Hong Kong’s exports to Vietnam surge 20pc
Pearl River Delta manufacturers see Southeast Asian country as top factory relocation option
Hong Kong’s exports to Vietnam surged 20 per cent year on year to HK$50 billion in the first eight months of this year, with the Southeast Asian country edging out Taiwan and Germany to become its fifth-largest export destination.
“More and more global companies have moved their manufacturing bases to Vietnam and Hong Kong has become a hot spot for logistics transit,” said Dickson Ho, principal economist for Asian and emerging markets at the Hong Kong Trade Development Council.
In a Standard Chartered survey in May, more than 30 per cent of manufacturers in Guangdong’s Pearl River Delta factory hub said Vietnam was their favoured option for factory relocation.
Lower wages, a young and educated workforce and a large domestic market in a country with a population of more than 90 million are key reasons making Vietnam an attractive investment destination.
Ho said most of the enterprises moving to Vietnam were in labour-intensive industries such as electronics processing and apparel manufacturing. Raw materials still needed to be imported from the United States or mainland China, and then re-exported through Hong Kong to Vietnam, which was why Hong Kong benefited from production shifting to Vietnam.
The council says 60 per cent of products exported from Hong Kong to Vietnam originally come from the mainland, with other major sources including the US, Brazil, Taiwan and Japan.
Telecommunications equipment, meat and knitted fabrics were the top three exports.
“With the emergence of a middle class, it’s not just production; the consumption demand for telecoms products is also strong in Vietnam,” Ho said, adding that he expected telecoms products and parts to account for 20 per cent of Hong Kong exports to Vietnam next year, up from the current 18 per cent.
Samsung Electronics, the world’s biggest smartphone vendor, manufactures 50 per cent of its mobile phones in Vietnam and has said it will invest another US$3 billion to build new plants.
Vietnam’s membership of the Trans-Pacific Partnership (TPP) free-trade zone has added to its appeal to manufacturers eyeing prospective tariff cuts.
Standard Chartered says it expects the members of the Association of Southeast Asian Nations (Asean) to become world’s next top exporter, leveraging the region’s low wages and young workforce.
“China’s trade with Southeast Asia will definitely increase, and Hong Kong will become the transit hub for both sides,”said Gerry Yim,chief executive of Hutchison Port Holdings Trust, a major port operator in Hong Kong and Shenzhen.