Hong Kong’s export index in Q3 fell 9.7 points back to its first-quarter level of 39.0, after rising for five consecutive quarters, said the Hong Kong Trade Development Council (HKTDC) recently.
Business confidence in Hong Kong's exports for the near term has been undermined by continuing uncertainties over the pandemic and surging transportation costs, HKTDC Director of Research Nicholas Kwan noted.
The HKTDC conducts the export index survey every quarter, interviewing 500 local exporters from six major industries including machinery, electronics, jewellery, watches and clocks, toys and clothing, to gauge business confidence in near-term export prospects.
The index indicates an optimistic or pessimistic outlook, with 50 as the dividing line, the organisation said.
- Only 20.2% of Hong Kong businesses polled in the Q3 survey expected an increase in their Christmas sales this year, compared with 38.7% who anticipated no change and 41.1% a decline.
- Most respondents in the latter category expected declines of no more than 30%.
- The key issues seen as affecting Hong Kong's export performance in the coming six months continued to be the pandemic (45.5%, up 4 percentage points on the second quarter (Q2)] and softening global demand [20.3%, up 3.6 percentage points].
- Proportion of Hong Kong exporters who reported having been affected by the pandemic (66.6%) rose 9.7 percentage points from Q2.
- The most-cited pandemic-induced problems include reduced order sizes (59.5%) and order cancellations (28.1%), as well as disruptions to logistics and distribution (58.6%) and increased transportation costs (53.6%).
- An increased proportion of Hong Kong companies reported difficulties in sourcing raw materials, parts and components. This category accounted for 24.6% of respondents, up 10.8 percentage points from the last quarter.
Digital transformation during the pandemic
Despite the reported problems, some Hong Kong firms (9.3%) said the pandemic had positively affected their business, especially those from the electronics and toys industries, HKTDC observed.
This is partly attributable to the COVID-19-inspired acceleration of digital transformation among enterprises, a restructuring of the global supply chain and a shift towards e-commerce, which together saw businesses invest heavily in electronics products to upgrade their operational resources, HKTDC said.
The survey found that businesses’ digital business strategies include developing an online sales operation [56.3%], promoting products via a digital channel [56.0%], enhancing their cybersecurity [50.2%], developing a cloud computing/online management system [47.7%] and adopting digital payment solutions [31.9%]."