23 Aug 2016
Machinery Industry in Hong Kong
Hong Kong manufacturers produce both industrial machinery and parts. Initial development of the industry was prompted by a rise in local demand. Industrialisation in the Chinese mainland since the early 1980s has provided an added boost to Hong Kong’s machinery industry.
Large manufacturers have started automation in producing standardised parts. Automatic tool handling and computer numerically controlled workstations are being adopted. Most of them have also set up production facilities in the Chinese mainland to take advantage of the lower production costs or to target the domestic market of China.
Machines made by Hong Kong manufacturers are price and quality competitive. Prices are lower than those of Japan and Europe. Hong Kong manufacturers are able to handle small batch and large variety of designs at shorter delivery lead-time. They also have an edge in providing prompt after-sales services, especially for those machines installed in China.
Competition among Hong Kong manufacturers is increasingly keen. In addition, manufacturers have to compete with other Asian competitors such as Taiwan in the medium-level market, and with Chinese mainland enterprises in the lower-end market.
Hong Kong manufactures both non-electrical and electrical machinery and parts. Initial development of the industrial machinery industry was prompted by a rise in local demand. For example, growth of plastic injection machinery was largely attributable to the development of the plastics industry in Hong Kong. Since the early 1980s, industrialisation in the Chinese mainland has provided an added boost to Hong Kong’s machinery industry.
Industrial machinery manufactured by Hong Kong companies mainly include plastic injection moulding machines, blow moulding & extrusion machines, pad printers, textiles dyeing & finishing machines, die-casting, electric discharge machining (EDM), wire cutting & other metal working machines, robotics as well as printing and packaging machines. Other more advanced machinery, such as die bonding machines and electronic processing machines, is also produced by Hong Kong. Parts & accessories include bearings, gears, screws, bolts, cutting tools and cooling systems. Direct current motors, electrical transformers, static converters & transformers, and electrical apparatus for circuits are the major export items for electrical machinery and parts.
The relative share of electronic components has increased due to the increasing use of servo system, a control system installed in high-end injection moulding machines to ensure performance consistency and to help saving energy, and these parts are normally imported. Major parts are imported from Japan and Germany, including mechanical parts (e.g. pneumatic & hydraulic mechanisms and compressors), electrical parts (e.g. process cooling & heating equipment), and electronic parts (e.g. temperature, pressure, distance and time controls).
Large manufacturers have started automation in producing standardised parts. Automatic tool handling and computer numerically controlled (CNC) workstations are used for metal machining.
Most Hong Kong manufacturers have set up plants in the Chinese mainland to take advantage of the lower production costs or to target the domestic market of the Chinese mainland. The larger plants in the mainland also enable Hong Kong manufacturers to have more diversifications in product range. The offices in Hong Kong are mainly engaged in marketing, accounting, purchasing and engineering development.
Hong Kong manufacturers are cost and quality competitive. They are able to handle small batches of orders and a large variety of designs at short delivery lead-time. They are also good at make to orders. They are having good access to overseas markets and information on the latest technology. Furthermore, Hong Kong has a strong cluster and high quality supporting industries, including accessories, such as blow dryers for plastic products and conveyors for plastic raw materials. Machines made by leading Hong Kong manufacturers usually bear local brand names. Hong Kong manufacturers are also upgrading their production to larger scale machinery or high precision machinery.
Small and medium-sized manufacturers prefer Hong Kong-made plastic injection, die-casting and pad-printing machines, as their prices are much cheaper than those of Japan and Europe. Machines made by Hong Kong companies also have an edge in providing prompt after-sales services, especially for those machines installed in the Chinese mainland.
Performance of Hong Kong’s Machinery & Parts Exports^
The mainland is Hong Kong's largest market, accounting for more than half of Hong Kong’s total exports. As most Hong Kong electronics, plastics and electrical manufacturers have set up production facilities in the Chinese mainland, their demand for Hong Kong-made machines has increased. Nevertheless, since these Hong Kong-made machines can be delivered directly from the plants to end-users, both locating in the mainland, these businesses were not captured by the export figures of Hong Kong.
Besides manufacturing, Hong Kong plays the role of a trading centre for machinery, especially for the mainland market, serving factories of both Hong Kong and mainland manufacturers. Hong Kong has good supportive infrastructure. Its machinery trading companies have long established trading or agency relations with their overseas and southern mainland counterparts. Well-established relationships and responsive after-sales services, combined with geographic and cultural proximity, have given Hong Kong’s machinery traders and manufacturers an upper hand in penetrating the mainland market.
Industrial machinery produced by Hong Kong companies mainly caters for the need of other Hong Kong manufacturers. It is estimated that a large share of the total output from small-scale machinery producers is sold to local manufacturers or factories set up by Hong Kong companies on the Chinese mainland.
Large manufacturers usually deal directly with overseas agents or buyers. As industrial machinery products require good after-sales services, overseas agents are usually employed to provide maintenance and repair services. Some large companies have also set up service centres in the Chinese mainland to support customers. Marketing and promotion efforts usually include advertising in related industrial publications or magazines, and through participating in exhibitions.
Most machinery manufacturing plants have been relocated to the Chinese mainland and certain Hong Kong machinery manufacturers are also expanding into other regions outside the PRD.
As a result of expanded capacity after Hong Kong manufacturers have set up plants in the Chinese mainland, competition among Hong Kong manufacturers has been increasingly keen. In addition, manufacturers have to compete with other Asian competitors such as Taiwan in the medium-level market, and with Chinese mainland enterprises in the lower-end market.
The increasing application of plastic materials in electronic and telecommunications equipment, medical and auto-parts has stimulated the demand for high precision and more sophisticated plastic injection machinery. Since most customers of machinery need to remain competitive, the demand for higher quality and precision machinery and equipment has continued to increase. Such trend results in more applications of computer technology in design and production. For example, computer-aided design, manufacturing and engineering (CAD/CAM/CAE) for machine structure design and analysis can be applied to plastic machine industry for better design for precision equipment in the elimination of vibration and to improve rigidity.
In order to explore overseas markets, there is an increasing need for manufacturers to develop the distribution network and provide after-sales services. The general strategy for manufacturers is to upgrade quality, and some large manufacturers have also improved their operation efficiency. In the case of metal working machines, electronic setting units have been incorporated to control tool and material feeding. Plastic injection moulding machines have introduced programmable controllers and close looped designs for monitoring screw position, injection speed, temperature and pressure to reduce moulding defects. Safety features have also been upgraded, like introducing device to control mould opening.
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 Machinery Exports
In order to enter overseas markets, especially the developed countries, machinery products must comply with the safety regulations of the importing countries. Beginning January 1995, all exports to the EU must bear the CE marking, indicating the products have complied with the safety requirements. The following directives are applicable to machinery: Machine Directive (89/392/EEC & 91/368/EEC), Low Voltage Directive (73/23/EEC) and the Electromagnetic Compatibility Directive (89/336/EEC).
Many Hong Kong manufacturers have tried to improve their product competitiveness by using higher quality components and precision parts, incorporating programmable or computer control features and enhancing safety features. They are looking for opportunities to diversify their products, particularly towards higher quality and performance.
Energy saving, material saving and environmental friendly are increasingly important in designs of new machines. For example, the technique of co-injection for items such as two-colour pads, metal injection moulding for auto-parts and consumer products such as watches, injection compression for very thin parts and quality optical products, and gas-assisted injection for manufacturing items like auto-parts. The development of hybrid injection machine combining features of electric and hydraulic machines can have the benefit of precision, energy saving and high compression power. The application of servo system is another development trend in helping to save energy.
There is a trend towards increasing use of electronic controls and instrumentation, e.g., the intelligent process control that can be applied to self-learning capabilities for machines. Based on technology like programmable logic control, more advanced controlling systems such as the CNC will be adopted with the development of more sophisticated and high precision machine tools. The developing trend is for machine tools to integrate design database with manufacturing, and to integrate machining capabilities such as combining functions of boring, drilling, milling and tapping on machining centres. There is also the tendency for modern machine tools to be capable of meeting the requirement for small batch and large variety production mode. With the development of modern logistics, there is also a rising demand for advanced sorting and picking machinery.