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SELECT COMMITTEE ON INDUSTRY AND TRADE: VISIT TO SOUTH EAST ASIA NOVEMBER 1982
UK/HONG KONG TRADE
BACKGROUND
The Select Committee visited Hong Kong in October 1980. Hong Kong is a valuable market for the UK. Despite its small size and population Hong Kong has this year supplanted Japan as our foremost market in South East Asia and is our 19th major market in the world (see statistics at Annex A). For many years the balance of trade has been in Hong Kong's favour. Recent British successes in the major project field have, to some extent, renewed the interest of British exporters in Hong Kong. This high level of project activity is likely to continue in the coming years with projects such as the Island Line Extension of the Mass Transit Railway, the Lantau fixed crossing and the construction of a replacement airport. (See Annex B). With no natural resources except its harbour, Hong Kong is completely dependent on international trade. A high proportion, currently 51%, of Hong Kong's imports are of raw materials and basic foodstuffs. The main UK exports to Hong Kong are transport equipment, electrical machinery, vehicles and power generation-equipment. Britain is Hong Kong's
sixth largest supplier.
The Hong Kong Government's policy stresses free enterprise and free trade. The British businessman has the advantage that English is the commercial language, company law is British based and British standards are often specified. Hong Kong has excellent communications and a versatile manufacturing base and is one of the largest financial centres in the world. It is an ideal base from which to tackle other markets in the region, including China.
Hong Kong has a significant re-export trade. Re-exports for 1981 were worth more than HK$41.7 billion, an increase of almost 40% over 1980, with the main countries of origin being China, Japan, US, and Taiwan. The largest re-export markets were China, US, Indonesia and Singapore.
The Hong Kong Government has for long encouraged foreign investment into the manufacturing sector largely in order to attract the expertise in engineering technology needed in Hong Kong. The Hong Kong Government office in London have recently opened an industrial investment office in order to encourage UK investment. However in line with their general policy of non-interference, no specific incentives are offered. According to the most recent available figures (1981), the UK has about a 6.9% share (HK$486 million) of total overseas industrial