An economist urged Hong Kong companies that have traditionally sourced in China to supply western customers to move up the value chain and develop their own brands to take advantage of the burgeoning Chinese consumer market, particularly as wage increase on the mainland undermine their traditional business.
The comments come amid concerns by some small, western sporting goods brands that they are being crowded out as their Chinese suppliers shift focus to their domestic market.
“Hong Kong companies have always viewed the mainland as a manufacturing base for the export of goods, but expansion of the mainland consumer market means rising spending power,” said Edward Leung, chief economist for the Hong Kong Trade Development Council.
Mainland government estimates say demand for high-end products will surpass Japan by 2015, making China the largest luxury market in the world.
Leung made his comments at a press conference in which he analyzed the impact of China's 12th five-year plan on Hong Kong. The ambitious development plan, which was passed at this month’s plenary meeting of the National People’s Congress, will shape major economic developments on the Chinese mainland between 2011 and 2015.
China's new five-year plan will speed up urbanisation, boosting demand for consumer goods and services.
“Hong Kong services providers, even those in the beauty and education sectors, should accelerate their entry into the market,” said Leung.
“Mainland city dwellers are now looking for high-quality services that can lift their living standards. They regard Hong Kong as a regional trendsetter and attach a higher preference to Hong Kong-branded services.”
Leung also disclosed that the latest Hong Kong Export Index, which rose from 53.6 to 55.8 in the first quarter of 2011, signals faster export expansion in the near term. The index monitors the export performance and prospects of Hong Kong traders and is based on a quarterly business confidence survey covering major industries.
Leung said that while indices for all major markets increased and stood above 50, a sub-index for exports to the Chinese mainland edged up to 54.2, and was likely to expand further.
