Hong Kong companies slow to sell in China
According to a Hong Kong Trade Development Council (HKTDC) survey, only 17% of Hong Kong’s companies have plans to begin marketing their products in China over the next five years. The figures are surprising given that China is now a member of the World Trade Organisation (WTO), and throw up a number of issues for international firms thinking of selling into China.
Of the 3,000 companies who responded to the survey, 27.5% were involved in mainland sales but their scale of business was relatively small, with around 60% having an annual turnover of less than $1.3 million. Among the majority that had not yet sold to the China market, about 50% said they were undecided about entering the market in the future.
The chief economist at HKTDC, Edward Leung, said the subdued interest in the mainland market was partly due to a lack of transparency in government policy and insufficient protection of intellectual property rights. He added that China's infrastructure and distribution system, dominated by mainland companies, was another factor. Distribution efficiency had improved in the past few years but was still far from satisfactory considering the lack of competition arising from the barriers to entry.
However, Mr Leung believed these unfavourable features would disappear over time. His view was shared by 69% of survey respondents who said they expected an improvement in the efficiency of China's distribution network, while 62.5% said they thought intellectual property rights protection would be strengthened after entry to the WTO. The majority of those questioned (62%) thought that high import tariffs would diminish, while a less substantial 35.3% felt that uncertainty over government regulation would decrease.
