Hong Kong exporters caught in crossfire

Top News | Janice Huang 9 Jul 2018

Local exporters are among the major casualties of the trade war, prompting some manufacturers to take measures to minimize damage to their operations.

US-bound products from China were subjected to a 25 percent tariff from Friday , under President Donald Trump's instruction.

Affected products in what Beijing described as the "biggest trade war in economic history" include water boilers, X-ray machine components, airplane tires and many other industrial parts.

An executive of a local toymaker said his company has been forced to slash its exports to the United States from 50 percent to just 10 percent of total output in the first half of the year.

To survive the bruising trade war, the toymaker also shifted semifinished goods from China to its factories in Vietnam. It plans to transfer all production facilities from Dongguan to Vietnam.

The company has stopped taking orders from its customers in the United States as Trump's next moves remain unclear.

Eddy Li Sau-hung, president of the Hong Kong Economic and Trade Association, said it is difficult to estimate the full impact to the SAR's export sector since the trade war has just started.

Some local manufacturers, however, have been asked by US buyers to suspend delivery of ordered goods so as to avoid high tariffs, Li said.

Willy Lin, honorary chairman of the Textile Council of Hong Kong, said the local industry has not been affected so far since textiles are not among products subjected to higher tariffs. But the sector should brace for this eventuality, he said.

The trade war's impact on the industry this quarter is limited as orders had already been placed and production of those orders has already began, Lin said. The impact will be felt much more in the next quarter, especially by companies with production facilities in China and those which export primarily to the United States.

He said local manufacturers should actively communicate with their US buyers and increase exports of products from their factories in southeast Asia.

They should also try to export more to countries in the European Union and in Asia, notably Japan and South Korea.

Chan Kei-biu, honorary chairman of the Hong Kong Electronic Industries Association, said he is not bothered much by the trade war as Hong Kong is not the principal target of the United States. Local manufacturers should just take a wait-and-see stance, he said.

Some analysts believe Hong Kong's growth could be affected. Banny Lam Chiu-kei, managing director and head of research at CEB International Capital Corp, said the GDP might be affected if the export sector is pressured.

janice.huang@singtaonewscorp.com



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