Hong Kong’s export index has risen for the fifth consecutive quarter, soaring from a record low of 16.0 at the beginning of the pandemic last year to 48.7 in Q2 of 2021, which is close to expansionary territory, said Hong Kong Trade Development Council (HKTDC) recently.
The sustained upturn indicates that local exporters have gradually regained confidence in the city’s export outlook, HKTDC noted.
Total exports in the first quarter of 2021 increased by 33.2% year-on-year to HK$1,107.8 billion, with growth of 24.4% registered in April, according to HKTDC.
“Led by Mainland China and the US, the global economy has rebounded steadily, which will continue to bolster Hong Kong’s export performance,”said Nicholas Kwan, HKTDC Director of Research.
The HKTDC’s Export Index survey also showed that local exporters continue to have concerns.
These include the persistence of the COVID-19 pandemic (41.5%), softening global demand (16.7%), prolonged trade tensions between the mainland and the United States (13.0%) and continuing pandemic-mandated border closures (11.6%).
“The global economic recovery is likely to be highly uneven. After taking into account a basket of factors, we decided to revise Hong Kong’s export forecast in 2021 upward from 5% to 15%, albeit from a low base,” Kwan said. “This represents the biggest rebound since the city’s recovery from the global financial crisis in 2010.”
Smaller orders, higher costs, and opportunities
While concerns remain, the impact of the pandemic has been gradually easing over the past few months, Kwai observed.
The percentage of respondents reporting that they had been negatively affected by pandemic-related issues fell from 78.2% in the first quarter of 2021 to 56.9% in the second quarter, according to HKTDC.
Other important survey findings include:
- A reduction in order size (66.4%), increased transportation costs (46.4%) and logistics or distribution disruptions (42.6%) were cited as the three most common problems.
- Hong Kong businesses have adopted new strategies to weather these challenges such as developing other product categories (53.8%), developing the mainland domestic market (49.5%), developing online sales channels (45.5%) and targeting new overseas markets (28.4%), with the ASEAN bloc and Europe the most popular choices for diversification.
- About 40% of the exporters surveyed have developed or are intending to develop the mainland Chinese market, yet are encountering various challenges such as intense competition (81.8%), difficulties in selecting suitable local sales partners and/or distributors (47.4%), and problems with mastering the required sales channels (44.0%).
Major markets and industries rebound
In addition, exporter confidence continues to improve across almost all industry sectors and major markets, HKTDC said.
According to the organisation, machinery (up 13.0 points to 55.9) and electronics (up 9.8 points to 48.8) both outperformed the overall average.
In terms of export markets, confidence in Mainland China (50.3) returned to expansionary territory while a more optimistic sentiment was seen in Japan (49.8), the EU (49.2), the ASEAN bloc (49.1) and the US (49.0).