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Following is the full text of a speech by the Permanent Secretary for Commerce, Industry and Technology (Commerce and Industry), Miss Denise Yue, at the Annual Dinner of the Hong Kong Toys Council today (January 7): (English only)

Mr Chan, distinguished guests, ladies and gentlemen,

It is my honour to be invited to attend this spectacular annual event of the Hong Kong Toys Council. I would like to take this opportunity to wish you all a happy and prosperous New Year.

We all have fond memories of the wonderful toys and games that brought so much joy to our childhood days. But toys and games are not just for children. Many adults buy and collect dolls, teddy bears, and built-to-scale models of exquisite cars. And even grown-ups could find it hard to tear themselves away from the latest electronic games - although they might have bought it for their children in the first place.

The ever lasting attraction of toys and games have ensured their important position in the world of international trade. Thanks to the efforts of many of you here, Hong Kong continues to be the world's leading toys and games exporter. Together, you have provided the world with millions of toys and games every year, bringing not only fun and joy to children and adults alike, but also countless business and job opportunities.

In 2001, Hong Kong's total exports of toys amounted to $60 billion, which accounts for no less than 45 per cent of the world's total exports of toys. Of the 4 000 or so toys manufacturers in the Pearl River Delta, most of them are Hong Kong investors. They are mainly original equipment manufacturing suppliers to leading toys manufacturers in the world. But, more and more of them are now building their own brand names.

Over the years, Hong Kong's toys industry has upgraded itself from a producer of primitive toys into a world class R&D and manufacturing centre for toys. By thriving on innovation, creativity, technology and market knowledge, Hong Kong's toys manufacturers have achieved a level of success that has become the envy of many competitors. Your creativity and marketing sense are demonstrated by the many popular toy characters created and marketed by Hong Kong companies. Your ability to apply technologies to product enhancement is equally remarkable. This can be seen from the technical sophistication found in a wide range of products, ranging from the traditional and educational toys to electronic toys, online multimedia games, box office hits characters, and collectors' items.

But I am sure you will not rest on your laurels. As more and more international players seek to expand further through merger and acquisition, competition is getting keener in the global toys market. Also, more stringent safety, environmental and labour protection requirements mean higher compliance costs to individual toys manufacturers. As far as games are concerned, competition from other technologically advanced economies is also clear and present. To stay ahead, Hong Kong's toys manufacturers and games producers will have to enhance their design capabilities, add greater value to their products and services through innovation and application of the latest technology, and, more importantly, strive to build your own brand names.

The Government is committed to helping Hong Kong's toys industry move up the value chain. To this end, we established the Innovation and Technology Fund (ITF) a few years ago to finance projects that contribute to innovation and technology upgrading in both the manufacturing and service industries. ITF has so far approved over $8 million to projects which aim to enhance the competitiveness of Hong Kong's toys industry. The Hong Kong Toys Council initiated two projects funded by ITF. One of them is to establish a manufacturing resource databank for the toys industry, and the other is to develop a quality improvement programme for the toys industry. Both projects have been completed successfully.

Other ITF-funded projects relating to the toys industry include the development of benchmarking models and skills enhancement programme, and the development of technologies on network-based smart toys. The former has been completed, while the latter is in good progress.

In order to help small and medium enterprises (SMEs) enhance competitiveness and rise to new challenges and opportunities, we launched four schemes dedicated to help SMEs in late 2001 and early 2002. These schemes involve a total commitment of $7.5 billion from the public purse. They aim to assist SMEs in the acquisition of equipment and business installations, manpower training, export marketing and industry development. So far, more than 300 SMEs in the toys industry have benefited from these schemes.

Last month, the Small and Medium Enterprises Committee completed a comprehensive review on the effectiveness of the four funding schemes, and came up with various recommendations to improve the schemes. These recommendations have been accepted in full by the Chief Executive. They will be submitted to the Finance Committee of the Legislative Council for approval later this month. When implemented, the maximum amount of assistance an SME may receive under the schemes will be $4.07 million, compared with the current $1.025 million. We are confident that these improved measures will help SMEs, including those in the toys industry, raise their competitiveness and further expand their business.

Apart from the Government, trade and industrial associations have also been playing a pivotal role in promoting and supporting the development of Hong Kong's toys industry. In this regard, I would like to pay tribute to the Hong Kong Toys Council for their unswerving efforts in helping local toys manufacturers upgrade and expand markets. Also, by working closely with the International Council of Toys Industries on issues such as the formulation of an international code of practice for toys manufacturers, the Council has helped enhance the international profile of Hong Kong's toys industry.

2002 was a very challenging year for the toys industry. Hong Kong's toys and games manufacturers have demonstrated very well that they have the capabilities to improve their competitiveness, amid the numerous challenges and opportunities facing us. I am confident that, with your remarkable efforts and Government's continued support, Hong Kong's toys industry will scale new heights in the years ahead.

Once again, I wish you every success in year 2003. Thank you.

End/Tuesday, January 7, 2003

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