one of the examples.

24. Besides TDC, the HKPC also provides more than a hundred websites and databanks and a series of trade and industry bulletins, industrial directories and Patents Updates to provide the latest information on different industries, markets and products. It helps enterprises seek suitable business partners and create new business partnership opportunities.
    
    

25. The HKPC has also launched Compass North, which provides SMEs with the latest business information on Hong Kong and the Mainland, assesses Mainland's investment environment and helps SMEs adapt to new demands. The China Productivity and Promotion Net (PPnet), which is jointly developed with the China Productivity Promotion Centres Association, provides information on the latest market trends, investment news, material supply, research results and patent updates in the Mainland.
    
    

26. The SME Development Support Plan published by the TID lists out various SME support services provided by various Government departments and support organizations. The Plan is also available at the TID's Virtual SME Information Centre at http://www.sme.gcn.gov.hk.

Back to Content