17 Feb 2016
Building Materials and Hardware Industry in Hong Kong
Hong Kong exports a wide range of building materials and hardware, with major categories including electrical apparatus, building hardware, and steel/iron and wood/board for building. The export sector is dominated by re-exports as Hong Kong companies have relocated their production facilities to the Chinese mainland.
In view of keen competition, Hong Kong companies have diversified their businesses to higher value-added products which meet international standards, such as BS of the UK and ASTM of the US.
Green-building technology is getting more popular and more environmentally friendly materials are being used. Some manufacturers are adopting the approach of de-materialisation, that is, to use less material. Energy efficiency is also a rising concern in selecting building products.
Hong Kong exports a number of building materials and hardware. The largest export item is electrical apparatus for building, including air-conditioning machines, relays, switches, electric conductors, electric insulators, wires and cables. Hong Kong also exports a variety of building hardware like nails, screws, nuts, hand and machine tools, sanitary ware and locks and keys. Meanwhile, steel/iron such as steel tubes and steel pipes for building, as well as wood/board for building, including fibreboards, wooden doors and wooden window frames, also share a significant portion of total exports. Other smaller export items include plastic tubes, plastic pipes, paints, wallpapers, tiles, floor coverings, sheet glass, lime, cement, marble, stone, sand and gravel.
For production of building materials and hardware requiring large space and special treatment, most Hong Kong companies have relocated their production facilities to the Chinese mainland on the grounds of cost and environmental considerations. Offices in Hong Kong are mainly responsible for quality control, management, marketing and logistic support. In the wake of the relocation, these companies have been re-classified as non-manufacturing establishments, despite the fact that they have manufacturing activities across the border.
The success of Hong Kong’s building materials and hardware industry lies in efficient management. Against the fast changing markets, Hong Kong companies emphasise quick response to ensure effective marketing services to their customers, and to monitor the changing product trends. Moreover, due to the growing quality consciousness of overseas buyers, many companies have strengthened their quality assurance systems.
Performance of Hong Kong’s Exports of Building Materials and Hardware ^
The Chinese mainland is the largest export market, sharing more than 60% of the total exports. Sales to the mainland dropped by 2% in 2014 and continued to decline by 9% 2015.
Hong Kong exporters of building materials and hardware usually sell their products directly to constructors, builders, real estate developers, architects and relevant sub-contractors in overseas markets. Some companies also sell to specialised importers, who then distribute the products to their clients.
As for the Chinese mainland, potential buyers include real estate developers, builders and sub-contractors. Hong Kong companies also sell to commercial project owners who have been authorised to conduct infrastructure and construction projects in the mainland and other Asian countries, as well as construction project developers who undertake private real estate development projects.
Promotion via participation in trade fairs is an effective way for Hong Kong companies of building materials and hardware to explore market opportunities. Important trade fairs related to the industry include the National Hardware Show in Las Vegas, Hong Kong International Building and Hardware Fair, and Light+Building in Franfurt. Business missions organised by the Hong Kong Trade Development Council to specific markets also provide opportunities for Hong Kong companies to establish connections with overseas buyers.
Environmental protection has increasingly affected the production of building materials and hardware. Against this background, many manufacturers have begun to review their production facilities and processes in order to comply with such regulations. The introduction of management system complying with the international environment standards, notably the ISO 14000, is to be a focus of the industry.
On the back of keen competition from the mainland and Southeast Asia in the low-end market segment, Hong Kong companies have diversified their businesses to higher value-added products. Compliance with BS of the UK and ASTM of the US are the cutting edge of companies selling higher-end building materials and hardware, especially to western markets.
The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) was concluded in June 2003 and subsequently expanded in following years. All products made in Hong Kong, subject to CEPA's rules of origin, enjoy duty-free access to the Chinese mainland. Detailed information is available from the following hyperlink:
General Trade Measures Affecting Exports of Building Materials and Hardware
Initiation of anti-dumping proceedings in western countries against goods originating from the Chinese mainland, including certain building materials and hardware, has been a concern for Hong Kong companies with sourcing or production activities in the mainland. For instance, the US has imposed anti-dumping duties on the mainland-origin iron construction castings, copper pipe and tube, heavy forged hand tools, steel wire rope and steel concrete reinforcing bars. Meanwhile, the EU has anti-dumping duties against certain tube and pipe fittings of iron or steel, steel ropes and cables and certain stainless steel fasteners originated in the mainland.
Alongside a steady growth of the markets for building materials and hardware, there is a demand for do-it-yourself (DIY) products for interior decoration, including demand for floorings, wall coverings, paints and fittings serving for DIY purposes, as well as hardware and electrical tools like electric screwdrivers, drill drivers, hand pumps and DIY home security systems. Moreover, building hardware is increasingly designed with emphasis on easiness of installation and maintenance. Products like parts and accessories for sanitary ware and domestic drainage systems have become standard-sized items, thus facilitating repairing and replacement by users.
With the advancement of technology, durability of items like wooden boards has been enhanced by improving fireproof, waterproof and scratch resistance capabilities. In addition, moulded kitchen sinks of fibreglass have become popular, due mainly to its seamless surface, durability and easiness to clean. New types of materials are being adopted to raise the flexibility, durability, and both environmental and cost efficiency.
Green-building technology is getting more popular as the consumers are becoming more environmentally responsible and are looking way to save money in the long run with green technology, such as waterless urinals and dual-flush fixtures. Wall systems and roofing systems are popular requests to minimize heating and cooling expenses and increase energy efficiency. Builders also require products that provide more value with little or no maintenance. One industry source estimates that global green building material market will grow by about 18% per annum from 2012 to 2016.
More projects now use no or low-volatile-organic compounds, including adhesives and binders that are more environmentally friendly. Some manufacturers are adopting the approach of de-materialisation, that is, to use less material, to use materials that can be recycled and to design products with longer term product life cycle.