Threat looms as mainland opens up further
A key issue affecting Hong Kong's competitiveness is the high cost of doing business, an executive says.
Kawasaki Kisen Kaisha (Hong Kong) (K-Line) managing director Mamoru Shozui said the cost factor affected shipping and other industries.
'Our overall concern is how to maintain our service and efficiency, especially when it is so much cheaper [to operate] in the mainland compared with Hong Kong,' Mr Shozui said.
Hong Kong businesses are concerned at the high costs of rentals and labour, especially when the mainland's efficiency and productivity is fast catching up.
If the mainland became more open, the high cost of doing business in the SAR would be highlighted, Mr Shozui said.
Although the mainland was about to enter the World Trade Organisation, doing business still depended greatly on when it would actually practise the open-door policy, he said.
The mainland is perceived as having monopolies in many areas and as a difficult environment to do business. Mr Shozui is not optimistic that the country will release its controls quickly.
However, he said once a company obtained the licence to call at a particular port there would be no problem.
K-Line has recorded handling 132,000 teu (20 ft equivalent units) of exports out of Hong Kong, including empty boxes, in the first six months of this year.
Mr Shozui said that over the same period the carrier handled 53,000 teu of imports, including empties.
The majority of the cargo was from the mainland and the growth was due mainly to strong demand in the United States and Europe, he said.
In terms of laden containers, the carrier handled 75,000 teu for exports and 39,000 teu for imports in the first half.
Mr Shozui said the second half would see stronger growth, as had been the pattern in past years.
Unlike other carriers, which are moving into logistics development, K-Line is concentrating on its core shipping business while closely monitoring developments in the logistics sector. In some cases, the carrier provides pick-up services in Hong Kong and Guangdong province through affiliate companies for shipments on its vessels.
K-Line has ordered 12 vessels of 5,500 teu capacity which will be delivered between next year and 2002. They will replace the carrier's 3,400 to 3,500 teu vessels in its trans-Pacific and European services.
As with most shipping firms, K-Line is upgrading its computer technology. It is introducing space booking on the Internet, but it believes there is no urgent need for this service as customers are comfortable with bookings by phone, fax and e-mail.
Meanwhile, K-Line in Japan has announced that it has surpassed the targets it set for its five-year management plan, K-Line Spirit for 21, which was launched in 1998.
It is confident that consolidated revenues will reach 610 billion yen (about HK$43.92 billion) and ordinary profit will almost double to 33 billion yen. Operating profit is forecast at 45 billion yen, up from a zero-profit forecast.
The carrier aims to attain mega-carrier status, with box business accounting for 55 to 60 per cent, and be ranked in the world's top 10 container lines.
