In our third installment on Hong Kong we look at their exports, or to be more specific re-exports.
Hong Kong has an export-oriented economy with 99 percent of shipments coming from re-exports. In 2021, Hong Kong was the number 36 economy in the world in terms of total exports.
The top exports of Hong Kong are Gold ($14.5B), Broadcasting Equipment ($7.99B), Integrated Circuits ($6.98B), Diamonds ($6.52B), and Telephones ($5.77B), exporting mostly to China ($26.8B), India ($17B), Netherlands ($6.93B), United Kingdom ($6.21B), and Philippines ($3.9B).
Major exports are electrical machinery, apparatus, and appliances which account for 36 percent of total shipments. Other significant exports include telecommunications and sound equipment (20 percent); office and automatic data processing machines (10 percent); miscellaneous manufactured articles (5 percent) and non-metallic mineral manufactures (5 percent).
Re-exporting from Hong Kong involves goods that are imported into Hong Kong and then exported to another country without undergoing any substantial transformation. Many exporters or logistics companies in Hong Kong import goods from China, then re-sell or distribute them in whole or in part. For shipments exported from Mainland China (or other country) to Hong Kong and re-exported from Hong Kong to overseas, a **Re-export Certificate of Origin (CR)** is an important document, certifying their re-exports are of China origin and under their own names.
In 2022, the total value of goods re-exported through Hong Kong from and to the Mainland was HK$3,817.1 billion (US$487.4 billion), accounting for 85.4% of Hong Kong's total re-export trade value. The top three origins of Hong Kong's re-exports in 2022 were the Mainland, Taiwan and Korea. The values of re-exports originated from them were HK$2,080.7 billion, HK$706.9 billion and HK$326.4 billion respectively.
There's another process known as outward processing in the Mainland. This refers to processed goods re-exported through Hong Kong, of which all or part of the raw materials or semi-manufactures have been exported from or through Hong Kong to the Mainland for processing with a contractual arrangement for subsequent re-importation of the processed goods into Hong Kong.
In terms of statistics, in Q4 2021, 19.0% of Hong Kong’s total exports to Mainland China were for outward processing in Mainland China. On the other hand, 33.1% of Hong Kong’s imports from Mainland China were related to outward processing in Mainland China. Over the same period, 60.2% of Hong Kong’s re-exports of Mainland origin to other places were produced through outward processing in Mainland China.
Of note is the wristwatch trade in Hong Kong. Hong Kong is renowned for its exports of high-quality watches and jewelry. It is a major trading center for luxury watches and gemstone jewelry. Hong Kong is a significant market for high-end watches. The revenue in the luxury watches segment amounts to US$9.44 billion in 2023.
While Hong Kong is a major market for new luxury watches, the market for pre-owned watches isn’t as popular. This is because Hong Kong’s status as the primary place to buy new watches, with the big Swiss brands using Hong Kong as an Asian or global launch pad for their latest pieces.
In summary Hong Kong is a trade destination and leverages its strong ties to China's manufacturing to position itself as the "official exporter" of China, and to the international market a base for expansion into Asia.