Hong Kong Manufacturing SMEs: Preparing for the Future

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10Exhibit 4. Exhibit 5.World Trade(Base year 2004 = 100)(With crisis vs. Without crisis)World GDP(Base year 2004 = 100)(With crisis vs. Without crisis)240With crisis150With crisis220Without crisis145140Without crisis2001351801301251601201401151101201051001002004200520062007200820092/20102/20112/20122/20132/20142004200520062007200820092/20102/20112/20122/20132/2014Source : EIU; Enright, Scott & Associates, Ltd.Source : EIU; Enright, Scott & Associates, Ltd.Developing countries, particularly those in Asia andLatin America, have been the bright spot in theworld economy over the last few years. Stimuluspackages and domestic growth in places likeChina, India, Indonesia, and Brazil have resulted incontinued growth in East Asia and Latin America.However, as central banks around the worldcontinued to flood markets with liquidity into mid-2010, fears have grown that China, India, and Brazilin particular are getting into an asset price bubble,which could eventually burst with negative impactson those and other economies.3 IMA-Asia, “Asia Pacific Executive Brief,” April 2010.4 EIU, “Forecast,” 2009.5 Statistical Bureau of Guangdong Province.6 “China’s workers head home jobless,” The Straits Times,15 November 2008.The global slowdown had a dramatic impact onChina’s exports and those of Guangdong Province.China’s export growth has slowed down from 21.9per cent in the first half of 2008 to 13.6 per cent inthe last half of 2008, and further declined to -15.9per cent in the year of 2009. 3 It was projected thatChina’s exports would not reach 2008 levels until2012. 4 In Guangdong, export growth has sloweddown from 13.1 per cent in the first half of 2008to 6.5 per cent in the last half of 2008, and exportsin 2009 were 11.5 per cent less than in 2008. Thedownturn slowed Guangdong’s GDP growth from14.7 per cent in 2007 to 10.1 per cent in 2008 and9.5 per cent in 2009. 5 Reports surfaced of millionsof job losses in PRD factories and of some firms thatclosed up without honouring their obligations toworkers. 6
11Exhibit 6.Exhibit 7.Hong Kong’s Trade(HK$ billion)Guangdong’s Trade(US$ billion)350ImportsRe-exports45Exports300Domestic exportsTotal exports40Imports352503020025150201001510505001/20053/20055/20057/20059/200511/20051/20063/20065/20067/20069/200611/20061/20073/20075/20077/20079/200711/20071/20083/20085/20087/20089/200811/20081/20093/20095/20097/20099/200911/20091/20103/20105/20077/20079/200711/20071/20083/20085/20087/20089/200811/20081/20093/20095/20097/20099/200911/20091/20103/2010Source : Hong Kong Census and Statistics DepartmentSource : Guangdong CustomsThe onset of the global economic crisis promptednumerous initiatives in China. The CentralGovernment announced a RMB 4 trillion (US$576billion) national stimulus package. In addition,Guangdong Province announced its own stimuluspackage of RMB 2.3 trillion (US$331 billion). Policiesdesigned to limit price increases in the propertysector were replaced by policies to encourage thesector. Other favourable policies including subsidiesfor the purchase of autos and home appliances ledto substantial growth in these sectors. Policies thathad limited bank lending, particularly in coastalareas, were reversed, as were reductions in exporttax rebates and other restrictions on export-orientedindustries. The policy initiatives helped Chinaweather the global downturn, with comparativelystrong GDP growth of 8.5 per cent in 2009, andeven faster rates in the first few months of 2010.Guangdong’s exports in the first few months of2010 were similar to those of the same period in2008 (see Exhibit 6). Hong Kong also saw its tradedecline in the last part of 2008 and through muchof 2009. By March and April of 2010, however,Hong Kong’s trade figures had returned roughlyto the same levels they had achieved in March andApril of 2008 (see Exhibit 7). Despite the rebound,international markets remained weak and theoutlook for the region’s trade has been uncertain.Influence of Retail and Buyer Market StructureThe global economic downturn has exacerbatedthe impact of the development of powerful andconcentrated retailers and buyer industries. Thevast majority of Hong Kong SMEs sell their productseither directly on to retailers or to OEM customerswho then resell the goods under their own names.The global economic downturn has caused thesebuyers to push their suppliers particularly hard.Some have pulled orders, some have delayedpayments, some have rejected shipments onquestionable grounds, and some have shifted ordersto competitors or other locations.
Page 1 and 2: Hong Kong Manufacturing SMEs:PREPAR
Page 3 and 4: ContentsForeword 2Executive Summary
Page 5 and 6: 3In this report and the accompanyin
Page 7 and 8: 5Cost reduction strategies may incl
Page 9 and 10: 7In order to answer these questions
Page 11: 9Exhibit 2. Exhibit 3.Global Stock
Page 15 and 16: 13Hong Kong manufacturing firms RMB
Page 17 and 18: 15hour in Bangladesh, US$0.33 per h
Page 19 and 20: 17Utilities and sewage charges are
Page 21 and 22: 19tax if they carried out export pr
Page 23 and 24: 21demand and production (such as in
Page 25 and 26: 23In recent years, China has become
Page 27 and 28: 25keep costs down rather than inves
Page 29 and 30: 27specific infrastructure projects,
Page 31 and 32: 29markets. 71This included helping
Page 33 and 34: 31Failure to DifferentiateMany Hong
Page 35 and 36: 33The Impacts of Developments on Ho
Page 37 and 38: 35performance). Note that the figur
Page 39 and 40: 37The RMB appreciation and inflatio
Page 41 and 42: 39In spite of these challenges, the
Page 43 and 44: 41Exhibit 23. Measures Taken to Cop
Page 45 and 46: 43The Chinese Manufacturers’Assoc
Page 47 and 48: 45Industry Situation ReportsWhile i
Page 49 and 50: 47Exhibit 33. Exports of Watches &
Page 51 and 52: 49that it is unlikely production wo
Page 53 and 54: 51factory in Cheung Sha Wan. The co
Page 55 and 56: 53Renley focuses a good deal of att
Page 57 and 58: 55The Consumer Electronics Industry
Page 59 and 60: 57Issues for Hong Kong Consumer Ele
Page 61 and 62: 59Some Hong Kong owned firms have a
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61Suga has occasionally been challe
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63In terms of dealing with regulato
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65• Having a manufacturing base i
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67Exhibit 41. Textiles and Clothing
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69China’s Labour Contract Law is
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71Case Study - Lever Style Incorpor
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73and potential customers know of L
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75are likely to yield them profits
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77Exhibit 46. Top Mould and Die Exp
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79under pressure to reduce prices.
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81Some Hong Kong firms are finding
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83Datamatic has worked hard to deve
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85• Companies that try to compete
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87Exhibit 52. Exports of Toys, Baby
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89into the medium-term. A further s
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91• As the entertainment and toy
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93Company StrategySilverlit constan
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95Silverlit plans to continue manuf
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97Strategies to Meet the Challenges
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99Central Governments, who set up r
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101manufacturing jobs, which is sti
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103• Strategies to deal with envi
Page 107 and 108:
105Strategies to Deal with Internal
Page 109 and 110:
107• Identify the key functional
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109• Superior visionSuperior visi
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111• Implement suitable workplace
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113• Plan for successionSuccessio
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115• Joint or place branding and
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117New OpportunitiesOne major devel
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119management, especially when it c
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Federation of Hong Kong Industries3
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Hong Kong Manufacturing SMEs: Preparing for the Future

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