"It is encouraging news that Hong Kong mid-size businesses have demonstrated sustainable above average growth compared to other countries around the world in the past three consecutive years, in spite of the turmoil in the economic environment and global competition they are facing.

Mainland China was included in the survey for the first time this year -- and was ranked 2nd in East Asia and 4th in the world, with 61% of mid-size companies recording above average growth, only after Hong Kong, India (75%) and Sweden (71%). Although Taiwan's ranking drops from 11th last year to 14th this year, the proportion of mid-size companies having above average growth remains the same," commented Desmond Yuen, Partner and Head of China Services at Grant Thornton in Hong Kong.

Interestingly, while more Hong Kong and mainland mid-size companies are recording above average growth, their counterparts in developed economies, including most of the Group of Eight economies (the US, UK, Japan, etc) and our neighbouring Asia Pacific economies Australia and New Zealand, are seeing less mid-size companies with above average growth.

The research further studies the so called super growth companies, i.e. those companies that show exceptionally strong growth and which occupy approximately the top 20% of companies on the growth index.

For the 2nd consecutive year, the US tops the Super Growth Index, with 39% - the highest proportion of super growth companies. Despite scoring the highest ranking, however, the proportion in the US actually fell by 9%. By contrast, the booming economies of Hong Kong and India surged ahead to take joint second place. Both Hong Kong and India have more than a third of companies (34%) achieving super growth status.

"The US continues to perform relatively well, reflecting the inherent dynamism of its economy which saw buoyant consumer demand, strong capital investment and robust export growth. But the real story is the continuing rise of Hong Kong and Indian companies. Based on current trends, it would not be surprising to see a change in the top ranking next year,'' said Dr Tapan Datta, Experian's global economist.

The other interesting finding is that super growth companies appear to have a competitive advantage as they are not constrained by access to expansion finance. The survey shows that super growth companies are 23% more likely to export than ordinary companies. Also, super growth companies are far less constrained by the ability to finance the expansion of their business. For example, cost of finance is an issue for 50% more ordinary companies than super growth companies; as is shortage of working capital (47%); and shortage of long term finance (58%).

Super growth companies are very positive about prospects for their business. A balance of 36%* predict increasing the selling price of their goods and services compared to 29% of companies in general. Super growth companies are also a third more positive about increasing the level of exports this year (32% compared to 20%) and are looking to make greater investments in their businesses (37% compared to 28% investing in new buildings; 51% compared to 43% investing in new plant and machinery).

* The figure is the percentage balance of the respondents who are optimistic and those who are pessimistic.

Mainland China came in 14th position, with 14% of its companies classified as super growth. "It will be hard for Mainland China to achieve greater super growth status until more companies experience rapid expansion both in terms of turnover and employment. Mainland China joined Germany (15%) and Japan (15%) in mid-table," added Desmond Yuen.

Dr Tapan Datta concluded: "When analysing business growth in China it is also important to understand the significant regional differences that exist across the country. Future economic growth is not just confined to the four 'take-off' cities -- Beijing, Shanghai, Guangzhou and Shenzhen -- investors need to look further afield to identify where the new hotspots will be and where value resides."

The sharpest fall in the rankings was seen in Greece, down from 9th to 21st position as the proportion of super growth companies fell from 15% to 8%, partly in response to the end of the Olympic Games spending windfall.

Appendices

Table 1 -- % of companies in that territory/ country that have shown above average growth

2006 2005 2004 Hong Kong 82 72 67 India 75 62 63 Sweden 71 52 51 Mainland China 61 not surveyed not surveyed US 60 69 50 South Africa 60 51 54 UK 60 61 57 Ireland 59 49 58 Australia 59 66 58 Malaysia 58 not surveyed not surveyed Canada 56 55 55 New Zealand 56 66 69 Poland 53 40 24 Taiwan 51 51 63 Singapore 47 42 62 Netherlands 46 38 33 Mexico 45 26 15 Thailand 45 not surveyed not surveyed Germany 43 39 41 Japan 43 54 42 Philippines 37 46 29 France 36 34 50 Luxembourg 35 not surveyed not surveyed Greece 35 39 45 Spain 34 27 40 Italy 30 30 49 Argentina 29 not surveyed not surveyed Botswana 14 not surveyed not surveyed Russia 12 12 18 Turkey 10 5 6

Source: Experian Grant Thornton International Business Owners Survey (IBOS) 2006

Table 2 -- % of companies in that territory/country that are super growth

2006 2005 2004 US 39 48 22 Hong Kong 34 28 12 India 34 21 21 Sweden 31 13 24 Ireland 26 15 18 Canada 23 23 13 UK 23 25 20 Australia 22 27 10 Malaysia 22 not surveyed not surveyed South Africa 20 16 12 Germany 15 11 8 Japan 15 13 2 Poland 15 13 7 Mainland China 14 not surveyed not surveyed New Zealand 12 13 6 Singapore 10 11 8 Taiwan 10 12 7 Thailand 9 not surveyed not surveyed France 8 6 8 Greece 8 15 13 Netherlands 8 10 7 Spain 8 8 9 Botswana 7 not surveyed not surveyed Mexico 7 4 2 Philippines 7 6 3 Luxembourg 6 not surveyed not surveyed Argentina 5 not surveyed not surveyed Italy 4 8 12 Russia 4 2 7 Turkey 4 1 2

Source: Experian Grant Thornton International Business Owners Survey (IBOS) 2006

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