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Following is a speech by the Secretary for Trade and Industry, Mr CHAU Tak Hay, at the Opening Ceremony of the International Bottled Water Association Asia Chapter's 2nd Biennial Convention & Exhibition today (Monday):

Ladies and Gentlemen,

It is my great pleasure to attend the opening ceremony of the second Biennial Convention and Exhibition of the International Bottled Water Association Asia Chapter. I am delighted that Hong Kong is playing host to this important international event.

When I cast around for reasons to justify my presence here, I found important lessons to learn from the development of the bottled water industry which are immensely relevant to what I do or part of what I do as the Secretary for Trade and Industry - the promotion of industrial development. This morning I would like to share with you these lessons.

Although water has been around since before civilisation began, bottled water has had a much shorter history. Even a casual observer can testify that the amount of shelf space allocated to bottled water in supermarkets and convenience stores has increased considerably over the past decade. So the first obvious lesson to learn is the need for industry to evolve to cater to changing consumer requirements. With rising living standards and changing lifestyles, a premium is placed on convenience. In addition, the growing passion of our community for health and fitness creates a demand for health drinks and alternatives to caffeine or alcohol products. Today, bottled water comes in a number of different forms - distilled, sparkling, mineral and spring etc. The bottle sizes vary enormously to suit practically every need. There are even flavours to choose from. In short, bottled water fills not one, but many, gaps in the consumer market.

As we enter the next century, we can expect consumers to be ever more demanding as they literally shop around the world. Even for previously mass-manufactured products such as cars, the talk is now for customisation. The challenge facing all industries is therefore to ensure that they continue to be responsive to the ever changing requirements of the consumer and that they continue to be alert to the possibilities brought about by the globalised world economy. Those who can keep pace with and stay on top of change will survive and thrive.

The second lesson concerns the importance of innovation to any industry. Looked at objectively, there is only one core ingredient despite the vast array of different bottles. It is the ancillary elements which play a determining role in the battle to survive and succeed in your keenly competitive market. The ability to create a unique image, if not taste, is a crucial factor of success with bottled water. Much ingenuity is required to perfect the taste of something which is essentially bland. More important, much innovation is needed in respect of brand-building and packaging for one to carve out and maintain a share of the market.

The bottled water industry has therefore shown us a good example of how innovation can add value to a product. In the knowledge-based economy of the 21st century, innovation will play an even more important role in almost every area of economic activity. The ability to invent new products, concepts, processes and so on has propelled our economic development, especially in the last few decades, and it will continue to do so. No business can afford to allow its innovative taps to run dry.

The third lesson is closely related to the second. This is the fact that almost any industry can benefit enormously from the application of technology. Quite apart from the need to comply with governmental hygiene standards, the bottled water industry has to ensure that the demands from increasingly discerning consumers regarding quality are fully met. This is an area where technology can help significantly. Many plants, including some in Hong Kong, produce their bottled water through fully automated production lines in a contamination-free environment. Thus technology is not the prerogative of defence or aerospace industries. So-called "traditional" industries can and do benefit from technology. Good examples abound - the use of wrinkle-free fabrics in the textiles and garment industry, the combination of computer software and toys, the application of modern production techniques to manufacture Chinese medicine and so on and so forth. The important question is not whether technology can work for us; but how we make technology work for us.

I now turn to the fourth lesson. This concerns the impact of industry on the environment. This has a special relevance to the bottled water industry as it is a big consumer of water as well as plastic bottles. These days environmental friendliness is gaining increasing recognition from both consumers and businesses. The trend that more and more in the trade are now turning to the use of bio-degradable materials in their packaging is therefore a welcome development. This shows that even for industries which are heavy consumers of our natural resources and are potential polluters, a difference can be made if we are more environmentally conscious.

Finally, another lesson that I have learned in studying the bottled water industry is that, while the Government can play the role of a promoter and facilitator, at the end of the day, the private sector is still the most critical factor in influencing the success or otherwise of an industry. Today's convention is a fine example of how suppliers and manufacturers, competitors and friends, can come together to exchange ideas and experiences for the good of the industry as a whole. I would like to congratulate the organisers for bringing about this meaningful event.

And finally, may I wish you all a most successful and fruitful convention. Thank you.

End/Monday, May 24, 1999

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