Find new markets, products, exporters told
Hong Kong exporters should adopt new strategies to keep traditional customers in Europe and the United States while striving to grab a piece of fast-growing emerging markets in eastern Europe and Latin America.
Christmas retail sales - a key indicator of an economy's retail performance outlook for the following year - have been generally good globally this year. Demand for luxury goods picked up a bit in some European countries and North America thanks to the economic recovery and timely tax incentives, an analysis of the Trade Development Council's global network found.
Most consumers, however, are still opting for basic and discounted items, and favour classic, rather than fashionable, items when they buy luxury watches and jewellery.
'The time has passed for Western consumers to spend lavishly on whatever they desire; fiscal tightening, the debt crisis, high jobless rate and a stagnant property market are likely to suppress consumption sentiment in the new year,' Daniel Poon Wing-choi, the council's assistant chief economist, said. 'That said, it doesn't mean Hong Kong exporters should give up on the traditional Western market, which together with Japan, made up some 60 per cent of our total annual exports.'
Better-than-expected Christmas retail sales in the United States and Britain are expected to push Hong Kong's export growth to between 21 and 22 per cent by the end of the year, although the council said it is likely to slow to 8 per cent in 2011.
Christmas retail sales could account for up to one-third of the annual sales. But while year-on-year retail sales growth in Britain hit 4 per cent this year, Poon said its sales outlook is far from bright as the country is raising its value added tax from 17.5 per cent to 20 per cent next year, meaning most of its current growth came from advance shopping to avoid the increase.
Although Western shoppers have become more price-sensitive, they are unwilling to sacrifice quality and the green features of products - such as their energy-saving functions.
'Hong Kong exporters cannot hope to compete with China on prices, but we have our strength in producing quality and sophisticated goods,' Poon said.
'Instead of producing an electronic item with 10 functions, for example, local exporters can consider producing one with fewer functions that sells for less.'
The council also advised exporters to diversify into emerging markets such as Russia, Brazil and Chile, which are expected to see retail sales growth of between 10 per cent and 20 per cent this year thanks to increasing demand for, and rising prices of, their major exports - raw materials including oil and copper.
The mainland remains a priority market for Hong Kong exporters. Re-exports, mainly to and from the mainland, account for about 95 per cent of Hong Kong's exports. Year-on-year annual sales growth there neared 20 per cent this year.
