‘It won’t be a bed of roses’ for exporters
FHKI cautious on sector as PRD operating costs keep going up
The powerful Federation of Hong Kong Industries (FHKI) is sticking to its earlier forecast of 4-5 percent export growth for the city despite an improvement in some overseas markets, including the US, Europe and Japan.
“We are cautiously optimistic with some economies in the euro zone having a rebound while the mainland marke t is still uncertain because the mainland’s economy is facing many problems”, FHKI Chairman Stanley Lau Chin-ho said on Monday.
The mainland and Japanese markets were only marginally up 0.8 percent in the first two months of this year, while ASEAN (the Association of Southeast Asian Nations), Latin American and US markets performed strongly during the same period — rising 20 percent, 19.1 percent and 14.5 percent, respectively — according to FHKI.
“The mainland market casts a deterministic effect on Hong Kong’s export-sec- tor performance. With the slowdown in the mainland’s export activities, it can be expected that Hong Kong’s export performance in March w o u l d n o t b e g o o d ,” L a u warned.
He added that this year’s market outlook for local toys and watch manufacturers remains cloudy.
Hong Kong’s export value in January and February this year rose by 1.8 percent yearon-year, with export volume adding 3.3 percent year-onyear in the same period.
Lau noted that Hong Kong exporters, with their manufacturing plants in the Pearl River Delta (PRD) area, are confronting problems arising mainly from mounting operating costs.
Business operating costs, especially labor costs, have increased greatly due to the implementation of minimum wage rules in the PRD region, Lau said.
Manufacturers in the PRD have also been hit by a shortage of an estimated 600,000 to 800,000 workers, he said. Besides, increasingly stringent environmental and labor laws are aggravating the situation.
“Labor shortage in the PRD area is a problem that may not be solved in the next two or three years,” Lau added.
To s u r v i v e , Ho n g K o n g exporters have to build up their brands and automate their operations to widen profit margins.
Lau advised local manufacturers to develop the mainland market, noting that some exporters are already using their Internet sales platforms successfully to improve sales on the mainland.
Some manufacturers have relocated their operations to neighboring low-cost manufacturing bases, but Lau reckoned that is not always a viable option.
“If local exporters want to relocate their operations entirely to ASEAN nations, they need to move their upstream and downstream operations as well,” he said.
“Business operating costs have also been going up in ASEAN member states recently. Many Hong Kong manufacturers in the PRD region have simply downsized their operations while searching for a way out of the current quagmire,” he said.
chairman of Federation of Hong Kong Industries