China’s Private Economy Promotion Law (May 20, 2025) is huge news for small business protection!

No one needs arbitrary fines and unjust charges let alone the targeting of ‘small guys’ by enforcement because they are soft-targets. This law tackles such economic pressures head-on, fostering a stable environment for SMEs.

Hong Kong could draw inspiration from this to support our struggling small businesses. During and post-COVID, SMEs and sole proprietorships faced immense challenges, such as hefty non-compliance fines and closure orders. Even Mandatory Provident Fund (MPF) violations, arising from poor cash flow or administrative oversights often hit small businesses hard, placing them under extra financial strain. Laws enforced on SMEs to curb virus spread shuttered countless solo restaurants, retail shops, and service providers, with many small operators unable to pivot to online operations or survive due to high costs or lack of expertise and no cash reserves.

Compounding these challenges, sole proprietorships in Hong Kong received minimal government support so often fell through the cracks of relief schemes. It is well known that freelancers, small vendors, and independent contractors, with little or no financial aid struggled. However enforcement impact and penalty levels were not correspondingly adjusted for the hard hit SME sector; as “low hanging fruit” in the eyes of some enforcement agencies it at times appeared to get hit the hardest.

A Hong Kong law mirroring China’s could curb excessive fines and ensure more equitable support for business or all sizes, reflecting the fact that we need our SME sector to thrive. Such a framework could protect both SMEs and sole proprietors that are taking the first step on the business ladder from overzealous prosecution and would see us enjoy faster economic recovery.

If you need specific input regarding a strategic Hong Kong challenge or related legal matters in the HKSAR, you can always DM me and check out my profile at ajhalkes.com.

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