Br
Brief No 3
UK TRADE PROMOTION
6.The DOT are advised on export promotion to Hong Kong by their Hong Kong Trade Advisory Group. This consists of businessmen and bankers with wide experience of the territory. Its chairman, Mr John Browne, is a Director of the trading house of John Swire and Sons which has a major share in the Cathay Pacific air line.
PROSPECTS
7.Hong Kong's vulnerability to restrictions on its textile ard
clothing exports and increasing competition from lower-cost suppliers such as Taiwan and S. Korea has intensified the need to widen its industrial base. This should result in substantial opportunities for British suppliers of machinery and equipment. Major current and potential project business in which we are or hope to be engaged is discussed in Brief No 8.
*.UK INVESTMENT IN HONG KONG
8.The Hong Kong Government has for long encouraged the inflow of
foreign investment into the manufacturing sector, chiefly. because it brings with it much needed skills, technology and overseas market networks. Given the basic policy of non- interference, foreign investors are not provided with specific incentives, although the favourable investment climate has encouraged a large influx of overseas investment, including a sizeable amount from China.
9.British investment has fallen behind the USA and Japan in recent
years a factor that may have contributed to our relatively poor export performance. Latest figures show UK investment valued at £16 million, covering 36 establishments. This represents 7% of total foreign investment, compared with 47% for the USA and 19% for Japan. Electronics, textiles and chemical products are the main beneficiaries.
10.UK IMPORTS FROM HONG KONG
More than half our imports are clothing and textiles (worth over £350 million in 1979) in which Hong Kong is the UK's single leading overseas supplier. These are inevitably the most sensitive items in Hong Kong's foreign trade relations. (Further briefing on textiles is at Brief No 4) Hong Kong is aware of its heavy dependence on textiles and clothing exports and is having some success in diversifying into other products such as watches and electronics.
11. There are dangers for the UK in being seen, in Hong Kong eyes, to
be in the forefront of the protectionist lobby. We have repeatedly tried to assure the Hong Kongers that we did our best to defend their interests in the EEC negotiations under the Multi-Fibre Arrangement in 1977.