"Hub Hong Kong" faces advantages, challenges
(Xinhua)
Updated: 2004-11-06 11:35

Hong Kong retains considerable strengths as a competitive hub, while at the same time, a key challenge for Hong Kong as a logistics hub is high costs, according to a study released here Friday.

The study was commissioned by DHL Express, the world's leading express and logistics company, and conducted by a team from the Chinese University of Hong Kong. It pointed out that the cost of transferring consignments through Hong Kong was high by comparison with competitor exit points in the Pearl River Delta (PRD) in China's mainland, but the sources of additional cost varied.

For sea freight, the cost of getting a consignment from a factory gate to a destination market varied from 13 percent to 18 percent higher through Hong Kong than through Yantian in PRD. For air freight, overall costs of getting a consignment to market ranged from 11 percent more expensive through Hong Kong to the Europe to 26 percent more expensive to Japan.

Such a large cost difference could be "a source of vulnerability for Hong Kong in future," said Kelly Yu, general manager of DHL Express Hong Kong.

However, he added, there are currently tremendous strengths that enable Hong Kong to remain attractive and competitive in spite of these costs. These include superior connectivity and frequencies both in Asia and globally, as well as immense trust in the efficiency and simplicity of Hong Kong's customs processes. They also include tax management advantages that arise from establishing an "importer of record" in Hong Kong.

Waiman Cheung from the Chinese University of Hong Kong urged PRD manufacturers to take better advantage of logistics services to improve the reliability of the supply chain.

He pointed out that the findings called for careful attention to reducing costs in the logistics industry in Hong Kong, and for enhanced focus on specialized and value-adding logistics services.

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