Hong Kong people were more reluctant to start a business in 2012 compared to the previous years, due to a strong labor market, rising rents and increased wages for workers, according to a local business broker BridgeWay.

Since the beginning of 2012, the economic environment in Hong Kong had been buoyant, local employers were hiring and willing to increase their staffs' wages. When most people in Hong Kong have stable jobs, their willingness to start an undertaking is likely to decrease, Edwin Lee, chief executive at BridgeWay, told a press conference on Tuesday.

Besides, the rising rental cost and higher wages in Hong Kong can also be prohibitive for people who want to start their own businesses, Lee added.

BridgeWay recorded only 40 business sales transaction deals in 2012, a decrease of around 40 percent from the previous year, and down sharply from its last peak in 2009, when 173 deals were recorded.

Lee said that historically, the number of deals that BridgeWay recorded is highly co-related with the city's unemployment rate.

In 2009, the unemployment rate was as high as 5.4 percent; more people were then interested in starting undertakings as they were laid off or had difficulties in finding jobs, which is why the number of deals recorded was so high that year, he said.

Although the number of deals dropped significantly in 2012, the average size of the deals increased. An average transaction amount recorded last year was HK$790,000, representing a 53 percent increase from a year ago.

Lee explained that when the economic environment is tough, people tend to be very conservative in spending, and they want to start small businesses that only need a small amount of investment. When the economic environment improves, people become more confident and willing to invest more.

He expects the number of business sales transactions in 2013 to be maintained at a low figure while the deal sizes will continue to grow, backed by the rising economy and stable labor market.

According to the business broker, the food and beverage industry continued to be the favorite industry in 2012 for people who wanted to start their own businesses. Among the 40 business sales transactions last year, 45 percent planned to enter the food and beverage industry; while others started their businesses in education (18 percent), retail (17 percent), servicing (10 percent) and B2B (10 percent).

Lee said that as the rentals in Hong Kong are very expensive for small businesses owners, businesses that do not need large shop spaces, like take away food stores, will be more and more popular to business start-ups.

Other than take away food stores, he also suggests people who want to start an undertaking to consider opening drug stores, jewelry and watch shops, as such stores have higher added-value and they are usually attractive to mainland visitors.

sophiehe@chinadailyhk.com

(HK Edition 01/23/2013 page2)