Firms told to avoid selling inferior items to Hungary

PUBLISHED : Tuesday, 27 December, 1994, 12:00am
UPDATED : Tuesday, 27 December, 1994, 12:00am


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HONG KONG businesses are being urged to sell to Hungary but to avoid competing with inferior goods from other countries.

The Hong Kong Trade Development Council (HKTDC) said traders should grasp the opportunity to enter the Hungarian market under favourable tariffs as domestic buying power surges.

Though Hong Kong contributed only slightly to Hungary's total imports, the value of Hong Kong exports to Hungary had leapt by 40 per cent to HK$561 million in 1993 over the previous year, said a HKTDC report.

In the first eight months of this year, exports increased 22 per cent to HK$406 million, of which 83 per cent were re-exports from China.

The HKTDC painted a rosy picture of the Hungarian market and expected the strong growth of exports to Hungary to increase in next two years.

A low tax rate was a major attraction. While more than 90 per cent of imports could enter Hungary without an import licence, Hong Kong and Chinese products could also enjoy the most-favoured-nation tariff rate, an average of 13 per cent.

Tariff rates were expected to decrease further because Hungary aimed to integrate its import tariffs with the European Union's external tariff by 2000.

Market reform in Hungary also created a strong domestic demand.

This was reflected in the per capita gross domestic product (GDP) of US$3,700 in 1993, higher than any neighbouring country in eastern Europe.

Hong Kong had many advantages over other suppliers as demand for innovative but relatively cheap products had been generated by the rise of a class of wealthy businessmen amid the market reforms.

The HKTDC stressed Hong Kong had a cost advantage derived from manufacturing in China.

An example was the information technology equipment market dominated by Japanese and Taiwanese products, which were at least 50 per cent more expensive than those from Hong Kong.

The report recommended that Hong Kong exports avoided competition with cheap and inferior goods but concentrate on design and quality, such as attractive appearance and innovative features.

Two-thirds of Hong Kong exports to Hungary were consumer goods. Popular were silk, cotton garments and electronic items.

On the other hand, Hungary was still in recession after the collapse of the Soviet Union and communism in eastern Europe.