The Risk Manager: HK repositions

AN ECONOMIC crunch has seen
retail rents drop by as much as half in Hong Kong, creating new opportunities for SMEs to establish a physical foothold in a city importing huge quantities of food and beverages for its tourism and hospitality sector . . .

HONG KONG — As Sindy Wong says Hong Kong’s current economic downturn has created a window of opportunity for SMEs and entrepreneurs seeking a foothold in the Greater China and regional markets.
Street-level rents have dropped, she says – in some cases the asking price is as little as half the rent charged at the peak of the cycle – as Hong Kong, along with its regional neighbours, is buffeted by global economic winds.
Hong Kong has also been impacted by falling tourist numbers from the Mainland, and the strength of its currency, which is pegged to the US dollar.
Wong, who is Head of the Tourism and
Hospitality section of InvestHK, says that,
increasingly, many smaller foreign SMEs are looking to Hong Kong as a risk manager in their dealings with China.
“The choice of the right partner and relationships in Hong Kong is just so important for small business and the entrepreneur,” she says. “It is all about local knowledge, and Hong Kong is closest to China.”
Wong’s role is to help SMEs and entrepreneurs who want to establish a presence in Hong Kong. Her area of responsibility encompasses all aspects of supply of goods and
services, including food and beverages, to the tourism and hospitality sector and its associated industries, such as wellness and lifestyle.
Imports to Hong Kong of major food items have shown enormous growth in the years from 2010-2015; live animals and meat up 28 per cent, to US$6,757 million in 2015; seafood up 17 per cent, to US$3,543 million in 2015; fruit and vegetables up 58 per cent, to US$4,914 million in 2015; and dairy products and eggs up 124 per cent, to US$1,980 million in 2015.
Because of lifestyle, Hong Kong has one
restaurant for every 600 people. Its F&B sector employed more than 280,000 people in 2015, a year in which restaurant receipts totalled US$13,379 million. F&B retail sales increased by 37 per cent between 2010 and 2015.
In the wellness sector, Wong says demand for vitamins and dietary supplements will continue to grow due to the ageing population and a
focus on health consciousness. Sales of vitamins and dietary supplements in Hong Kong grew by 44 per cent between 2010 and 2015 to reach US$$792 million.
 Paediatric vitamins and dietary supplements are also becoming increasingly popular, seeing 133 per cent sales growth over that period. “Parents are very concerned about their children’s nutritional intake and development, particularly of the brain, bones and immunity.”
Wong says the current rental market in Hong Kong is providing opportunity to more effectively market new brands. An example, she says, is in the sports industry, where a number of companies offering branded sports equipment and lifestyle gear have been opening their doors.
For Australian companies, she sees openings especially in food and beverages, but warns that Hong Kong’s burgeoning wine market is now highly competitive. In 2015, Hong Kong imported 60 million litres of wine, doubling
imports recorded in 2008, the year in which it abolished all wine taxes.
Wong says InvestHK can help companies
interested in establishing a physical presence in Hong Kong. InvestHK offers a range of free advisory services which can be customised to help at any stage of a client’s business development. Visit www.investhk.gov or email swong@investhk.gov.hk
In Australia, contact luca_de_leonardis@hketosydney.gov.hk, call (61 2) 9286-2358.
Companies looking to import or distribute products into Hong Kong can contact the Hong Kong Trade Development Council, which offers a business