Warning of big slowdown for Hong Kong's port
Hong Kong's port risks a major decline within 10 years due to competition from cheaper mainland rivals, and needs to position itself to protect its business and jobs, observers warn.
'I see the risk of a sharp slowdown in Hong Kong's port. In five or 10 years, it may lose a lot of its major customers' connections. Instead of a slow decline, there may be a steep drop,' said Jonathan Beard, managing director of GHK Hong Kong, a subsidiary of ICF International, a US professional services company.
A steep fall in throughput in Hong Kong would jeopardise thousands of jobs in the city, Beard said.
Container throughput for the world's third busiest container port fell 4.2 per cent in April, after 7.1 per cent year-on-year growth in February and March, according to the Hong Kong Port Development Council.
Maersk Line, the world's biggest shipping company, selected Nansha port in Guangzhou as its third gateway for south China in April last year. Since then, ships on most of Maersk Line's major trade routes have started to use Nansha.
Tim Smith, Maersk's chief executive for north Asia, said: 'In the last 15 years, other Chinese ports have started to compete with Hong Kong, such as Shenzhen and Nansha. They can do many things that Hong Kong built its business originally on. To be competitive, Hong Kong needs to offer something beyond that.
'In the last couple of years, growth in the Pearl River Delta has slowed appreciably. The annual throughput growth in central China has been growing in double digits. In northern China it has been growing above 15 per cent but in south China it has been 2 per cent. That will continue in future,' Smith said.
VF Corporation, the third largest footwear company in the world, will slash its shoe manufacturing from 40 million pairs of shoes in south China in 2010 to 11 million in 2016. VF vice-president Thomas Nelson said: 'We are moving our footwear manufacturing from southern China to north China, Vietnam, Bangladesh and other countries. So the amount of shoes shipped from other Chinese ports will be more than Hong Kong.'
VF shipped four times more cargo through Shenzhen than Hong Kong, as the cost of distribution was 245 per cent higher in Hong Kong than on the mainland, Nelson said. But the US firm still had 600 people in Hong Kong, due to the ease of doing business, the use of English and lack of corruption. 'Hong Kong is a great place to do business.'
Beard said to make Hong Kong more competitive, the city's government should remove subsidies and trade barriers.
Cross-border trucking between Hong Kong and Shenzhen should be liberalised as it was monopolised by Hong Kong truck drivers. 'The Hong Kong government doesn't want to do it because of Hong Kong trucking jobs.'