Opportunities Seen in Vietnam, Mainland China Electronics Market
HONG KONG, Mar 11, 2015 - (ACN Newswire) - Confidence among Hong Kong exporters rose in the first quarter of 2015, according to research data from the Hong Kong Trade Development Council (HKTDC). The Council's latest Export Index, announced today by HKTDC Director of Research Nicholas Kwan, rebounded 6.7 points to 44.9 points. However, Mr Kwan noted that, although confidence has improved, the Export Index remained below the watershed mark of 50, indicating that export sentiment for the immediate future remained slightly pessimistic.
Sub-Sectors
Among industry sub-indices, machinery and electronics performed better, recording 49.1 and 45.6 respectively. Except for jewellery, the indices of other industries also picked up compared to the previous quarter. Export sentiment in all major markets also improved. The indices for Japan, the United States and the Chinese mainland edged up to close to 50, reflecting relatively neutral sentiments of exporters for these markets. Confidence in the European market was still rather weak at 46.7.
Price indices and procurement indices both remained below 50, signalling that unit prices would be lower and procurement activities may shrink in the short term. On labour cost pressure, 64 per cent of the respondents predicted a rise in labour costs on the mainland, an increase of seven percentage points compared to the fourth quarter of 2014.
Challenging Environment
Daniel Poon, Principal Economist (Global Research) of the HKTDC, said the data revealed that the global economy will basically maintain its current growth momentum in 2015. With the US expected to gradually tighten its monetary policy, combined with uncertainty for the European economy and labour constraints on the Chinese mainland, the export environment will remain challenging, Mr Poon said.
Regional Research
Last year, a delegation from the HKTDC's research team visited Vietnam to gain a deeper understanding of production base development there. Vietnam is regarded as a key economy in the ASEAN (Association of Southeast Asian Nations) region. The HKTDC research team had also conducted a study on the Chinese mainland consumer market for electronic and electrical products with the view to bringing new business opportunities to Hong Kong companies.
Vietnam Production Base
Vietnam's manufacturing industries are largely export-oriented. Many multinationals such as Samsung, Intel and Microsoft have successively set up production bases in the country. Dickson Ho, Principal Economist (Asian and Emerging Markets) said: "In view of the shortage of factory workers and the surge in labour costs on the Chinese mainland, neighbouring Vietnam has become a hotspot for setting up factories. The minimum wage in Vietnam was raised by 15 per cent at the beginning of the year, to between US$101 and US$145 a month. Despite such an increase, it is still far lower than on the mainland and is roughly half of that in mainland cities." Mr Ho said the confidence of foreign investors has generally been restored in Vietnam following labour unrest last May. "Local factories are now back in operation as a host of remedial measures have been adopted by the Vietnamese government. Newly added foreign direct investment in Vietnam for 2014 has risen by 9.6 per cent."
Vietnam Advantages
Among manufactured products in Vietnam, the growth in electronic products is most significant; increasing by 59 per cent from 2008 to 2013, double the rate of growth in other areas such as wooden products and metal materials. This is due to the comparatively high quality of the labour force in Vietnam, where the literacy rate is as high as 94 per cent and people are generally receptive to an English-speaking environment and to learning new skills. This is conducive to meeting the high-tech demands of electronics manufacturing.
There are about 290 industrial parks with good facilities across Vietnam. To attract foreign investors, investment promotion zones offering special tax incentives have been set up in some of the industrial parks. Also, with its accession to the World Trade Organization in 2007, Vietnam enjoys lower tariff rates for its exports to Europe and the US, which could benefit Hong Kong companies, Mr Ho said.
Mainland Electronics Survey
The Chinese mainland is one of the world's largest consumer electronics markets, while electronic and electrical appliances are major exports for Hong Kong, accounting for 61 per cent of the city's total exports in 2014. Recently, HKTDC Research surveyed 1,600 middle-class consumers in eight mainland cities. The results of the questionnaire study will be released next month in two reports: Consumer Survey on China's Small Electrical Appliances Market and Consumer Survey on China's Consumer Electronics Market.
Survey Highlights
HKTDC Economist (Greater China), Wing Chu, previewed the findings during today's press conference. He noted that, in addition to factors such as quality, price and brand recognition, more than half of the respondents are also concerned about user-friendliness of products. Online shopping has also become one of the major channels for consumers to purchase electronics and electrical appliances. Furthermore, 90 per cent of the consumers rated Hong Kong consumer electronics as either "medium-end" or "top grade". As for Hong Kong household electrical appliances, 89 per cent of respondents rated them "mid-range" or "high-end" products. Local companies can capitalise on the Hong Kong brand name to make inroads into the mainland market. Hong Kong companies can also consider adding value to their products, such as introducing energy-saving and environmental elements or including functions that are compatible with smart homes. The survey shows that consumers are willing to pay an extra 10 per cent for products with these elements and functions.
Reference:HKTDC Export Index 1st Quarter of 2015 - http://bit.ly/1FIoykgVietnam, an Alternative Production Base: 2015 Update - http://bit.ly/1D2M4ee
Websites:HKTDC Research - www.hktdc.com/research/tcHKTDC Quarterly - www.hktdc.com/research/tq_tcHKTDC Statistics - http://bso.hktdc.com/bso/jsp/bso_freq_stat_chi.jsp
Video: Vietnam: ASEAN Option for Manufacturers - http://youtu.be/KKq-ghhRGM8
Photo Download: http://filesharing.tdc.org.hk/hktdc/download.php?fid=_phptPCcgh
About HKTDC
A statutory body established in 1966, the Hong Kong Trade Development Council (HKTDC) is the international marketing arm for Hong Kong-based traders, manufacturers and service providers. With more than 40 global offices, including 13 on the Chinese mainland, the HKTDC promotes Hong Kong as a platform for doing business with China and throughout Asia. The HKTDC also organises trade fairs and business missions to provide companies, particularly SMEs, with business opportunities on the mainland and in overseas markets, while providing information via trade publications, research reports and media room. For more information, please visit: www.hktdc.com. Follow us on Google+, Twitter @hktdc, LinkedIn.
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Source: HKTDC
Contact:
HKTDC Corporate Communication Department Joe Kainz Tel: +852 2584 4216 Email: joe.kainz@hktdc.org
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