Inside Retail speaks to Hong Kong Trade Development Council expert Cloris Long on opportunities for Australian brands in Hong Kong and beyond.

IR: What have been some of the key changes to manufacturing in Hong Kong?

Cloris Long: Manufacturing operations on the mainland are now focusing on more sophisticated and higher value added items or urgent orders. Along with rising labour costs and stricter environmental regulations on the Chinese mainland, an increasing number of Hong Kong and mainland manufacturers have relocated their production of lower-end and mass products to Southeast Asian countries like Bangladesh, Vietnam, Cambodia and Indonesia. Today’s Hong Kong manufacturers are focusing on higher value added activities such as design and brand development, quality control, logistics and material sourcing.

IR: What advantages does the Hong Kong market offer?

CL: The Free Trade Agreement between Hong Kong and Australia will foster economic development between the two economies. Australia commenced the Free Trade Agreement negotiation with Hong Kong in May this year. It is envisaged this will include, among many other things, a reduction of non-tariff barriers, preferential rules of origin, and promotion and protection of investment.

IR: What are some of the opportunities for Australian brands on a retail front?

CL: Awareness of Australian brands is relatively limited in Hong Kong. However, the presence of Australian brands in the city continues to grow through partnering with Hong Kong based traders. For example, Carman’s Fine Foods has grown 135 per cent in sales over 12 months through its partnership with New Base Trading Co. The brand is now available in major Hong Kong supermarkets.

“Success has taken a long time — it certainly didn’t happen overnight, said Carolyn Creswell, CEO of Carman’s Fine Foods. It was a slow and steady plod every year to be better and to be very customer-focused so that we could deliver products consumers want to buy.”

IR: What are the challenges of the market?

CL: It is important to understand the tax and business structures in Hong Kong and find reliable business partners from Hong Kong rather than trying to do it yourself. Trade Fairs and exhibitions are still common places for buyers and suppliers to congregate and find potential partners.

Competition is fierce as the Hong Kong market is highly fragmented and dominated by international players from all over the world. The Hong Kong consumers are highly sophisticated and value conscious; they tend to purchase from established brands rather than trying out unknown foreign brands. It is important for Australian brands, like Carmen Fine Food, to become well established prior to entering the market.

IR: Any other tips?

CL: To establish connections and explore market opportunities, Hong Kong manufacturers and traders have involved themselves actively in international shows led by the Hong Kong Trade Development Council.

For more information and travel incentives of returned airfare and subsidised hotel bookings of up to HK$3,000, please contact HKTDC Sydney office on (02) 9261-8911 or at sydney.office@hktdc.org. For a list of trade fairs, visit: http://www.hktdc.com/info/trade-events/EX/en/Exhibitions.htm