'Maybe when the EU rejects the first batch of products, then sends them back to Hong Kong, will we see thousands of companies start a rush to comply. By that time, we may be hard pressed to meet demand.'

The restriction of the use of certain hazardous substances (RoHS) limits the use of certain substances in electrical and electronic equipment to go on the EU market from July 1. Its purpose is to reduce the risk of hazardous substances polluting the environment during end-of-life recycling or disposal in landfills.

Manufacturers are required to design and ship products that contain no more than the maximum quantity allowed for any of the hazardous substances named. These include lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyls and polybrominated diphenyl ethers.

Various industry groups last year estimated the new EU environmental requirements would affect about US$20 billion worth of Hong Kong exports annually, even as manufacturers invested in compliance.

More than 14 per cent of Hong Kong's electronics exports go to the EU.

The EU directive is expected to affect Hong Kong companies with production facilities in the Pearl River Delta, where most mainland electronics goods are made.

The delta is home to about 77,000 Hong Kong-owned or controlled manufacturing operations, employing about 10 million mainland workers.

Industry experts said non-compliance would also put at risk about US$50 billion worth of electronics and electrical products exported each year by China to Europe.

Exceptions to the RoHS ruling include spares or parts for the repair or upgrade of products put on the market before July 1, and equipment solely for military and national security purposes, medical devices, and monitoring and control instruments.

Manufacturers of goods investigated for non-compliance by the EU after July 1 will have only 28 days to prove they have abided by the green rules.

'Even if the wrapper or packaging used, not the products, are found to be non-compliant, the whole shipment will be rejected. That is how stringent the law is,' said Hong Kong Productivity Council executive director Yeung Kwok-keung.

In December, the council and Microsoft - under their 'Productivity Plus' initiative - introduced a jointly developed online platform called RoHS Portal.

The service and software package was designed to help companies revamp their processes and manage all documents related to RoHS compliance with testing and application.

'As a productivity improvement tool, the RoHS Portal has electronic forms to simplify the RoHS laboratory test and supplier material declaration requests,' said Frank Leung, the council's general manager for electronic products innovation.

The portal's centralised filing of test reports, supplier declaration forms and other supporting documents made tracking and retrieving RoHS-compliant applications relatively easy.

'Although the information is protected with an electronic signature, the portal can be accessed via the internet or corporate intranets,' Mr Leung said.

'It can also be integrated with other business applications, such as enterprise resource planning, supply chain management and inventory systems.'

Electronic wire and cable manufacturer LTK Industries was one ?of the first to adopt the RoHS ?solution.

'We signed up for the RoHS Portal project last December and we are already seeing the benefits as we deploy the system across the entire organisation,' said Thomas Chaung, LTK director of sales and marketing.

'The time to circulate RoHS documentation has been cut from seven days to one minute. We are also better able to identify and extract green data from our supply chain through the system's alert workflow mechanism. We see this as a competitive advantage.'

But the Hong Kong Science Park-based firm, which has operations in Huizhou, Shanghai and Dalian, is one of the exceptions. By and large, local manufacturers are showing an environmentally lax attitude.

A survey of 100 SME manufacturers conducted last year found that half of the firms were not aware of EU green rules, including the waste electrical and electronic equipment directive that covered the recovery, sorting, treatment and recycling of electrical and electronic waste products.

Mr Yeung said Hong Kong manufacturers should also be ready to be green-compliant with non-EU markets, including China, the United States and Japan.

Meanwhile, the scale and cost of green compliance could be intimidating to some. Electronic components distributor Arrow Asia-Pacific estimated that RoHS compliance could raise the manufacturing costs of small firms from 5 per cent to 10 per cent on average.

The directives would amount to a re-engineering of business processes, from design and production to supply chain management and marketing.

But Mr Yeung said the short-term costs to Hong Kong were greatly outweighed by the long-term economic consequences of non-compliance.