Hong Kong must become global supply chain hub to navigate US trade war: experts
Hong Kong must transform itself from a transshipment port into a global supply chain services hub to navigate a raging US-China trade war while leveraging its position as an international shipping and trading centre, industry leaders have said.
Kennedy Wong Ying-ho, honorary president of the Hong Kong Chinese Importers' and Exporters' Association, said on Thursday that the transition from being a re-exporting hub was crucial for the city amid challenges of growing trade protectionism worldwide and US tariff shock on small parcels.
'In the past, Hong Kong's trade was relatively simple. Our role as a 'superconnector' meant business was like buying with the left hand and being able to resell with the right. But now, the global supply chain is being reshaped,' Wong told a radio programme.
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'Certain raw materials originate in one country or region, while a part of the manufacturing takes place in another country, and finally, the product goes for packaging and then transport to yet another location. Hong Kong needs to provide some high-quality services along the links of the supply chain.'
Earlier this week, the association released a study report on how Hong Kong could elevate its position from 'intermediary' to 'supply chain manager' by integrating advantages in professional services such as finance, law and insurance to provide comprehensive trade support throughout the entire cycle.
The suggestions are in line with the budget blueprint by Financial Secretary Paul Chan Mo-po in February, in which mainland Chinese companies are encouraged to establish a presence in Hong Kong by setting up international or regional headquarters to facilitate offshore trading and supply chain management, and expand globally.
Wong, also import and export sector lawmaker, said that Hong Kong should accelerate the development of new momentum in the 'airport economy' by building a highly efficient and high-value-added air cargo hub.
'Our airport handles nearly the highest volume of air cargo in the world, and with the completion of our third runway, we have what it takes to develop the 'airport economy' as neighbouring regions are rapidly emerging. Our advantage in sea freight has dwindled,' he added.
The escalating trade war initiated by US President Donald Trump, which prompted Hongkong Post to stop accepting parcels for delivery to the country by land and sea starting Wednesday, in response to what it called 'bullying' tariff hikes.
Highlighting Hong Kong's world-class aviation infrastructure, Wong said that greater collaboration with e-commerce exporters in the Greater Bay Area was crucial to solidify the city's position as a leading air cargo hub in the evolving global trade landscape.
'Establishing dedicated logistics hubs for e-commerce near Hong Kong's airport cargo terminals leasing to major e-commerce platforms can create a cluster effect,' Wong said.
'The international flight connections and the small package processing capabilities of airports in Guangdong and other Greater Bay Area provinces need to work together with Hong Kong's infrastructure to achieve true global reach.'
Fellow lawmaker Jeffrey Lam Kin-fung of the commercial sector said the US-initiated trade war had negatively affected Hong Kong's manufacturing and re-export trade, with various businesses being forced to absorb costs, accepting loss-making orders or relocating production.
'The government needs to support businesses, especially [small and medium-sized enterprises] SMEs, to help them overcome difficulties while accelerating the exploration of emerging markets like Asean and the Middle East as well as mainland China,' Lam said in the same radio show.
'It also needs to leverage Hong Kong's free port status and CEPA policies to facilitate joint ventures between Hong Kong and mainland businesses.'
Lam added that attracting foreign investment to access the mainland market amid the volatile global environment would strengthen the city's position as an international financial and trade centre.
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