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57. An office was maintained in Tokyo throughout the year both to conduct routine business connected with the operation of the open account and to give any assistance required by Hong Kong merchants in Japan. Relations with S.C.A.P. continued to be most cordial.
58. The maintenance of the open account and the routine handling of documents was taken over by the commercial banks in April, 1948. A central account was maintained by the Hong Kong & Shanghai Banking Corporation and actual transactions were handled by it and five other banks. This transfer took a very considerable burden off the Government Treasury, but the work of the Department on Japanese Trade continued to be extremely onerous, involving not only the maintenance of accounts, but also, in view of the Department's status as ultimate consignee, the discharge, storage and delivery of the bulk of cargo arriving from Japan under open account arrangements.
59. The volume of trade with Japan continued to grow throughout the year. The value of imports totalled II.K.$71 million and the value of exports H.K.$68 million. This was an average of H.K.$113 million per month in both directions, but by the end of the year trade was in fact flowing at about H.K.$16 million per month.
60. The Department also handled applications for entry of businessmen into Japan, maintaining a liaison for this purpose with the U.K. Liaison Mission. 72 Hong Kong merchants visited Japan during the year.
III. INDUSTRY.
61. The Industry Section was handicapped by the temporary nature of the Department, as much of the work to be done required long term planning. Its work was, therefore, necessarily of an ad hoc nature.
62. While the Section handled many miscellaneous matters connected with industry and industrial development, its work was mainly connected with raw materials and foreign markets.
(a) Raw Materials. In the case of raw materials in short supply the Department has endeavoured to ensure adequate supplies; e.g. cotton yarn, refined sugar for ginger preserving, tinplate for food canning, where necessary allocating between users. In the case of raw materials to be imported from hard currency countries a quota system based on factory capacity was operated. While the residue of rayon yarn stocks was liquidated and procurement returned to commercial channels, the Department continued to provide the textile industry with its basic require- ments of cotton yarn. Actual offtake from Government stocks fell from 36,559 bales in 1947-8 to 8,541 bales in 1948-9 (see Annex IV). It is estimated, however, that the total consumption of local textile mills was approximately the same as in the previous
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year (60,000 bales), the reduction in Government supplies distributed being compensated by local production (20,000 bales) and commercial imports, largely smuggled from China on a falling exchange. The latter source cannot be relied on for the future and the Department continues to carry a substantial reserve stock against contingencies.
(b) Foreign Markets. Representations were made wherever practicable for the lifting or relaxation of import restrictions on Hong Kong manufactures where these existed. The Hong Kong Government Agent in London paid a visit to the Colony late in the year with the principal object of discussing with local manufacturers and merchants the question of import quotas for Hong Kong goods into the United Kingdom; the principal commodities concerned were preserved ginger and rubber shoes.
IV. ACCOUNTS.
63. Scarcity of accounting staff again threw a heavy burden on those accountants who were available. The Chief Accountant resigned during the year to join Messrs. Lowe, Bingham & Matthews. As it was not possible to obtain a replacement, the latter firm was requested and agreed to take over the supervision of accounts. Departmental accounting staff consisted of a total of 19 accountants and book-keepers in five trading sections with a total turnover of $275 million.
64. While current accounts were maintained up-to-date, considerable progress was made in the complete reconstruction of accounts for the years 1945-6 and 1946-7, which was begun in the previous year. It was not, however, possible to finalise these accounts before the end of the year, although the back of the task had been broken.
65. All the Department's administrative arrangements such as stores and staffing were carried out by the Accounts Section.
66. Annex V gives details of cash turnover broken down by commodity and section. The cost of operating the Department, including the cost of the Tokyo Office and such non-commercial sections as Price Control was approximately $728,000 or less than
% of turnover.
V. PERSONNEL.
67. Total staff employed dropped from 173 to 158, in spite of the establishment of an office in Tokyo. The difficulty experienced throughout the existence of the Department in retaining the service of officers in temporary employment continued throughout the year. This was particularly so in the case of
accountants.
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