TNAG-2355-FCO40-3426-Visit-by-Douglas-Hurd--Secretary-of-State-for-Foreign-and-Co-1991 — Page 116

CONFIDENTIAL

FM BTC HONG KONG

TO DESKBY 22100OZ F C O TELNO 104

OF 22081OZ MARCH 91

FOR PAUL, HKD

CONFIDENTIAL

HKD 026/9

43 013455

MDHIAN 9168

TOP COPY Q DIST?

YOUR TELNO 71: SECRETARY OF STATE'S VISIT TO HONG KONG AND CANTON: BRIEFING: THE COMMERCIAL AND ECONOMIC CLIMATE WITH PARTICULAR REFERENCE TO PROSPECTS FOR BRITISH BUSINESS

1. HONG KONG CONTINUES TO BE AN IMPORTANT MARKET AND A SIGNIFICANT TRADING PARTNER FOR THE U.K. THE ECONOMY IS NOT FLOURISHING AT THE PACE OF A FEW YEARS AGO, WITH LOWER GROWTH AND HIGHER INFLATION, BUT IT IS NEVERTHELESS A MAJOR COMMERCIAL AND ECONOMIC CENTRE OF GREAT VALUE TO BRITISH COMPANIES. AS THE PACIFIC RIM BECOMES A FOCAL POINT OF THE WORLD'S ECONOMY, HONG KONG IS NOT ONLY ONE OF THE MAJOR PLAYERS, BUT IS THE ONE WHERE BRITISH INTERESTS ARE MOST CONCENTRATED.

U.K. EXPORTS

2. OUR EXPORTS TO HONG KONG AMOUNTED TO POUNDS 1.24 BILLION IN 1990, AN INCREASE OF 11.4 PER CENT OVER THE PREVIOUS YEAR. HONG KONG REMAINS OUR SEVENTEENTH LARGEST MARKET IN THE WORLD, AND IS SECOND ONLY TO JAPAN IN THE FAR EAST. WE SOLD WELL ACROSS THE BOARD IN 1990, CAPITAL AS WELL AS CONSUMER GOODS. POWER GENERATING EQUIPMENT, TRANSPORT EQUIPMENT AND MEDICAL AND PHARMACEUTICAL PRODUCTS, ALL PARTICULARLY STRONG SECTORS FOR THE U.K., EACH INCREASED BY ABOUT 40 PER CENT COMPARED WITH 1989, WHEREAS THE SALE OF HIDES, SKINS AND FURS, REFLECTING A GLOBAL TREND, FELL BY ABOUT 75 PER CENT.

3. OUR SHARE OF HONG KONG'S TOTAL IMPORTS HAS AGAIN FALLEN SLIGHTLY AND IS NOW ABOUT 2.2 PER CENT. THIS IS NOT AS GOOD AS OUR MARKET SHARE GENERALLY IN THE REGION, AND IS SURPRISINGLY LOW GIVEN THE WIDE SPREAD OF BRITAIN'S EXPORT PRESENCE OF A LARGE RESIDENT BRITISH COMMUNITY, MANY OF WHOM ARE IN KEY PURCHASING POSITIONS. WE COULD AND SHOULD BE DOING BETTER. IN 1991 THERE MAY BE ADDED DIFFICULTIES IN EXPANDING OUR TRADE: THE CONCENTRATION OF CONSTRUCTION AND ENGINEERING COMPANIES ON THE GULF, WHILE OTHERS LOOK TO EUROPE IN THE APPROACH TO 1992, THE STRONG POUND,

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