Hong Kong: Gateway to China, and a Vibrant Market on its Own

by Dawn Bruno
U.S. Commercial Service

Hong Kong, one of the so-called Asian tigers of the 1990s, may have lost a step or two during the current slowdown, but no snaggle-toothed feline is this.

As one of the world’s most open and dynamic economies, Hong Kong boasts the second-highest per capita income in Asia (at just over $23,000). The keys to Hong Kong’s economic success lie in its liberal market philosophy, market transparency, free flow of information, and strong legal system. Hong Kong is a “free port,” with virtually no duties or tariffs, allowing U.S. businesses to easily reach its 6.8 million consumers. U.S. exports to Hong Kong totaled $14.1 billion in 2001. Hong Kong is the world’s largest transshipment center and is positioned to play an important role for U.S. businesses wishing to expand their exports to the biggest tiger of them all—China.

“For small and medium-sized companies, Hong Kong is the best route into China, providing effective and familiar business laws and practices,” says Barry Friedman, senior commercial officer of the U.S. Commercial Service in Hong Kong. The main advantages to using Hong Kong to enter China include well-developed infrastructure, strong communication networks, and excellent rail and road links to the booming southern provinces. In addition, explains Friedman, “Hong Kong has an English-speaking, Western-oriented business culture.”

Business in a Hong Kong Minute
But the Hong Kong market is well worth targeting on its own, never mind the allure of the mainland. The first thing a visitor notices is Hong Kong’s fast-paced business climate. Because Hong Kong is among the most competitive markets in the world, U.S. companies need to make decisions quickly and respond to buyer inquiries immediately. According to Olivia Cheng, president of California-based World Medical Trade Organization (WMTO), “Business moves quickly, and you have to be ready to act fast in Hong Kong.” One of the best ways to sell products and services in Hong Kong is through agents and distributors,which minimizes initial investment in the market. Hong Kong has an extensive network of agents and distributors who are eager to buy and sell competitively priced, quality U.S. products.

The Hong Kong government plans to spend $30 billion over the next five years to significantly improve infrastructure, including schools, roads, communication facilities, and government buildings. This activity will open many opportunities for U.S. companies.

Beyond bricks and mortar, Hong Kong is the world’s most service-oriented economy, including financial, legal, and advertising services. The services sector grew at an annual rate of 6 percent between 1991 and 2000. After rebounding from the Asian financial crisis in 2000, the Hong Kong economy slowed in 2001, as a result of the global economic downturn. However, this should not deter U.S. exporters, who will be well poised in the market as the economy strengthens.

Finding Buyers without the Bother
Hong Kong is a key Asian technology hub. Leading sectors include telecommunications and information technology products and services, electronics, medical equipment, and security products. The medical equipment industry provides multiple opportunities for U.S. companies. World Medical Trade Organization (WMTO), a U.S. company specializing in opening Asian markets for medical-related products, has used the U.S. Commercial Service in Hong Kong to locate distributors.

Based in Newport Beach, California, WMTO markets and distributes U.S. medical equipment throughout Asia. When WMTO decided to enter the Hong Kong market with PapSure, an early detection device for cervical cancer, it relied on the expertise of the U.S. Commercial Service, a division of the Commerce Department that helps small and medium-sized U.S. companies find new markets around the world. WMTO chose a distributor using a service called Gold Key, which matches U.S. exporters with pre-qualified distributors and agents, as well as arranges videoconferences and face-to-face meetings.

As part of the Gold Key, the U.S. Commercial Service arranged for WMTO to meet with seven companiesin just two days, providing complete background information on each company. This significantly cut the time and cost of finding a distributor in Hong Kong, according to WMTO’s Cheng: “Choosing a good distributor is important to us, since we are giving exclusive rights to this company. The Commercial Service staff was very experienced and well connected in the Hong Kong community. They understood the product, provided our criteria to medical distributors strong in the OB-GYN field, and arranged meetings, which we appreciated the most.”

For more information about business opportunities in Hong Kong, call the U.S. Commercial Service at (800) USA-TRADE (872-8723), or visit www.export.gov/cntryind.html for Hong Kong market research.