IN CONFIDENCE
SECTION II: UK Export Promotion Strategy
a) Historical reasons underlying the current strategy, and the division
between trade policy and trade promotion work.
The historical background to the strategy outlined below (Section II b iii) is that Hong Kong is a UK dependent territory which as achieved outstandingly successful trade performance, fast economic growth and a high standard of living. The UK/China Joint Declaration an Hong Kong (December 1984) set out a framework for Hong Kong's long term future after 1997 as a special administrative region of China, but with a high level of local autonomy and preserving Hong Kong's existing economic system and way of life. UK investment in HK manufacturing sector is some £70 million (7% of total foreign investment in manufacturing). The UK's investment in HK's invisibles and services sector is considerable.
b) Assessment of the effectiveness of the current strategy
i) UK strengths in the market
English widely spoken; legal system based on British Law; British Standards often specified; established British community. The fact that there is a British Administration is no longer a strength: there are no favours and British goods have to compete with those from other countries.
ii) UK weaknesses in the market
High transport costs; lack of price competitiveness in some sectors; cessation of production in some others.
iii) Current UK export promotion strategy, and likely outcome for UK exports
Maintain/increase interest of British exporters in Hong Kong as a market in its own right and gateway to China.
Increase number of opportunities through Export Intelligence Service (x4).
Concentrate promotional efforts on selected priority sectors ie health care, information technology, quality consumer goods, quality textiles, and building materials.
Support formation of a British Chamber of Commerce.
Follow up Royal visit to Hong Kong (October 1986) with specific trade promotion:
3 Store promotions opening October 1986
Major seminar ("HK: The base for China Trade") November 1986
inward health care mission 1987
Likely outcome: continued increase in value of British Exports (£950m in 1986) but difficult to do more than maintain UK market share, which has been about four percent for ten years and has declined in recent years to 3.7 percent.
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