Why Aussie companies are taking advantage of new free trade and investment opportunities.
Open trade and investment opportunities; transparent regulations; and access to the world’s freest economy are some of the reasons why SMBs are doing big business in Hong Kong.
Business is now well and truly a global game – and Australian SMBs have more opportunities for growth than ever before. While digital technologies have opened new avenues for companies to expand into, it is a longstanding trade relationship with an economic powerhouse that continues to provide thriving business for SMBs Down Under.
So, what’s the attraction to Hong Kong?
Earlier this year, Australia and Hong Kong signed a free trade and investment agreement, which sees all tariffs on goods originating between the two eliminated.
According to the Australian Department of Foreign Affairs and Trade (DFAT), Hong Kong stands as the 34th-largest economy in the world at nearly US$341.7 billion in 2017, in terms of GDP.
The free movement of capital in and out of Hong Kong have accelerated the city’s development as an international commercial and financial centre.
Hong Kong is also a gateway to one of the world’s largest consumer markets – China. Hong Kong forms part of the Greater Bay Area, which is a Chinese government scheme to link 11 cities of Guangdong’s Pearl River Delta, all part of an integrated economic and business hub.
DFAT says the lack of discrimination against foreign-owned companies has allowed Australian companies to benefit from comprehensive economic partnership agreement and gain greater access to mainland China.
Meanwhile the World Trade Organization (WTO) says Hong Kong is the world’s eighth largest exporter of merchandise trade and the world’s 15th largest exporter of commercial services in 2018.
Analysis from The UNCTAD World Investment Report 2019, found global foreign direct investment inflows to Hong Kong amounted to US$115.7 billion in 2018, ranked third globally, behind mainland China (US$139 billion) in Asia.
DFAT says Hong Kong has one of the largest Australian communities abroad with around 100,000 Australians residing in Hong Kong. Around 96,000 people born in Hong Kong live in Australia.
Australia and Hong Kong have a longstanding trade relationship. Hong Kong was Australia’s twelfth largest trading partner overall in 2017, with total two-way trade in goods and services worth $18.8 billion.
In 2017, Hong Kong was Australia’s sixth most important destination for merchandise exports ($12 billion) and seventh-largest services market ($3.0 billion). Australia’s major merchandise exports were gold, edible products and preparations, telecommunications equipment and parts, and fruit and nuts.
The Hong Kong Trade Development Council (HKTDC) is a statutory body that assists and develop Hong Kong’s trade as a two-way global investment and business hub.
The HKTDC organises more than 30 exhibitions in Hong Kong a year, forming 11 of the largest marketplaces of their kind in Asia, of which five are the world’s largest – electronics, lighting, watches and clocks, jewellery and gifts. The fairs welcomed close to 40,000 exhibitors and over 771,000 buyers in 2018/19.
The HKTDC organised more than 300 promotion activities and over 610 networking events, and received more than 610 incoming missions in 2018/19, connecting about 80,000 Hong Kong companies with its database of 6.8 million mainland and overseas enterprises and multipliers.
At one of its fairs earlier this year, Australian SMBs were able to tap into global networks of buyers and suppliers to help fuel growth back home.
“We are a retailer of wooden toys in Australia and run a large retail store and an online shop,” says Craig Aitken, managing director of Australian SMB, Knock On Wood Toys.
Aitken says the company operates in a niche market for wooden toys in Australia, because of the product’s educational value. He visited the Hong Kong Toys & Games Fair for the first time earlier this year.
“I am looking for new brands which have no distribution in Australia,” he says. “I have spoken to a number of companies and eventually identified four brand-specific suppliers and three OEM [original equipment manufacturers] suppliers for a wide range of wooden toys such as educational toys, role-play toys, puzzles and baby walkers.
“I have asked them to provide more information. I plan to buy US$10,000-20,000 worth of toys from each new supplier. The Hong Kong fair is big and well-organised. I really like it.”
The HKDTC’s digital platforms have also transformed the typical buyers’ sourcing cycle. By extending the physical reach of trade fairs, via a 24/7 online platform and marketplace app, buyers can source industry-specific products from multiple exhibits online, as each supplier has a dedicated webpage to promote and attract buyer interest before a trade fair.