Businesses target ASEAN, Mainland China amidst sentiment dip

Almost 80% plan overseas expansion over the next three years.

Hong Kong businesses are placing greater emphasis on resilience as 79% plan overseas expansion over the next three years, even as business sentiment weakened, according to the UOB Business Outlook Study 2026.

Business sentiment fell to 63% in 2025 from 73% in 2024, whilst 76% of businesses expressed confidence in the year ahead.

George Tung, CEO of UOB Hong Kong, said companies were prioritising resilience alongside selective growth strategies.

The study found that regional expansion remained a key growth strategy. About one in two businesses expanded overseas in 2025, with ASEAN and Mainland China remaining the preferred destinations for future expansion.

“ASEAN (33%) and Mainland China (26%) remain the most preferred destinations, reinforcing Hong Kong’s role as a key gateway for cross-border expansion in the region,” the report said.

Companies identified expanding into new customer segments as their top priority, cited by 29% of respondents.

Another 26% said they were integrating environmental, social, and governance (ESG) considerations into their operations, whilst 24% were reviewing business strategies to differentiate themselves from competitors.

Supply chain resilience also remained a priority, with 86% of businesses describing supply chain management as strategically important.

Companies said they were diversifying suppliers (27%), exploring alternative sourcing strategies (27%), and digitalising supply chains (26%), whilst 38% said they were strengthening supply networks within ASEAN and the region.

“Digital transformation remains firmly on the agenda, with 93% of businesses having adopted digital solutions,” UOB said.

Respondents said these investments improved productivity (36%), customer experience (33%), and decision-making (30%), but only 53% said their digital initiatives had achieved the desired outcomes.

The study also found that about eight in 10 businesses plan to increase digital spending in 2026.

Within the technology, media, and telecommunications sector, more than 90% of businesses said they intend to increase artificial intelligence budgets over the next year.

Sustainability remained a focus for businesses, with 86% recognising its importance and nearly half already implementing sustainability initiatives.

Respondents cited competitive advantage (38%), brand value (37%), and long-term resilience (35%) as the main benefits.

“Nonetheless, limited financial incentives and non-financial technical and advisory support remain a challenge, highlighting the need for stronger ecosystem collaboration to accelerate progress,” the report said.

The UOB Business Outlook Study 2026 is based on 255 interviews with business owners and senior decision-makers conducted in early 2026 and examines how medium and large enterprises are responding to ongoing geopolitical and economic shifts.