Hong Kong's logistics companies are riding on the buoyant mainland demand to develop the city as a distribution centre for luxury products, says the Hong Kong Trade Development Council (TDC).
Indeed, China is poised to overtake Japan as the largest market for luxury goods next year, according to the latest report of the World Luxury Association. Last year, mainlanders bought US$10.7 billion of high-value goods, or a fourth of the world's total.
'The 12th five-year plan has praised Hong Kong's role as a distribution centre for high-value goods, giving the city a very good policy framework to pursue the goal,' said Raymond Yip, TDC's assistant executive director. Some luxury brands, such as Tiffany, had chosen Hong Kong as their regional distribution centre because of the level of security the city offers, its proximity to the mainland and the local tax framework, said Willy Lin Sun-mo, chairman of the Hong Kong Shippers' Council.
Warehousing, packaging, reprocessing and after-sales services are among the many functions of a regional distribution centre. Taking Apple's iPhone and iPad for instance, millions of chips from suppliers across Asia are shipped to Hong Kong for processing before being delivered to Shenzhen and other mainland cities for assembly, according to Lin.
'Hong Kong workers remove the manufacturer's name on the chip and re-stamp Apple's brand on it, making it hard for counterfeiters to trace the origin and copy,' Lin said.
Despite the many incentives that Hong Kong offers companies to locate their distribution centres here, the city's shortage of land and human resources hurt the city's efforts to emerge as the regional distribution hub, said Stephen Chan, a former president of the Hong Kong Logistics Association.