16 March 2011
Hong Kong to Benefit from China’s New Five-Year Plan
Urbanisation, Expanding Domestic Consumption Will Create Opportunities
The ambitious development plan, which was passed at this month’s plenary meeting of the National People’s Congress, will shape major economic developments on the Chinese mainland between 2011 and 2015. At a media briefing today, HKTDC Chief Economist Edward Leung said the new plan offers Hong Kong companies room to expand their mainland business. (An interview with Edward Leung is available on: http://www.youtube.com/watch?v=GYIXwOXN5To.)
Export Index Strengthens
Mr Leung also announced the latest Hong Kong Export Index, which rose from 53.6 to 55.8 in the first quarter of 2011, signalling faster export expansion in the near term. The index monitors the export performance and prospects of Hong Kong traders and is based on a quarterly business confidence survey covering major industries.
Mr Leung said that while indices for all major markets increased and stood above 50, a sub-index for exports to the Chinese mainland edged up to 54.2, and was likely to expand further.
Labour Cost Concerns
Asked about labour costs on the mainland, Mr Leung said that 79 per cent of manufacturers and traders had reported higher costs in the past quarter. Some 40 per cent of those manufacturers said they would not be able to pass increased costs on to their overseas buyers. “The cost issue weighs on some Hong Kong companies,” said Mr Leung, noting that labour shortages and wage rises are likely to persist.
Cashing in on Consumption
“Hong Kong companies have always viewed the mainland as a manufacturing base for the export of goods, but expansion of the mainland consumer market means rising spending power,” said Mr Leung, adding that Hong Kong can take advantage by moving up the value chain and developing its own brands. Mainland government estimates say demand for high-end products will surpass Japan by 2015, making China the largest luxury market in the world.
The new plan will speed up urbanisation, boosting demand for consumer goods and services. “Hong Kong services providers, even those in the beauty and education sectors, should accelerate their entry into the market,” said Mr Leung.
“Mainland city dwellers are now looking for high-quality services that can lift their living standards. They regard Hong Kong as a regional trendsetter and attach a higher preference to Hong Kong-branded services.”
The new plan also calls for increased efforts to promote energy efficiency in the manufacturing, construction and transportation sectors, as well as stricter requirements on business and industry to meet emission standards.
“Other areas such as engineering, property management, brand consultancy and marketing can also offer tremendous opportunities to Hong Kong companies,” said Mr Leung, adding that Hong Kong companies can be competitive by capitalising on the Mainland and Hong Kong Closer Economic Cooperation Agreement (CEPA).
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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