Economic Data
Total GDP: $165.3 billion
(1998 Revised estimate)
$164.4 billion (1999 Projection)
Real GDP Growth: -5.1%
(1998 Revised estimate)
0.5% (1999 Projection)
Per Capita GDP: $24, 716
(1998 Revised estimate)
$24, 270 (1999 Projection)
Inflation: 2.6% (1998 End)
-1.5% (1999 Projected)
Unemployment Rate: 4.7% (1998 End)
6.0% (Dec. 98-Feb. 99)
Current Account Balance: $3.5 billion (1998)
Trade Balance: -$10.44 billion (1998)
Merchandise Exports: $172.77 billion (1998) Major exports include clothing, electronics, textiles, watches, clocks, and office machinery.
Merchandise Imports: $183.22 billion (1998) Major imports include consumer goods, raw materials and semi-manufacturers, capital goods, food stuff, and fuels.
Major Export Markets: China (34.2%), USA (21.1%), E.U. (14.8%), Japan (6.5%), Singapore (2.7%), Taiwan (2.38%), Republic of Korea (1.6%)
Major Import Markets: China, Japan, Taiwan, and Thailand
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For David Driver, whose Atlantic Alloys, Inc. of Bristol, has been doing business with Hong Kong for 15 years or more, the change in the city’s status has presented few obstacles while opening up new areas for possible trade.
Now Driver sees Hong Kong as more a conduit for his business than a destination for the bi-metal parts he ships to factories that use them in the manufacture of thermostats and thermometers.
“It has broadened possibilities,” Driver said. “At the same time there weren’t any possibilities 15 years ago. Only recently have possibilities opened, since China opened itself up to manufacturing and tradeAs it comes down to our doing business, it’s business as usual. The Chinese are practical people. They want to keep things the way they are.”
And in spite of a recession sparked by the Asian financial crisis, Driver said it appears the Hong Kong economy is recovering – “Hong Kong is a very resilient economy.”
His sales representative in Hong Kong for 15 years, an Englishman who went to Hong Kong 30 years ago, has recently opened an office in China, Driver said. The sales representative’s business is staffed with Chinese and Hong Kong residents, involved in inside and outside sales, all of whom are capable, Driver said, of dealing in the sophisticated Hong Kong economy and an emerging Chinese economy.
“They definitely are two separate economies,” Driver said. “China is definitely a developing economy, an agricultural economy that is trying to industrialize under political circumstances that are inhibiting. Hong Kong is a sophisticated and advanced economy.
“In China you hear stories about negotiations when you have to wait them out and deal with rituals,” but in Hong Kong’s fast paced economy American business traditions are well accepted.
While Hong Kong/China is Driver’s most active trading partner, accounting for $500,000 a year, his company also trades with Canada, Mexico and Brazil. He sees his trade with Hong Kong/China doubling in the next three to five years. Foreign trade overall, he said, represents about 15 percent of his company’s business.
Driver said he used to deal solely with factories in Hong Kong, but with real estate expensive in Hong Kong, he said those factories have moved to Southern China where real estate – and labor – is cheap. He said he is dealing with two Southern Chinese factories.
Atlantic Alloys, Inc. was established 1972, Driver said, and employs about 35 in a niche market of elements that are made out of thermostatic bi-metal. The parts the company manufactures are used in the manufacture of thermostats, thermometers, temperature control devices, instruments and in various automotive applications.
Hong Kong Special Adminstrative Region (HKSAR)
Location: Hong Kong is situated on the southeast coast of the People’s Republic of China, east of the estuary of the Pearl River. It covers an area of 1,067 square kilometers, comprising numerous offshore islands and a portion of the Chinese mainland.
Main Cities and towns: Victoria (capital), Sheung Shui, Tuen Mun, Tsuen Wan,
Population: 6.8 million (1998)
Languages: English and Cantonese
Type of Government: Special Administrative Region of China, with its own constitution, the Basic Law.
Chief of State: China President, Jiang Zemin; Chief Executive, Tung Chee-hwa
Currency: Hong Kong Dollar
Exchange Rate: 7.768 to $1 (U.S.) (July 23, 1999)
Economic and Political Conditions: Hong Kong operates as a Special Administrative Region (SAR) of the People’s Republic of China, with a “One Country, Two Systems” guarantee given in the Basic Law passed by the Chinese National Peoples’ Congress in 1990. Hong Kong’s transition from British to Chinese rule since July 1, 1997 has been smooth, with a Chinese promise to retain the capitalist system for 50 years. The difficulties Hong Kong has faced in the last two years are linked to the Asian financial crisis, rather than the political transition. Hong Kong’s open, competitive, services-oriented economy has allowed it to perform well throughout the crisis.
Tariff, trade regulations, and free trade zones
Tariff and Trade Regulations: Hong Kong is a free port with few tariffs. A domestic consumption tax is levied on certain goods, such as tobacco, cigarettes, alcoholic beverages, methyl alcohol and some fuels. New cars are taxed at 40 to 60 percent of their purchase price.
Taxation: All profits derived through trade in Hong Kong are taxed, except for dividends from Hong Kong stocks. The profit tax is among the lowest in Asia-Pacific. Individuals are taxed on income earned through employment and pensions. Interest earned in or from Hong Kong is taxed at 17 percent. No capital gains, turnover or sales taxes are levied, although the government is considering a sales tax. Hong Kong does not have a treaty with the U.S. to avoid double taxation with the United States.
Foreign Ownership and Licensing: Licensing is common for brand name product manufacturing and marketing. Strategic alliances or joint ventures ease entry into the market, and are important in bidding for major projects.
Import and Export Control and Documentation: All goods imported into Hong Kong require a commercial invoice and a bill of lading or air waybill. Textiles require import and export licensing because of Hong Kong’s obligations under agreements with the United States and other countries. Textile shipments must have a certificate of origin. Products considered dangerous to public health, strategic goods, and other restricted items such as pesticides, radioactive substances, pharmaceutical products and ozone-depleting substances need a license. License applications are normally approved in two to three weeks. Meat and poultry shipments must have health certificates issued by the recognized authority of the export country.
Trade Financing: As one of the top seven trading countries in the world, Hong Kong’s banking sector is highly efficient in providing trade finance and services. Letters of credit are widely available. All licensed banks are required to provide loans for residents and non-residents.
Marketing and Selling Factors/Techniques: Since Hong Kong levies almost no tariffs or duties and has an established network of agents and distributors, initial market entry into Hong Kong requires only a modest investment. Hong Kong is one of the most competitive and price sensitive countries in the world, with a climate of fast-paced decision-making. Companies must be able to respond quickly to inquiries, or risk losing a deal to faster competition. Price, quality, on-time delivery and service are important selling factors. Hong Kong consumers are sophisticated, with substantial disposable income. U.S. companies are able to sell the full range of products and services, notably in computers, telecommunications equipment and information technology services.
Product Pricing: The competitive market gives Hong Kong companies many options, so quote on a deliverable basis, CIF or C&F rather than FOB. Pricing should be given in metric measures.
Patents/Trademarks/Copyrights: In preparation for transition to Chinese rule in July 1997, a patent ordinance was approved. Patents granted by the United Kingdom and Chinese Patent Offices will be recognized under the Hong Kong Special Administrative Region jurisdiction. All trademark registrations are valid for seven years, renewable for 14-year periods. A new copyright law protects any original work created or published by anyone, anywhere in the world. Penalties and means of enforcement against copyright piracy have been enhanced under the new law.
Key Contacts
RI Export Assistance Center and World Trade Center
Raymond W. Fogarty, Director Robert Hamlin, Country & Industry Program Manager Edward Barr, World Trade Center Manager
Telephone: (401)232-6407 or (401)232-6408
Fax: (401)232-6416 E-Mail: postoffice@idtn.net
Website: http://www.rieac.org
Embassy of the People’s Republic of China
2300 Connecticut Avenue NW
Washington, DC 20008
Telephone: (202) 328-2500
Fax: (202) 8588-0032
Website: http://www.china-embassy.org www.china-embassy.org
E-Mail: webmaster@china-embassy.org
Consulate General of the People’s Republic of China, New York
520 12th Avenue
New York, NY 10036
Website: http://www.nyconsulate.prchina.org http://www.nyconsulate.prchina.org
Hong Kong Economic and Trade Office
Director: Mr. Raymond Fan
115 E. 54th Street
New York, NY 10022
Telephone: (212) 752-3320
Fax: (212) 752-3395
Website: http://www.hongkong.org
E-Mail: rfan@hongkong.org
English Language Publications and Other Media
South China Morning Post
http://www.scmp.com/ http
Hong Kong Standard
http://www.hkstandard.com/
Far Eastern Economic Review
http://www.feer.com/
Television Video Broadcasting (TVB)
http://www.tvb.com.hk/
CNNAsia, Inc.
http://cnn.com/WORLD/asiapcf/
Country Profile
Compiled by Providence Business News,
in collaboration with Bryant College Export Assistance Center.
