CO129-432 - Governor Sir May - 1916 [3-5] — Page 774

Fondlosure 1.

MEMO RE BONDED GODOWNS FOR HONGKONG.

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"ZJUNTS

At present we sell small quantities of Yarn made at our three Shanghai mills at our Amoy, Swatow and Canton Agencies and having paid an Export (or Excise) Duty at Shanghai it enters these Coast ports "Duty Free". The chief yarn market of the South of China however is that of Hongkong but the Hongkong Yarn dealers will not buy Shanghai yarns for the following reasons :-

When they may buy Indian and Japanese Yarn they receive it here unburdened by any Duty, whereas Yarn from Shanghai has had to pay Export (or Excise) Duty which would admit it Duty Free into any port i in China if it went direct, but this right is lost if it is landed

in Hongkong.

As Hongkong is only a distributing centre the Shanghai Yarn has eventually to be sent to China and then has to pay Import Duty the same as Indian and Japanese Yarn, but considering that it has already paid Duty (Export) it is obviously at a disadvantage as compared with the two latter.

In order to avail themselves of the "Duty Free" rights that Shanghai Yarn carries after paying its Export (or Excise) Duty, the buyers have to declare the port of destination (in China) but this they object to do because the Yarn business is practically all conducted on speculative lines, and the buyers do not know where the Yarn will finally be sent, and even if they did, they would certainly object to disclosing their markets to the sellers,

Bonded godowns in Hongkong where Yarn could be stored without losing its status would undoubtedly increase the business transacted

in Hongkong.

I have given Yarn as an instance but there must be many other

articles in a similar position.

In my opinion Bonded godowns in Hongkong would be of great

advantage in many ways to the trade of the place.

It would not decrease but rather tend to increase the revenue

of the Chinese Customs for at present the duty arrangements and the classification of Hongkong as a Foreign Port simply stops such business being done. Bougkong, 20th. April, 1916.

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