US importers have cut orders from Hong Kong firms and shifted to short-term contracts amid a global oil crisis triggered by war in the Middle East. Business leaders warn of eroding profit margins and strained liquidity, urging the government to bolster ties with Central Asia and Asean nations to diversify market risks. Executive Council member Jeffrey Lam Kin-fung said the situation will impact SMEs' cash flow.
Hong Kong firms are facing a profit squeeze as US importers cut orders and shift to short-term contracts amid a global oil crisis triggered by war in the Middle East. Business leaders warn that profit margins are eroding and liquidity is becoming strained. Executive Council member and businessman Jeffrey Lam Kin-fung said on Sunday that the US-Israel war on Iran has driven up fuel costs, raising operating expenses for local firms. The Middle East war, now in its fourth week, has triggered the crisis with Iran sealing the Strait of Hormuz, a critical energy chokepoint. Lam urged the Hong Kong government to bolster ties with Central Asian and Asean nations as a vital strategy to diversify market risks. “Orders are greatly affected, shifting from long-term to short-term, but costs have risen with no room to pass them on through price increases,” Lam said. “The situation is unclear and will definitely impact the cash flow of Hong Kong’s small and medium-sized enterprises, so we cannot sit idly by.” Keywords include Hong Kong Small and Medium Enterprises Association, but no further details are provided in the sources.
