A big hello from Hong Kong! I am Arthur, Head of Consumer & Retail at the Department for International Trade, Hong Kong.
Having spent half of my childhood in the UK, my taste buds were developed in English taverns and farmers’ markets, enjoying many styles of cuisines around the country. I feel privileged to have the opportunity to help introduce these familiar flavours into Hong Kong.
The Department for International Trade (DIT) in Hong Kong supports UK companies looking to export here by providing market briefings, access to tradeshows and government-to-government liaison. While the first 2 duties are quite visible to exporters, the third is often a fun part of the job. Previously I have been deployed to ‘rescue’ containers of milk or tonnes of chicken wings that are stuck at customs!
Hong Kong is one of the easiest places to do business for almost every sector. The World Bank ranked Hong Kong as 3rd out of 190 countries for the ease of doing business, with the market just losing out to New Zealand (3rd) and Singapore (2nd). It has a population that does not need much convincing to appreciate the UK’s lifestyle and products.
Trade barriers are almost non-existent when importing British products. We have world-class infrastructure to the rest of the world and into mainland China, which also makes it attractive for re-exporting.
Exciting things are taking place in Hong Kong, from dawn to dusk!
Before COVID-19, the city hosted 55.01 million visitors (2019), a majority of which are from mainland China. Hong Kong’s vast assortment of international brands, zero sales tax, lower retail prices (relative to mainland China), a broad diversity of authentic products and proximity means mainland Chinese tourists are one of the largest contributors to the sale of fashion, cosmetics and personal care products in Hong Kong.
In face of the global pandemic, the border remains closed to a large extent. Yet domestic consumption seems to have absorbed the impact and achieved a bounce-back in February 2021.
Although food services have been clouded with uncertainties as public health control has been changing constantly, this has paved the way for the growth and popularity of e-grocery. The e-commerce market is growing very fast in Hong Kong and an online survey in 2021 showed that 84% of respondents did their grocery shopping online. Although only a small survey, it shows that habits are changing!
Hong Kong is a ‘city of foodies’ known for its broad range of dining options. Whilst it is easy to export to Hong Kong, the city has a rigorous checking system for high-risk items e.g. meat, dairy, seafood. The food safety regulations are separate from China. Worth noting too that spirits (i.e. at or above 30% abv) are subject to 100% excise duty. It is one of the few items with a significant fiscal entry barrier. My colleagues and I can advise you on the food regulations and licensing requirements you need to be aware of when exporting here.
Opportunities for UK food & drink producers include:
Recently vegan and plant-based food has become popular thanks to a successful campaign by Green Monday, encouraging the population to eat meat-free 1 day a week. But conversion cannot be compared to Western countries. Instead, Hong Kong consumers prefer to try conventional food items with innovative and healthy twists such as zero-alcohol beer, dried fruit crisps and keto biscuits.
Macao is an hour ferry ride from Hong Kong (as well as linked by bridge). Although Macao’s total land area only amounts to 30.5km2 and has a population of 667,400 – the Special Administrative Region is awash with opportunities for British companies.
Macao is often cited as the world’s gaming hub: in 2018 casino revenues amounted to £25bn. The International Monetary Fund expects Macao to overtake Qatar as the richest place in the world very soon.
Macao is limited in resources, and imports almost all goods and services to support its 35.8 million visitors and 36,000 hotel rooms. Similar to Hong Kong, mainland Chinese tourists make up a large proportion of visitors. In fact, approximately 70% of tourists were from China in 2017, with the remaining 30% consisting of Hong Kong (18%), Taiwan (3%) and the rest of the world (9%).
For the past few years, all six of Macao’s major casino-resort operators have been investing in expansion programmes to diversify their revenues – retail, restaurants, hotels and the experience economy play a large role in this expansion, offering lots of opportunities for companies.
Hong Kong’s business community is predominantly proficient in English. Despite being under the umbrella of the Chinese language, be aware that the mother tongue of the city is Cantonese. We write in traditional Chinese, as opposed to Mandarin and simplified Chinese in mainland China.
It is standard to keep in touch with each other via e-mails, phone calls and video meeting platforms such as Zoom or Teams. Some might find instant messengers such as Whatsapp a handy tool, but it’s always regarded as an appropriate tool for business communications.
When dealing with Hong Kong contacts you might be amazed by their ‘can-do’ spirit and efficiency. However on the flip-side, we can sometimes speak in an undecorated tone, so don’t take it personally, we always mean well!
Almost every trader would more or less have a footprint in re-exporting products from Hong Kong to mainland China. The advice from me would be to protect your IP, be aware of any payable tariffs & regulations and develop tailored messaging for the market. DIT has a strong team in China that stands ready to support your expansion to the market.
If companies are supplying Food and Drink products, entry can be complicated. While Hong Kong is very much aligned with international food safety standards, mainland China operates in a different way. Products will need to be registered and importable items are very much limited to an approved list.
So for Food & Drink brands, without going through the time-consuming procedures, you could consider using Hong Kong as a base for cross-border trading. It is one form of e-commerce that might allow suppliers to get around some regulations by supplying from abroad.
Don’t forget that some UK brands gain their first China exposure through Chinese tourists visiting Hong Kong and trying your products here.
The order is a result of an introduction at a Meet the Buyer event organised by the Department for International Trade. The buyer was purchasing for a premium chain of 40 grocery stores, and we’d previously met them when exhibiting at Anuga Food & Drink fair. It just shows that, whether it’s physically promoting your brand at exhibitions and events or registering on an online marketplace and attending virtual Meet the Buyers, brand exposure does lead to future sales.
Yes, compared to other countries Joe & Seph’s has exported to, Hong Kong was very easy. The amount of paperwork needed was low, which made the process very smooth. For companies that are newer to exporting, Hong Kong would be a great market to take your first step.
Hong Kong consumers highly regard British products, so I’d recommend that your marketing and messaging showcases the fact that your brand is from the UK. Your DIT Trade Adviser can always put you in touch with in-market experts like Arthur, who would be able to offer the best advice on a market entry strategy.