TNAG-1748-FCO40-2467-Visit-by-Sir-Geoffrey-Howe--Secretary-of-State-for-Foreign-a-1988 — Page 167

ACEAIL

VISIT OF THE SECRETARY OF STATE TO HONG KONG: 29-31 MAY 1988

BACKGROUND BRIEF B: UK/HONG KONG TRADE

General

1.

Hong Kong is the UK's eighteenth largest export market, and the second largest in the Far East after Japan. UK exports to HK in

1987 were a record £1,013m a 5.4% increase over 1986.

2.

The UK's share of the Hong Kong market has declined gradually

in recent years.

(Almost all suppliers have been losing market

share to China.) At end-1986 it was 3.4% and at end-1987 was 3.2%.

The UK is the sixth largest supplier. Our principal exports are: capital goods; power generating equipment; electrical machinery;

vehicles (buses and rail cars). The UK also sells leather and fur

in significant quantities. The UK has traditionally performed well in Hong Kong's project sector: the Castle Peak power stations were built by GEC (with Babcock); Babcock built the Town Gas Plant (phase

1); and GEC and Metro-Cammell worked in unison on the Mass Transit

Railway. More recently Davy Morris won an order to supply cranes

for the container port; and GEC Transportation Projects the contract

to supply a new traction system for the Mass Transit Railway. UK companies have been moving into Hong Kong's retail sector. Habitat,

Mothercare, Gieves and Hawkes, The Body Shop and Marks & Spencer

have opened stores. BHS has entered into a joint venture with

Dodwell.

3.

Bilateral trade is in favour of Hong Kong. UK imports from Hong Kong in 1987 were £1,531.7m, giving HK a surplus of £518m and registering an increase of 0.06% over 1986.

4. Within the EC the UK is Hong Kong's leading supplier.

However, in terms of bilateral trade, the FRG overtook the UK in

1987 as HK's largest European trading partner.

5.

UK companies (banks, accountants, insurance brokers and

solicitors) have a large presence in Hong Kong's 'invisibles' sector. Revenue accruing to the UK from 'invisibles' is estimated