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SENIOR BRITISH TRADE COMMISSIONER'S BRIFFING FOR TRADE MISSIONS TO HONG KONG
APRIL 1989
Something about Hong Kong. It's very small and dedicated to business. The urban and industrial area is no larger than an average-sized new town in Britain. But it has a population. of about six million. That makes it the most densely populated area in the world and the most concentrated business community. It's the world's thirteenth largest trader. Within Asia and the Pacific it ranks behind Japan but it is a bigger trader than South Korea, Taiwan, China or Singapore and it buys and sells twice as much as Australia. The container port handles more boxes than anywhere else in the world. The airport deals with as much freight as Heathrow. Hong Kong pulsates with business and generates extraordinary statistics. One that really sums it all up is that this tiny place imports and exports a quarter as much as the whole of the UK. It has to import because there are no natural resources and it earns its living by exporting and trading. It does very well. There is some concern that order books in some industries are not quite as full as a year or so ago. Nevertheless GDP has been growing by six percent in the last 12 months. That's less than the average of 12 percent in the last few years but 6 percent is fairly bouyant. This is confirmed by the fact that despite the fax and the mobile telephone, the amount of mail in the postal system has forced the authorities to introduce a Sunday delivery. Investment is continuing, especially in new equipment that Hong Kong needs to help it compete with places like Korea and Taiwan. The major domestic problem is a serious shortage of labour which has caused Hong Kong manufacturers to expand their operations across the border into the PRC. More people work for Hong Kong companies in the Guangdong province of China than in Hong Kong itself.
Manufacturing makes a major contribution to the economy but trading and services now make an even bigger contribution. Hong Kong companies buy from all over the world and sell throughout the region including China.
It is difficult to put a figure on the value of services (that is, invisible earnings) but so far as imports, exports and re-exports are concerned, the total in 1987 was the equivalent of £51bn. Imports alone were worth the equivalent of £28bn. So that's the extent of the market offered by Hong Kong: £28bn and still growing.
The territory is Britain's second largest market in the Far East, only a third less valuable than Japan. Our sales in Hong Kong in 1987 were worth over Elbn for the first time.
In 1988 we achieved another record with sales up a further £18M. However a billion pounds is only about three percent of Hong Kong's total imports. It seems curious but we have never been Hong Kong's major supplier. Many other countries are better placed, geographically. Seventy-five percent of Hong Kong's imports come from the Pacific region. China is increasing its percentage share, year by year. It can meet Hong Kong's basic needs and there is, as I have said, a lot of joint effort in manufacturing.
In 1988, China supplied about 31 percent of all Hong Kong's imports. Japan supplied 18.6 percent and its share is falling. Taiwan and the United States both supplied about 8 percent; South Korea 5 percent and Singapore about 4 percent; the UK 2.6 percent and Germany the same. Almost all the major suppliers are losing market share to China, but all are selling more as the market expands.