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Gifts and Premium Industry in Hong Kong

  • Hong Kong is an important world-renowned sourcing centre for giftware. A wide spectrum of gift items can be sourced here, ranging from basic to sophisticated, high-valued merchandise. Hong Kong exporters are sensitive to changing market needs, and are known for quality, quick response, efficiency and reliability.
  • Hong Kong's giftware industry is supported by a strong network of competent ancillary industries. Sectors such as toys and figurine candles are well served by the mould-making industry. Timepiece manufacturing, for its part, is supported by the metal products industry in casings, bands and precision components.
  • Structurally, there has been a rising trend of offshore trade for toys and some lower-priced gift items. High-valued items like timepieces and precious jewellery remain largely exported through Hong Kong, mainly by air.


Industry Features


Giftware covers a wide spectrum of light consumer products in this profile, ranging from basic to more sophisticated, higher-valued goods such as toys, timepieces, jewel, silverware, kitchenware and clothing accessories. Other gift items include stationery, photo frames, jewellery boxes, artificial flowers, candles, soaps and works of art. This profile also takes in promotional items for corporate or the so-called premiums market.

Hong Kong's giftware exports are mainly targeted at the middle-to-high-end market, with competitive edges in product design and low production costs. Many Hong Kong companies have their own designers, and are shifting their business focus from original equipment manufacturing (OEM) to original design manufacturing (ODM), in order to acquire competitiveness and so as a higher profit margin. Some firms have even started to create and market their own brand by engaging in own brand manufacturing (OBM).

Hong Kong exporters are capable of delivering a large number of price-competitive products for the premium and give-away markets (including cotton T-shirts, baseball caps, ball-point pens, key chains, plastic watches and electronic gadgets), although a variety of middle-to-high-end gift items (such as porcelain dolls, silverware, brass and leather stationery, and jewellery sets) are also available. They are sensitive to changing market needs, and are known for quality, quick response, efficiency and reliability.

Hong Kong's giftware industry is supported by a strong network of competent ancillary industries. Sectors such as toys and figurine candles are well served by the mould-making industry. Timepiece manufacturing, for its part, is supported by the metal products industry in casings, bands and precision components.
 
Performance of Hong Kong's Exports of Giftware and Premiums [1]

Table: Performance of Hong Kong Exports of Giftware and Premiums
Table: Performance of Hong Kong Exports of Giftware and Premiums

 

Table: Performance of Hong Kong Exports of Giftware and Premiums
Table: Performance of Hong Kong Exports of Giftware and Premiums

 

Table: Performance of Hong Kong Exports of Giftware and Premiums
Table: Performance of Hong Kong Exports of Giftware and Premiums

After dropping by 8% in 2015, Hong Kong's giftware and premiums exports extended the decline by 12% in 2016. Sales to all major markets were uninspiring. The US and the EU, the two largest markets making up 48.1% of the total, fell by 11% and 14% respectively in 2016. Exports to the next major markets, Chinese mainland, Japan and ASEAN, which in total accounting for 22.5%, dropped 6%, 13% and 2% respectively in 2016. Fine jewellery and wristwatches were the dominating categories of Hong Kong’s giftware exports, taking up more than half of the total.

Structurally, there has been a rising trend of offshore trade. This tendency is phenomenal in the case of toys and some lower-priced gift items, particularly for those bounded for the US and increasingly the EU market. On the other hand, high-valued items like timepieces and precious jewellery remain largely exported through Hong Kong, mainly by air.

Sales Channels


In general, Hong Kong companies rely heavily on OEM and ODM orders. While premium and give-away items are embossed with the buyers' company logos and names, most gift products are exported as open items. Hong Kong manufacturers also offer expertise in design, engineering, tooling, quality control and other technical know-how to its customers.

To expand business networks and explore market opportunities abroad, Hong Kong manufacturers may participate in some influential international trade fairs. Since gifts and premiums comprise a wide range of products, manufacturers may also participate in other related fairs; say for toys, stationery, jewellery, and timepieces. Some leading trade fairs are listed as follows:

Table: Performance of Hong Kong Exports of Giftware and Premiums
Table: Performance of Hong Kong Exports of Giftware and Premiums


Industry Trends

There is a trend towards consolidation of buyers and retail channels. In particular, large-scale retail chains and mass merchants are minimising inventory and shortening delivery lead time in an effort to lower costs and business risks. Such a development will continue to pose a threat to smaller manufacturers, as giant retailers, doing direct sourcing on their own, may tend to favour large suppliers. On the other hand, the rise of giant retailers has provided new opportunities for private labelled items.

With the rapid development of internet technology, online shopping becomes more popular, particularly for gift items because consumers are increasingly look for personalised gifts and unique gift ideas which online shops are usually able to deliver.

The intensifying price war and increasing environmental awareness are prompting giftware manufacturers to explore more affordable and non-polluting substitutes to traditional materials. Also, due to the intense competition, giftware firms need to turn out an increasing number of new models and designs in an effort to stay competitive.

Licensing is entering the home accessories market. According to industry sources in the US, there is good market potential in the licensing of decorative accessories. Licensed products based on familiar characters from movies or TV series will likely remain popular. Hong Kong companies are in a good position to capitalise on this trend, as they are known for protecting clients interests with due respect for intellectual property rights.

CEPA Provisions

Under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), the mainland has given all products of Hong Kong origin, including giftware, tariff-free treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin can enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. Non-Hong Kong made giftware products are subject to tariff rates up to 35% when entering the mainland.

The promulgated rules of origin for giftware products to benefit from CEPA's tariff preference are basically similar to the existing rules governing Hong Kong's exports of these products. Generally speaking, for the manufacturing of imitation jewellery, moulding and assembling, identified as the principal processes for the purpose of delineating their origin, must be done in Hong Kong. For giftware articles manufactured from paper, cutting, die-pressing, wrapping and glueing, must be done in Hong Kong. If rolling and/or forming is/are required after die-pressing, such process/processes must be also done in Hong Kong. Detailed information is available here.

General Trade Measures Affecting Giftware Exports

Some trade measures such as anti-dumping charges affect giftware products exported by Hong Kong companies. For example, certain paper-made products, folding gift boxes and wax candles are subject to anti-dumping duties by the US, while some ring binder mechanisms are charged against by the EU. These measures can affect Hong Kong companies as many of them are manufacturing on the mainland. On the other hand, the EU has removed its import quotas on China-made kitchenware of porcelain or china since 2005.
 
Product requirements have become more stringent in overseas markets, mainly in areas of product safety and environmental protection. For example, the EU’s revised Toys Directive has been adopted. All member states have been required to implement its provisions from July 2011. In the US, the enactment of the Consumer Product Safety Improvement Act (CPSIA) poses a great challenge to Hong Kong's toy exporters. Tightened lead limits, prohibition on the use of certain phthalates and third-party testing requirements are among the strengthened provisions contained in the CPSIA.

Safe and ethical working conditions have also increasingly been a concern among overseas buyers. A number of leading buyers such as Hasbro, Mattel, LEGO, and Wal-mart are all requiring the supplier to meet the standards. The International Council of Toy Industries (ICTI), with active involvement of Hong Kong toy makers, has introduced the ICTI Code of Business Practice and an associated auditing process known as the CARE Process to manufacturers, distributors and retailers of toys and related merchandise in member countries.

For health reasons, the EU has adopted a directive on the control of use of nickel in objects intended to be in contact with the skin, such as watches and jewellery. In addition, the EU has prohibited the trading of clothing, footwear and other textile and leather articles containing azo-dyes, from which aromatic amines might be derived. Separately, the National Candle Association has established a framework for quality control on candle and its accessories, and published through the American Society for Testing and Materials (ASTM) international standards. Although the standards are not legally binding to outsiders and is only applicable to the US, candles bearing the quality mark may have a competitive edge.

Product Trends

Personalised items: Customers have become more savvy and sophisticated. Especially when choosing gift items they look for something special and unique. That makes personalization a stronger trend today. While gift items can be custom ordered to personal specifications, there are simpler solutions such as monogramming or assortment of different themed or coloured accessories. These allow customers to “mix and match” to create gift items with their own style.

Distribution of higher-valued, functional corporate giveaways to boost sales: Corporate giveaways will continue to be an effective sales and marketing tool. Companies will however tend to distribute higher-valued, functional yet creative premiums in the future, as target recipients appear to feel drained of low-valued items. For example, IT peripherals such as USB flash memory and power banks are increasingly considered as corporate gift items.

Innovative technological items: The prevalence of high-tech gifts is a trend seen across the board. Examples include smart watches, interactive dolls as well as scanner mouses which can accurately converting printed text, tables and pictures into a digital format. Lately, drones are very popular gift items for both kids and adults.

Refocusing on family value and connecting with others to strengthen sales of home products, festive items: A major trend is the popularity of the so-called "home products" and festive items, as the trend of “nesting” continues to evolve; shoppers now tend to spend more time entertaining with families and friends at home. Along this development, houseware, tools, DIY & home deco products will continue to be favoured gift items. Consumers also feel increasingly the need to reach out and communicate with others in a traditional way, like sending hand-written greeting cards and scrap booking.

More emphasis on health care and related products: Given the trend of ageing population and rising health awareness, the demand for health care and related products will remain strong and have greater growth potential in the future. Candles, fragrance and aromatic gifts will also be sought after as a way to relieve work pressure, home affairs, etc. Their popularity has led to the increased sales of related items like candle holders, fragrance oils and other glass decorative accessories.


[1] Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies.

Content provided by Picture: Wenda Ma
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