Speech by SEDL at Third Annual Supply Chain Management CEO Summit

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Following is the speech by the Secretary for Economic Development and Labour, Mr Stephen Ip, at the Third Annual Supply Chain Management (SCM) CEO Summit today (November 17) (English only):

Glenn, Victor, Cassian, Anna, distinguished guests, ladies and gentlemen,

Good morning. I am delighted to address you at the beginning of the Third Annual Supply Chain Management CEO Summit. First of all, congratulations to the Hong Kong Article Numbering Association (HKANA) and Efficient Consumer Response (ECR) Hong Kong for bringing this event to Hong Kong for the third time. I believe it is the highlight in the calendar of all SCM CEOs, not just here in Hong Kong but also internationally.

Standing here, in front of a backdrop that reads "Partnerships for Success", I believe many of you will agree with me that the organisers have picked an entirely appropriate theme - a theme that underlines the strategic importance of forging partnerships for mutual benefit and success in this age of globalisation and economic integration. For an SCM Summit held in Hong Kong, it also reminds us of the opportunities awaiting Hong Kong enterprises under the Mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA) that will come into effect on January 1 next year - less than two months away. I will say more about CEPA later on.

But first, let me talk about supply chain management, or SCM, which is central to this summit. Since the 1980s, SCM has developed into one of the hottest topics in business management circles. As with any management theory and concept, SCM often means different things to different people. To many, the term is synonymous with logistics or the efficient flow of freight. But SCM is more than that. It is the integration of key business processes involving not only original suppliers and end users of products, services, and information, but also all manufacturers and service providers who add value to these products, services and information as they progress along the supply chain. Logistics or efficient freight flow are of course part of the formula - but more than anything else, the key is "management" - the "M" in "SCM". And it is in the management of the business processes that strategic partnerships come into play.

Hong Kong's economic success has been founded on partnerships of one kind or another. In partnerships with our close neighbours in the Pearl River Delta (PRD), we have been a major manufacturing base and transportation hub for more than half a century. This role has evolved over time, as Hong Kong migrated from a manufacturing economy to a services economy. Today, services contribute more than 85% of our GDP. The shift in our economic focus has led to a natural evolution of our partnership with the PRD.

In the past, we were partners in the trade in goods. In more recent years, we have become partners in the trade in services. Now, with the growth and development of the services sector in the PRD, the partnership is gradually taking another important turn, with Hong Kong and the PRD each developing their respective niches in the vast market of trade in services.

Similarly, efforts to promote the adoption of the best SCM practices and associated enabling technologies in Hong Kong have led to visible changes in the business management field. When the HKANA was formed in late '80s, bar-coding was rarely heard of in Hong Kong. The hard work of the association and close partners such as ECR Hong Kong, coupled with Government support, has made the use of bar codes and similar standardisation measures the best practice in all lines of business in Hong Kong as well as in Government.

New technologies to speed up transport processes, such as EDI, are gaining popularity in Hong Kong and, increasingly also across the boundary. In the fine tradition of forging partnerships, and in order to develop synergy with our PRD partners, the HKANA has for many years collaborated with our neighbours to promote business standardisation. When I visited Fujian in August, I had the honour of witnessing the signing of a Memorandum of Understanding (MoU) between the HKANA and the Fujian Branch of the Article Numbering Centre of China. I am glad to learn that more MoUs of this nature will soon be concluded with other partners in Mainland China. This is clearly a move in the right direction. As an outward-looking economy, Hong Kong needs to think beyond our geographic confines and indeed beyond our present catchment of the PRD to reach out to the rest of Mainland China in collaborative efforts to promote SCM best practices. As Asia's world city, partnership with the rest of the world should of course remain high on the agenda as always.

As Chairman of the Hong Kong Logistics Development Council (LOGSCOUNCIL), I wholeheartedly support the HKANA and other like-minded bodies in the promotion of SCM best practices. Such practices are essential in strengthening Hong Kong's competitiveness as the preferred international logistics hub in Asia. I believe that LOGSCOUNCIL, with an overwhelming majority of its members drawn from the industry, is itself an example of Hong Kong's much-celebrated public-private sector partnership. I should add that the HKANA has been represented in LOGSCOUNCIL since its inception in late 2001. So, partners we are.

You may know that the Hong Kong government regards the logistics sector as one of the mainstays of our economy. The resilience and strength of the industry throughout the trauma of the SARS outbreak reinforced our confidence in the logistics sector. There is every reason to believe that the future will be even brighter as Hong Kong's economic partnership with the Mainland scales new heights, particularly with new opportunities coming on line under the CEPA.

This landmark agreement will provide a new platform, and new impetus, for businesses wishing to tap the vast potential of the Mainland market. It opens a new avenue of co-operation between Hong Kong and overseas firms wanting a foothold in the Mainland market. The implementation of the CEPA in January promises new opportunities for Hong Kong SCM and logistics service providers in the growing China market. I am confident that our enterprises and practitioners will leverage their proven skills and capitalise on the growing demands for their service. Against this background, the summit will provide an excellent opportunity for participants to share experience and insights in developing SCM strategies to serve the China market and for worldwide application.

Ladies and gentlemen, I wish you every success in your quest for "Partnerships for Success". I am sure that, as in the last two Summits, all the distinguished speakers and participants will find your involvement in the event a rewarding experience. And of course we would love to see you all back here again next year for the fourth annual summit.

Thank you very much.

Ends/Monday, November 17, 2003

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