|HKTDC forecasts Hong Kong’s exports to grow 15% in 2021|
HONG KONG, June 23, 2021 – (ACN Newswire) – The Hong Kong Trade Development Council (HKTDC) announced today that its Export Index has risen for the fifth consecutive quarter, soaring from a record low of 16.0 at the beginning of the COVID-19 pandemic last year to 48.7 in the second quarter of 2021, which is close to expansionary territory. The sustained upturn indicates that local exporters have gradually regained confidence in the city’s export outlook.
HKTDC Director of Research Nicholas Kwan said Hong Kong’s exports have grown significantly in recent months, buoyed by the global revival in trade and the resumption of production activities. Total exports in the first quarter of 2021 increased by 33.2% year-on-year to HK$1,107.8 billion, with growth of 24.4% registered in April. “Led by Mainland China and the United States, the global economy has rebounded steadily, which will continue to bolster Hong Kong’s export performance,” Mr Kwan said.
Meanwhile, the HKTDC’s Export Index survey showed that local exporters continue to have concerns. These include the persistence of the COVID-19 pandemic (41.5%), softening global demand (16.7%), prolonged trade tensions between the mainland and the United States (13.0%) and continuing pandemic-mandated border closures (11.6%).
“The global economic recovery is likely to be highly uneven. After taking into account a basket of factors, we decided to revise Hong Kong’s export forecast in 2021 upward from 5% to 15%, albeit from a low base. This represents the biggest rebound since the city’s recovery from the global financial crisis in 2010,” Mr Kwan added.
Smaller orders, higher costs
Mr Kwan pointed out that while concerns remain, the impact of the pandemic has been gradually easing over the past few months. The percentage of respondents reporting that they had been negatively affected by pandemic-related issues fell from 78.2% in the first quarter of 2021 to 56.9% in the second quarter.
A reduction in order size (66.4%), increased transportation costs (46.4%) and logistics or distribution disruptions (42.6%) were cited as the three most common problems, Mr Kwan said. In addition to getting accustomed to a new normal of smaller orders and higher transportation costs, Hong Kong businesses have adopted new strategies to weather these challenges such as developing other product categories (53.8%), developing the mainland domestic market (49.5%), developing online sales channels (45.5%) and targeting new overseas markets (28.4%), with the Association of Southeast Asian Nations (ASEAN) bloc and Europe the most popular choices for diversification.
New opportunities under 14th Five-Year Plan
Mr Kwan said that China’s 14th Five-Year Plan, coupled with the “dual circulation” development model, aims to stimulate domestic demand in the mainland, presenting enormous opportunities for Hong Kong businesses. About 40% of the exporters surveyed have developed or are intending to develop the mainland domestic market, yet are encountering various challenges such as intense competition (81.8%), difficulties in selecting suitable local sales partners and/or distributors (47.4%), and problems with mastering the required sales channels (44.0%).
“The HKTDC has formulated strategies to help Hong Kong companies capture domestic sales opportunities through both online and offline channels. We can help them understand business regulations, master market trends, establish contacts and expand their sales network through a series of promotional activities and new services,” Mr Kwan said.
Major markets and industries rebound
The HKTDC conducts the Export Index survey every quarter, interviewing 500 local exporters from six major industries including machinery, electronics, jewellery, watches and clocks, toys and clothing, to gauge business confidence in near-term export prospects. The Index indicates an optimistic or pessimistic outlook, with 50 as the dividing line.
HKTDC Assistant Principal Economist (Greater China) Alice Tsang said: “The Export Index rose by 9.7 points to 48.7 in the second quarter. In line with this, exporter confidence continues to improve across almost all industry sectors and major markets.” Looking at specific industries, machinery (up 13.0 points to 55.9) and electronics (up 9.8 points to 48.8) both outperformed the overall average. In terms of export markets, confidence in Mainland China (50.3) returned to expansionary territory while a more optimistic sentiment was seen in Japan (49.8), the European Union (49.2), the ASEAN bloc (49.1) and the US (49.0).
Ms Tsang added that the improving export sentiment is further evident in an upward trend in subsidiary indexes, including the Trade Value Index (up 10.7 points to 57.0) and Procurement Index (up 11.9 points to 45.5). The employment sentiment, however, remained subdued (down 1.6 points to 41.6).
Tech and eco products take the lead
HKTDC Assistant Principal Economist (Global Research) Louis Chan interviewed a number of consuls general and trade commissioners in Hong Kong and shortlisted some of the new opportunities for Hong Kong companies on the road to recovery.
Mr Chan added that Hong Kong companies producing tech products and services have a better chance to succeed in the post-pandemic market, citing areas such as 5G-related smart devices, clothing made with anti-bacterial fabric, the cold supply chain and e-Health. He added that traditional products with a modern twist are also popular in niche markets, including proprietary IP toys, contemporary jade jewellery, at-home fitness gear, hiking equipment and more.
The Hong Kong Trade Development Council (HKTDC) is a statutory body established in 1966 to promote, assist and develop Hong Kong’s trade. With 50 offices globally, including 13 in Mainland China, the HKTDC promotes Hong Kong as a two-way global investment and business hub. The HKTDC organises international exhibitions, conferences and business missions to create business opportunities for companies, particularly small and medium-sized enterprises (SMEs), in the mainland and international markets. The HKTDC also provides up-to-date market insights and product information via research reports and digital news channels. For more information, please visit: www.hktdc.com/aboutus. Follow us on Twitter @hktdc and LinkedIn