HONG KONG'S manufacturers are bracing for the pinch next year as the region's unfolding economic crisis renders Special Administrative Region exports more expensive by the day.
The Trade Development Council forecast exports next year would grow just 3 per cent, compared with 4 per cent this year, while imports were slated to rise 3 per cent after this year's projected 5 per cent.
The TDC said the global declines caused by the Asian currency crisis would be a more important cause of the downturn than a fall in Hong Kong's competitiveness.
But manufacturers admitted some sectors, such as electrical and electronic goods, or labour-dependent garment and textiles, would feel some pain. About 10 to 15 per cent of Hong Kong manufacturers would face a squeeze as costs became 20 to 100 per cent higher than those in neighbouring countries.
'This year, most of the orders are done, so we're not seeing much of an impact from the currency crisis, but next year some sectors, especially those exporting some of the cheap stuff, will be affected,' Hong Kong Exporters Association chairman Jeffrey Lam said. 'It's not the end of the world, but we'll have to tighten our belts and work harder.' Buyers from advanced economies had already begun asking for better prices, economists said, whereas sales to countries hit by the crisis had been hurt by payment problems or inefficient distribution channels.
Taking away the Hong Kong dollar's link to the greenback was not the solution, since it would hurt confidence and make imports more expensive, Hong Kong Knitwear Association chairman Willy Lin Sun-mo said.
'Imagine the overnight impact on food, fuel and water, which we import,' Mr Lin, who is also Milo's Knitwear International managing director, said. 'Devaluation may help in the short-term, but after a few months, inflation will creep up.' What companies could do, and had been doing, was diversify even more, farming out early stages of the production process to cheaper areas, he said. 'Hong Kong companies have to be more multinational, sourcing more overseas, to ride out the tide,' Mr Lin said.
