Having weathered numerous storms in the global market, Hong Kong
manufacturers are facing another challenge to prove their business
agility.
The hurdle is in the form of the central government decision to
expand its export limit catalog to 15 percent of the country's
trade categories as of August 23, in a bid to trim its
ever-increasing trade surplus
Exporters of goods listed in the catalog, released on July 23,
are required to deposit half the amount of their payable levies in
Bank of China before they can continue their business.
Tens of thousands of Hong Kong enterprises will have to give up
their labor-intensive production or move out of familiar coastal
bases, or upgrade their technology and product quality quickly.
Simon Lam, boss of a Hong Kong-funded toy firm, yesterday told
China Daily that he will consider moving his firm from
Dongguan, a processing industry center in south China, to either
Thailand or Vietnam to avoid the costs incurred by the policy
change in Beijing.
He said his factory used to import processing materials at a
price of about 80 million yuan per manufacturing unit, and
according to the new regulation, he would have to pay an additional
deposit of as much as 23 million yuan.
At a maximum, Hong Kong Trade Development Council (TDC)
estimates, processing companies will have to shed some 370,000 jobs
on the mainland and another 10,000 in Hong Kong.
Fearing the pinch from the policy change, a delegation of Hong
Kong industry and trade bodies, visited the Guangdong provincial government last week
seeking a grace period in the enforcement of the policy.
But Beijing is unlikely to soften its current position due to
the mounting pressure for it to reduce the trade surplus, according
to a source close to the Ministry of Commerce who did not want to
be named.
Instead, the central government may consider allowing Hong Kong
companies currently engaged only in processing trade to expand
their business scope, according to Wang Qinhua, a senior official
with the Ministry of Commerce.
TDC economist Yau Lai-ping admitted that local manufacturers
need to upgrade operation and production.
Wang suggested that they also consider relocating their
operations to provinces in central and western China, where the
export limit catalog does not apply.
(China Daily August 2, 2007)
