Buyers beware the turmoil, hope for yuan devaluation

FROM his desk on the 12th floor of the Wing On Plaza building in Kowloon, Udo Wietrychowski has a prime view, not only of Hong Kong harbour, but beyond to factories in southern China and markets around Asia.

Mr Wietrychowski is managing director of the joint office of Karstadt, Hertie, Neckermann, three German department store chains who together form Europe's leading retail group. The troika has been buying offices in Beijing and Shanghai and has agents in Indonesia, South Korea, Taiwan, Singapore and as far away as Bangladesh.

Mr Wietrychowski has a good overview of the banking and currency crisis which has wreaked havoc in Asia's companies.

On the same side of Hong Kong harbour, are the offices of the biggest German department store Metro, which last year had a turnover of US$70 billion, and leading buyers for Japanese, French and American department stores. Hong Kong is also the regional base for the mail order giants Quelle and Otto-Versand.

The Hong Kong office of Otto-Versand - the world's largest mail-order firm - bought $1.1 billion worth of goods last year and the firm had a global turnover of $15 billion. These and other heavyweight Hong Kong-based buyers with a buying power of between $500 million and $1 billion each know better than anyone else what the huge currency movements mean to producers and the hardship Asian factories now face when trying to pre-finance production.

Between 10 per cent and 20 per cent of all goods in European department stores come from Asia and China and are purchased via Hong Kong. The percentage for US department stores is even higher.