17 Sept 2012
Hong Kong Still Asia’s Top Central Business District
HKTDC Research Revises Export Forecast Down
|Speaking today at a press conference, HKTDC Director of Research Edward Leung said Hong Kong is likely to maintain its place as Asia’s top central business district by taking advantage of its position as a leading trade port and services hub|
But a recent HKTDC survey found the city to be making the most of its position as a leading trade port and services hub. Edward Leung, HKTDC Director of Research, said that approach is likely to hedge against downside risks and maintain Hong Kong’s place ahead of Singapore and Shanghai as Asia’s top central business district (CBD).
“The survey result highlighted Hong Kong’s multiple strengths, its excellent geographical location, ease of doing business and strong institutional structure,” Mr Leung said, adding that “to survive in tough times, Hong Kong has to make the best of its competitive edge.”
Asia’s Most Preferred CBD
The survey, conducted in the first half of 2012, interviewed more than 500 senior executives from companies based in the Asia-Pacific. Collecting responses from business leaders in 10 cities, the survey looked at impressions about Hong Kong as Asia’s CBD, as well as its competitiveness in six industries – merchandise trade, banking and financial services, professional services, intellectual property trading, logistics and tourism and MICE (meetings, incentives, conventions and exhibitions).
More than half the respondents placed Hong Kong ahead of either Singapore or Shanghai as Asia’s top CBD. (Some 52 per cent selected it as top choice, and 77 per cent chose Hong Kong for top two choices combined). Of 10 “essential Asian CBD functions” listed in the survey, “marketing and sourcing platform” and “gateway to the Asian market” were considered the two most important, followed by “financial and fund raising centre.”
Hong Kong enjoyed a comfortable lead over Singapore or Shanghai in the top three CBD functions, according to the survey. Some 56 per cent of respondents ranked Hong Kong as the top marketing and sourcing platform, 59 per cent ranked it the top gateway to the Asian market, and 60 per cent considered Hong Kong as the top financial and fund-raising centre.
“Respondents were optimistic over the sustained lead of Hong Kong as Asia’s CBD over other regional counterparts in the next five years,” said Mr Leung.
The survey also found that Hong Kong’s lead as a CBD in specific industries widens if the market being considered is Greater China rather than Asia as a whole. Given its prominent role in offshore fundraising for Chinese mainland companies and as the largest offshore Renminbi (Rmb) centre, Hong Kong has a clear lead in serving Greater China with “banking and financial services” (68%), “tourism and MICE” (61%) and “merchandise trade” (60%).
A Reliable Platform
As global economic gravity shifts from West to East, Hong Kong has become the mainland’s most important external investment destination as well as a platform for foreign opportunities. Hong Kong currently channels more than half of the mainland’s direct investment overseas annually, and has attracted over 3,000 mainland-funded enterprises to the city with bonds in excess of Rmb150 billion issued.
With the Closer Economic Partnership Agreement (CEPA) in place since 2004, the share of Hong Kong-mainland trade in Hong Kong’s overall external trade has soared from 36 per cent before the handover to 49 per cent last year. Hong Kong also continues to contribute to China’s foreign trade, with the city’s re-export of mainland-originated goods more than doubling from US$152 billion in 1996 to more than US$419 billion last year.
“These developments have made significant contributions to advancing the Mainland’s economic development. They have also helped promote Hong Kong-mainland trade and economic integration,” said Mr Leung. “But to truly capitalise on its advantages, Hong Kong may need to now seriously consider measures to meet the challenges that a more competitive, dynamic, economic order will present.”
Looking ahead, Mr Leung suggested that Hong Kong should fuel its economy by seizing opportunities under China’s 12th Five-year Plan. “By assisting Mainland enterprises to ‘go global’ and engaging international companies to tap vast opportunities in China, Hong Kong will help China drive its economic development in sectors like high-end services and further internationalisation of the Rmb. This in turn enhances Hong Kong as a strong regional competitor.”
Export Forecast Revised Down
Mr Leung also said his export forecast for Hong Kong’s export growth in 2012 has been revised to minus one per cent, from an original plus one per cent. The revision, he said, takes into account deteriorating export confidence across all major industries and markets.
The HKTDC Export Index dropped to 35.3 in the third quarter, the lowest reading since the second quarter of 2009. “Export confidence has plunged largely due to weaker demand from buyers, an unfavourable exchange rate and keen competition,” said Mr Leung. “Indices for most major industries including electronics, dropped by more than 10 points to the 30 level,” he said, adding that among all the indices, machinery saw the lowest reading at 29.6, while jewellery was highest at 41.
The HKTDC Export Index is designed to monitor exporter performance of Hong Kong traders and gauge their near-term prospects. A reading below 50 indicates a pessimistic sentiment during the quarter and signals a contraction in Hong Kong’s exports over the short term.
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About the HKTDC
A statutory body established in 1966, the Hong Kong Trade Development Council (HKTDC) is the international marketing arm for Hong Kong-based traders, manufacturers and service providers . With more than 40 global offices, including 11 on the Chinese mainland, the HKTDC promotes Hong Kong as a platform for doing business with China and throughout Asia. The HKTDC also organises trade fairs and business missions to connect companies with opportunities in Hong Kong and on the mainland, while providing information via trade publications, research reports and online. For more information, please visit: www.hktdc.com