Swedish companies in Hong Kong have reported an improved business environment with their profits trending upward in 2024, and continue to view the city as a key regional hub and an attractive business destination for its unique blend of competitive advantages despite global trade uncertainties.

Louise Bergholm, Sweden’s consul general in Hong Kong, said in an interview with China Daily on Thursday that based on her own observation and feedback from Swedish companies, Hong Kong’s business environment has “really picked up” since 2023, with more positive sentiment seen this year.

Whether it is Swedish companies’ operations in Hong Kong or using the city as a base for sourcing and selling to the Chinese mainland, the overall business sentiment has been more stable, despite the variables in geopolitics and the global economy, she said.

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Her comments follow the release of Business Climate Survey for Swedish Companies in Hong Kong SAR 2025 earlier this month. The survey covering high-level representatives from 61 Swedish companies in Hong Kong revealed that 80 percent of respondents reported breaking even or making a profit in 2024 — a jump from the 68 percent in 2023 and the highest level following the COVID-19 pandemic.

The share of companies reporting profits rose to 61 percent, up from 46 percent the previous year, with improvements noted across businesses of all sizes and industries.

The survey also highlights Hong Kong’s role as a regional hub, with nearly two-thirds of Swedish companies in the city using it for this purpose.

As a regional center, Hong Kong’s advantages are manifold, the consul general said, including proximity to the mainland, access to half the world’s population within a five-hour flight, professional business services, and a transparent judicial system.

“You will find other places with one or two of these traits, but Hong Kong’s uniqueness lies in having all of them,” Bergholm said, adding that this is the feedback from Swedish business representatives who cite these factors as important reasons for choosing Hong Kong as a place to work and live.

Key functions conducted through these hubs include purchasing and sourcing, overall management, and sales. Notably, 92 percent of these companies intend to retain Hong Kong as their regional hub for at least the next three years.

For the third year running, Hong Kong’s role as a gateway to and from the mainland remains its most compelling advantage, with 38 percent of respondents ranking it as a top benefit.

The survey conducted in February also found that an increasing percentage of firms rated Hong Kong’s business climate as good or very good this year compared with 2024, which has brought the city’s score to 3.3 from 3.1 out of 5.

However, the survey revealed a dip in investment plans among Swedish companies in Hong Kong, with 23 percent intending to increase investments in the next 12 months, compared to 33 percent and 38 percent in the past two years.  

Bergholm said the decline in investment sentiment was because businesses need a clearer vision and a more predictable future. For instance, Swedish companies place great emphasis on green and sustainable initiatives, but Hong Kong’s latest Budget does not place much focus in this area, she added.

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Similarly, there should be a clear government guidance on the implications of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), despite nearly half of surveyed companies seeing opportunities in the city cluster.  

“There is a lot of curiosity about the Greater Bay Area,” she said. “(Companies’) questions include what the next steps are and how it will function.”

Globally, lingering uncertainties around tariffs and trade have also hampered investment decisions. While most Swedish companies in Hong Kong are not directly affected by tariffs as they do not produce in the city, the uncertainties have indirectly dampened business sentiment, Bergholm noted.

Contact the writer at irisli@chinadailyhk.com