Hong Kong to back SME AI adoption as only 2% are ready

Hong Kong's government will launch an enhanced digital transformation program this year to help small businesses adopt artificial intelligence, as a legislative report shows only 2% of local organizations are fully prepared for the technology — far below the 13% global average.

"Artificial intelligence is a major trend in the wave of technological transformation. We are promoting AI for all, encouraging the whole society to understand, learn, and use AI," Paul Chan, Hong Kong's financial secretary, said in a blog post on July 19.

The enhanced Digital Transformation Support Pilot Programme will subsidize off-the-shelf AI solutions for small and medium-sized enterprises, Chan said. The move follows the first meeting of the government's Committee on AI+ and Industry Development Strategy last month, where members identified life and health technology and embodied AI as priority areas. Hong Kong ranked 20th in the International Monetary Fund's AI Preparedness Index, trailing Singapore, Japan, South Korea and the United Kingdom, according to research published by the Legislative Council Secretariat.

The adoption gap carries direct economic consequences. About 44% of local businesses struggled to secure adequate computing power, while many smaller firms lacked support for redesigning workflows and integrating legacy data systems, the LegCo report found. Hong Kong's fragmented governance, limited in-house expertise and insufficient computing capacity represent the main barriers, the report said. While the city scored highly for digital infrastructure and innovation capacity, it ranked considerably lower in human capital, labor policy, regulation and ethics.

Singapore and the UK as Models

The LegCo report recommended Hong Kong draw on the experiences of Singapore and the UK, which have combined funding with technical assistance and computing infrastructure to accelerate adoption. Singapore's Enterprise Compute Initiative had linked about 1,000 companies with cloud partners by October 2025, with grants subsidizing approved AI tools and government programs connecting businesses with consultants, engineers and major cloud providers.

Yet Singapore also faces challenges in moving from experimentation to widespread organizational transformation. AI adoption reached 62.5% among larger companies and 14.5% among SMEs in 2024, but only 4% of firms had integrated AI into their core business processes by 2026, the LegCo report noted.

The UK has concentrated support on small businesses and traditionally less digitized sectors through programs such as BridgeAI and Made Smarter, which combine funding with mentoring, diagnostics, training and technical collaboration. Business use of AI in the UK increased to 25.9% by March 2026 from 9.4% in September 2023, with particularly strong growth in construction, transport and manufacturing. The UK is also investing in public supercomputers and regional AI Growth Zones, which had attracted 28.2 billion pounds in planned investment by January 2026.

Investment Implications

For investors, the policy shift points to potential demand growth for AI service providers, cloud infrastructure vendors and digital transformation consultancies operating in Hong Kong. The city's AI committee identified life and health technology and embodied AI as priority sectors, areas where local startups and global technology firms alike could benefit from government-backed adoption programs.

Hong Kong's challenge will be translating its strong digital infrastructure score into actual business adoption — a gap that Singapore and the UK have shown can be narrowed through coordinated funding and technical support rather than isolated incentives. The LegCo report concluded that accelerating AI adoption will require more than financial incentives, calling for a coordinated approach combining affordable computing, technical assistance, workforce development and help with business transformation.

This article is for informational purposes only and does not constitute investment advice.