Twenty-three Hong Kong companies were among the world's top-500 retailers in terms of value creation for last year but only one firm made it into the first 50, according to a survey. More than half of the Hong Kong companies were found to have had problems creating value and generating cash flows in the battered retail market. The KPMG-sponsored survey analysed the published results of the world's top-500 retailers and ranked them according to two calculations - their value creation quotient (VCQ) and their realised economic value (REV). The VCQ measures the return generated on every dollar of capital investment while the REV is a risk-adjusted measure of cash flow - effectively judging a company's ability to generate cash. Fashion retailer Esprit Holdings was the best-performing Hong Kong company, ranked seventh for its VCQ rating and 33rd for its REV. Hong Kong Pharmaceutical Holdings achieved the seventh-best REV rating but was at 472 for its VCQ ranking. Nick Debnam, a consumer markets partner at KPMG in Hong Kong, said local companies had problems generating cash flow due to low consumer confidence and the battered retail market. 'We have been [in a deflationary cycle] for years but the United States is just starting,' Mr Debnam said. 'What Hong Kong companies need to do is to boost sales without significantly increasing additional expenses. 'It is a question of whether you can use capital efficiently.' KPMG said cash-flow profitability would be the future key to success for retailers. 'The markets increasingly demand effective use of shareholder capital. Generating positive cash flows adjusted for risk is vital to ensuring shareholder support,' it said. Retailers in North America returned the strongest results in the survey, both for value creation and cash-flow generation. Online retailer eBay was the uncontested champion for creating value. The survey found nearly a third of the 500 companies had a stock market valuation lower than their business asset base, indicating the market's lack of confidence.