H.K. electronic products face stiff competition from Chinese

HONG KONG, Aug. 25 Kyodo

About 90 percent of Hong Kong's electronic appliances exported to the U.S. market are facing direct competition from products manufactured in other parts of China, Hong Kong's Trade Development Council Executive Director Fred Lam said Friday.

Lam, head of the council in charge of promoting trade for Hong Kong-based manufacturers, said in a radio program most Hong Kong electronic appliances were sold in the same price range as Chinese products in the U.S. market last year.

But similar Japanese products still command a premium in the same market, he noted.

''This is a serious warning,'' Lam said. ''The quality of products made in China has been improving and Chinese products are becoming a threat to Hong Kong products in overseas markets.''

He said creativity in the whole production process is vital to Hong Kong's survival, especially when production costs are rising due to significant wage increases in the Pearl River Delta region in southern China's Guangdong Province.

Many Hong Kong manufacturers have relocated their production bases to the region since the 1980s.

''Production costs have been rising,'' Lam said, noting that last month in the nearby Shenzhen special economic zone workers' minimum monthly wages were raised by 23 percent to about 850 yuan ($107).

''The average wage in the Pearl River Delta region as a whole in 2005 rose by 20 percent from 2004, and another 15 to 30 percent in the first seven months this year,'' Lam added.

He said some of the investors have to move their factories to inner provinces or even to Vietnam and Indonesia for lower labor costs.

Lam said the Chinese government's tightening of control on pollution means that manufacturers have to invest more in environmental protection. The extra costs, in addition to rising costs of oil and raw materials, could not be transferred to buyers as economies in major overseas markets have slowed down, he added.

The council's figures shows that Hong Kong's export value in 2005 reached HK$2.2 trillion ($283 billion), while about 30 percent of the 3.6 million labor force worked in the industrial or trade sectors.

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