Hong Kong as a Food Trading Hub

Alice Tsang, Economist

Research Department

16 October, 2017

2

Overview of Hong Kong’s Economy

3

Major Economic Indicators

4

Characteristics of Hong Kong’s Economy

free trade

low taxation

6th largest trading economy of merchandize

15th largest exporter of commercial services

3,731 regional headquarters and regional offices in Hong Kong representing their parent companies located outsides Hong Kong

Among these companies, US accounted for 21%, Japan (18%), UK (9%) and the mainland (8%)

5

A Services-oriented Economy

GDP by Economic Activity in 2015 %

Agriculture, fishing, mining and quarrying 0.1

Manufacturing 1.1

Electricity, gas and water supply, and waste management 1.5

Construction 4.6

Services 92.7

Import/export, wholesale and retail trades 22.7

Accommodation and food services 3.4

Transportation, storage, postal and courier services 6.5

Information and communications 3.5

Financing and insurance 17.6

Real estate, professional and business services 10.9

Public administration, social and personal services 17.5

Ownership of premises 10.6

GDP at basic prices 100.0

Source: HKSAR Census and Statistics Department

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Organic Food Market in Hong Kong

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Food Safety Issues

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Hong Kong Food and Beverages Market

Hong Kong area 1,092 Km² with 7 million+ population <1% agriculture land, >95% of food supply relies on imports

57 million tourists in 2016, of which 43 million (~76%)

were from China ~14,000+ restaurants

(37% Chinese, 56% non-Chinese restaurants, 7% fast food outlets) 1,000+ bars, pubs and other eating

and drinking establishments

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Hong Kong Organic Food Market

Hong Kong organic packaged food market reached USD13 million in 2016 (+5%).

Both organic food and non-organic food are governed by: The Public Health and Municipal Services Ordinance (Cap.132) stipulates that all food for sale in Hong Kong must be fit for human consumption and food labels should not be misleading or falsely described the food.

Any person who carries on food importation or food distribution business is required to register with the Director of Food and Environmental Hygiene (DFEH)

10

Organic Certifications in Hong Kong

There are two certification bodies in Hong Kong: Hong Kong Organic Resource Center (HKORC) and Hong Kong Organic Certification Center (HKOCC)

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Other Organic Food Labels

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Sales of Organic Packaged Food by Category

Rice, pasta and noodles, 23%

Spreads, 15%

Others, 14%

Biscuits and snacks bars, 12%

Breakfast cereals, 12%

Savory snacks, 10%

Bread, 8%

Soup, 6%

Source: Euromonitor

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Sales Channel: Physical Stores

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Sales Channel: Online Shopping

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Consumption Pattern on Organic Food

HKORC and Hong Kong Baptism University conducted “Local consumer Behaviour Towards Organic Food 2016”.

70% of interviewees had purchased organic products, 38% of them purchased organic products at least once every two weeks.

67% of interviewees relied on the certification label to differentiate organic food from conventional food

Price and certification label are the major considerations

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Hong Kong as Food Trading Hub

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In 2016, Hong Kong Imports USD25 billion (+9%) of Food and Beverages

China,

23%

USA,

16%

Brazil,

8%

Japan, 5%

Thailand, 4%

Others,

35%

Netherlands, 5%

Australia, 4%

Meat, 26%

Vegetables/

Fruits, 22%

Fish, 15%

Beverages, 13%

Seasoning, 8%

Dairy products,

8%

Cereals, 4%

Coffee/Tea,

3%

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Jan-Aug 2017, Hong Kong Imports USD16 billion (-1%) of Food and Beverages

China 23%

USA 15%

Brazil 8%

Australia 5%

Netherlands 5%

Others 34%

Thailand 5%

Japan 5%

Meat 29%

Veg/Fruits 21%

Seafood 14%

Beverages 13%

Seasoning 8%

Dairy products 7%

Cereals 4%

Coffee/tea 4%

Sugar/honey 2%

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Jan-Aug 2017, Hong Kong Imports USD2.4 billion (+5%) from the U.S.A.

Meat 47%

Veg/fruits 34%

Seasoning 8%

Seafood 4%

Beverages 3%

Dairy products 2%

Sugar/honey 1%

Coffee/tea 1%

Cereals 1%

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Hong Kong re-exports of USD 917 million of USA’s Origin Food and Beverages

Meat 49%

Veg/fruits 41%

Others 7%

Seasoning 5%

China 41%

Taiwan 23%

Vietnam 21%

Macau 7%

Others 8%

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Hong Kong: Distribution Centre for Imported Food Destined for China/Asian Countries

Foreign food imported into China is subject to customs duties (10-35%) and value-added tax (17%)

Hong Kong is a free port and does not levy any customs duties on food imports

Importers can first ship the products to Hong Kong then transship the right quantities to different cities in China according to the local demand

Importers can also consolidate the products destined for China, Hong Kong and other Asian countries in FCL, then transship the other markets according to the sales level

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Success Story

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Hong Kong: as a Food Production Base

Amazing Delights Ltd is a natural health food company specailised in black mission figs, founded in USA in 2007 In 2010, set up branch company and factory in Hong Kong

targeting the Asian market R&D in Hong Kong, leveraging Chinese

festive seasons: moon cake and Chinese pudding Besides retail market, it also cooperates

with catering chains in Hong Kong

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Marketing and Sales Channels

www.awellfood.com