LI, Tao @ Hong Kong

“Hong Kong City” themed marketplaces that sell only local products could be revived on the mainland if the relevant Hong Kong authorities get involved, a report says.

The report, released in December, recommends that the government work with mainland authorities to establish more “Hong Kong City” markets to promote the city’s brand.

The report – “Road for Hong Kong into the mainland market” – was penned by scholars from Sun Yat-sen University in Guangzhou and local political party the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB). They argue that although Hong Kong products enjoy a high degree of popularity among mainlanders, it is nevertheless inconvenient for most consumers to come to the city for shopping on a regular basis. However, well organized “Hong Kong City” marketplaces will not only bring economic benefits but also help promote the city’s brands in the mainland market.

The research group commissioned by the university and the DAB carried out a survey in Beijing, Shanghai, Guangzhou, Xi’an, Wuhan and Chengdu recently, which showed that 68 percent of the respondents said they had bought Hong Kong-made goods in the past year while 54 percent said they did so within the past six months.

Most respondents said they like Hong Kong products due to their high quality, fashionable design, and – more importantly – the safety of the products.

But among the more than 1,000 local brands which touch on the service, manufacturing, and traditional industries, only seven major local brands including jewelry maker Chow Tai Fook and retailing chains Watson are known to more than half of those surveyed.

However, as most of the city’s thousands of local firms are boutique companies with limited brand influence, Wong Ting-kwong, a member of Hong Kong’s Legislative Council (LegCo), believes that themed marketplaces could help them strengthen their influence in the mainland market since consumers trust the “made in Hong Kong” mark.

Wong, who represents the import and export industry in a functional constituency seat in the LegCo, warned that one of the downfalls of “Hong Kong City” in its previous incarnation was that it sold inferior products. “It was disappointing and hurt the equity of the city’s brands,” he said.

The first “Hong Kong City” was opened in Guangzhou in 2004 under the Mainland-Hong Kong Closer Economic Partnership Arrangement (CEPA). It allowed products of Hong Kong origin to enter the mainland tariff free.

However, despite a promising start, sales began to nosedive after many shoddy goods were discovered in the market. It eventually ceased operations in 2006 when some local businessmen decided to cut their losses and run, in many cases not getting their rent deposits back.

Wong said he believed a lack of adequate supervision killed what could have been a good business model. However, joint cooperation between governments on both sides would ensure the healthy and orderly development of “Hong Kong City”, he added.

“Since the Hong Kong government is dedicated to promoting the city’s brands on the mainland, they should help promote it,” Wong said. “The building up of a Hong Kong-themed marketplace involves huge investment which individual investors may not be able to afford.”

Meanwhile, Ann Chiang, DAB vice chairman of commerce and industry, says that permanently established “Hong Kong City” marketplaces will build publicity for the city as well as meet the growing demand of mainland consumers for Hong Kong products.

“Though Hong Kong-made goods mainly target the middle class and higher income earners on the mainland, the increase in the number of wealthy individuals with enhanced buying power has helped offset the disadvantage of Hong Kong’s small retail market,” Chiang said.

Chen Guanghan, director of economics at the Center for Studies of Hong Kong, Macao, and the Pearl River Delta, Sun Yat-sen University, agrees that Hong Kong brands are naturally popular among mainlanders because they are both Chinese and Western in terms of style and characteristics. They are also usually reasonably priced compared with luxury brands.

Chen said that maintaining high product quality is imperative if Hong Kong-made goods are to remain popular on the mainland. Thus figuring out effective approaches when counterfeit goods still run rampant in many parts of the mainland, should be a key priority, he added.

The research report recommends that one step forward would be for mainland authorities to tighten the requirements for goods sold in “Hong Kong City” and strengthen supervision of marketplace operations. They should also frequently conduct random quality checks on goods sold there and impose heavy fines on any offenders.

The report adds that Hong Kong authorities should also assume responsibility for quality certification of Hong Kong-made products.

“Maybe the Hong Kong Trade Development Council (HKTDC) is in the position to do the authentication job,” said Wong, adding that with enough regulatory assurance and supervision, mainland customers would not have to worry about the quality of goods.

However, Pansy Yau, deputy chief economist at the HKTDC, said that although the “Hong Kong City” idea is interesting, it is easier said than done.

“This is not the typical approach the Hong Kong government would adopt to help promote local brands,” she said. “And moreover, government involvement is not the only factor that would ensure its smooth operation.”

“A lot of unexpected issues could pop up from this concept that would be unable to be solved by us – such as disputes over intellectual property. I am not really a fan of this idea and I don’t think it will be achieved in the near term,” she added.

The HKTDC organizes trade fairs every year matching local companies with business opportunities on the mainland.

China Daily

(HK Edition 01/07/2011 page3)

http://www.chinadaily.com.cn/hkedition/2011-01/07/content_11805502.htm

Economists at the University of Hong Kong (HKU) have raised their fourth-quarter growth estimate for the local economy to 5.2 percent from 4.8 percent previously, citing stronger growth in private consumption.

The adjustment was in contrast to its previous projection on October 6, which estimated that the city’s gross domestic production (GDP) growth for the final quarter last year will rise 4.8 percent from a year earlier.

Both projections were made in the quarterly Hong Kong Macroeconomic Forecast released by the APEC Studies Programme at the Hong Kong Institute of Economics and Business Strategy at the university.

“In the third quarter of last year, Hong Kong’s economy had fully recovered from the setback caused by the turmoil in the global financial market triggered by the sub-prime mortgage crisis more than two years ago,” Richard Wong, professor of economics at the HKU said Wednesday.

Correspondingly, GDP growth for the second half of last year has been adjusted to 6.0 percent from the previously estimated 5.3 percent, while the full-year projection has been lifted to 6.6 percent from 6.2 percent.

The growth is driven primarily by domestic demand, according to Wong, who added the increase in domestic demand is estimated to account for 5.5 percentage points of the 6.6 percent overall increase, with external demand accounting for the rest of the growth.

According to the HKU forecast, the city’s private consumption spending grew by 5.7 percent in the third quarter last year compared with a 4.4 percent growth in the previous quarter, due to a stable job market and rising asset prices.

“The job market will continue to improve with the unemployment rate projected to fall from 4.2 percent in the third quarter of 2010 to 4.0 percent in the fourth quarter,” said Alan Siu, executive director of the Hong Kong Institution of Economics and Business Strategy at the HKU.

“The headline inflation is forecast to increase by 2.6 percent in the second half of last year, up from the 2.2 percent increase in the first half. Stripping out fiscal measures, the underlying inflation rate is estimated to be 2.1 percent in the second half of 2010 compared with 1.1 percent in the first half,” said Siu.

Falling real wages, nevertheless, are expected to dampen consumption growth. Growth is estimated to rise by 4.7 percent in the fourth quarter and moderate further to 4.3 percent in the first quarter of this year, the HKU report added.

Wong indicated that economic growth for the first quarter of 2011 is expected to moderate to 4.4 percent compared with the same period last year, due to a less supportive external environment.

Paul Tang, chief economist from Bank of East Asia (BEA), said other than strong domestic consumption, the rebound in exports as well as a buoyant property market also supported the city’s economic growth at a faster-than-expected pace in 2010.

Tang told China Daily that BEA is maintaining its 4.5 percent and 6.5 percent GDP growth projections for the fourth quarter and full-year 2010 respectively. Economic growth for 2011, according to Tang, is likely to wind up at around 5 percent.

In November, Hong Kong government raised its full-year GDP growth forecast to 6.5 percent from 5-6 percent after the city reported a better-than-expected 6.8 percent rise in the third quarter on the back of strong exports and consumption figures.

China Daily

(HK Edition 01/06/2011 page2)

http://www.chinadaily.com.cn/hkedition/2011-01/06/content_11800400.htm

Workers load a container ship at a port in the city. Hutchison Whampoa Ltd said Monday it has raised its stakes in Hongkong International Terminals Ltd and acquired interests in some properties located in Kwun Tong. Thomas Lee / Bloomberg

Conglomerate buys interests from China Resources Hldgs for HK$5.7b

Hutchison Whampoa Ltd, the conglomerate controlled by billionaire Li Ka-shing, said Monday it has raised its stakes in some container terminals by acquiring additional interests from partner China Resources (Holdings) Co Ltd for HK$5.7 billion.

The deal includes acquisition of shares in Hongkong International Terminals Ltd (HIT) and interests in properties located in Kwun Tong in east Kowloon, Hutchison said in a statement filed to the stock exchange Monday.

HIT is the flagship operation of Hutchison Port Holdings (HPH) Group, the conglomerate’s port operation unit.

HIT operates 12 berths on its own and another two through its joint venture with COSCO Pacific Limited in the Kwai Chung container port area of Hong Kong, one of the busiest container ports in the world.

Before the deal, Hutchison held about 53 percent of HIT. It did not provide further details on the company’s holdings in the acquired assets after the deal.

The purchase will be settled in cash and is expected to be completed before January 7, according to the company.

In 2005, Hutchison sold a 20 percent stake in HIT to Singaporean investment holding company PortCapital Ltd, booking a gain of HK$5.5 billion from the sale.

“Since the market is bullish on shipping business in 2011 counting on the US economic rebound, Hutchison has accelerated the pace in the acquisition of port assets,” said Alvin Chung, associate director with Prudential Brokerage.

The rebound in global trade has boosted the container-freight fees which helped most shipping companies return to the black in 2010.

Hutchison Port Holdings, the conglomerate’s port division, in August said its earnings before interest and taxes (EBIT) rose 35 percent in the first half of 2010 from a year ago as its container throughput increased 17 percent to 35.3 million twenty-foot equivalent units (TEUs).

Hong Kong’s total exports rose by 23.8 percent for the first 11 months of 2010 compared with the same period a year earlier while total imports increased by 26.1 percent, according to data provided by the Census and Statistics Department.

According to a report prepared by IHS Global Insight, trade will continue to grow in 2011 albeit at a slower pace compared with 2010. It projected that global containerized trade measured in TEUs will grow at 6.8 percent this year from 9.2 percent growth in 2010.

“Hutchison has been very active in seeking investment opportunities,” said Chung. “Particularly at a time when Asian markets expect strong export growth in 2011 as demand from the US is likely to be further driven by US government measures in stimulating the economy, Hutchison will not let this opportunity slip away.”

Shares of Hutchison climbed 5.3 percent to close at HK$84.20 in Hong Kong trading Monday, compared with a 1.74 percent gain in the city’s benchmark Hang Seng Index. The stock surged almost 50 percent last year.

China Daily

(HK Edition 01/04/2011 page2)

http://www.chinadaily.com.cn/hkedition/2011-01/04/content_11788481.htm