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China Daily Website

HK exporters urged to seek orders from alternative markets

Updated: 2012-09-10 13:13
By Sophie He (China Daily HK Edition)

The fast-growing economies in the Middle East and Africa could provide huge alternative markets to Hong Kong exporters, who have been facing slack demand from their traditional export markets in Europe and the US, a Hong Kong Trade Development Council (HKTDC) official says.

The current economic situations in developed markets like the US and Europe, which are the city's traditional trading partners, are challenging, HKTDC spokesperson Katherine Chan told China Daily.

Due to the global economic activities' contraction, Hong Kong's exports have recorded year-on-year decline in both June and July. Economists cautioned that the local export sector will remain fragile for the remaining of the year.

"As the growth momentum of new orders from the developed markets has weakened, HKTDC is encouraging Hong Kong exporters to search for (new) business opportunities in emerging markets like the Middle East and Africa," said Chan.

HKTDC principal economist (Asian and Emerging Markets) Dickson Ho told a seminar that Hong Kong exporters should not overlook the Middle East region as its GDP growth in 2012 is expected to be more than 4 percent and Hong Kong's exports to this region is seeing sustainable growth.

"During the first six months of this year, Hong Kong exports to the United Arab Emirates increased 22.7 percent from a year ago, while Hong Kong exports to Saudi Arabia rose 27.5 percent," said Ho.

He adds that Hong Kong's exports to Middle East totaled $6.7 billion in 2011, accounting for 1.6 percent of the city's total exports, and the proportion increased from 1.3 percent in 2010.

Ho mentioned that the top five product categories that Hong Kong firms export to Middle East include pearls and precious stones, telecom items, computers, jewelry and watches.

He recommends that Hong Kong exporters interested in doing business with the Middle East should consider exhibiting their products in Dubai's Dragon Mart first, as it is the largest exhibition area where Chinese goods were sold outside the mainland.

Aside from the Middle East, Hong Kong exporters should also look at Africa, as over the past decade, six of the world's 10 fastest growing countries were from the African continent, and apart from the "BRIC" countries, Africa is expected to be the next global economy for growth in the coming decades, said Dickson Ho.

Ho said that Africa, which has very close ties with Asia, as its Asian trade makes up some 30 percent of its total external trade.

"Both China and India are actively investing in the continent, ranging from mining, infrastructure projects to the retailing business."

He introduced Nigeria, Ghana and Kenya as African countries with an expanding middle class, rising consumerism and who are benefiting from the booming African trade.

But he warned that there are some major challenges to be faced by businesses seeking to become involved in commerce with these countries. They included high personal risks, high corruption of local governments and serious business fraud.

"The power supply in Nigeria (and some other African countries) is also inadequate. During a visit to Nigeria recently, we experienced blackouts about 10 times per day in the hotel where we stayed," said Ho.

He also mentioned that the distribution landscape in African counties is not ideal either. McDonalds, Wal-Mart and other international brands are not yet present in some African countries where the supply chain and distribution systems are limited.

 
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