Big rise in Hong Kong's offshore trade statistics

The Census and Statistics Department today (July 22) released for the first time a new set of separate statistics on Hong Kong's exports of services relating to offshore trade for 2000.

In the past, offshore trade has been covered under the category of exports of trade-related services within the broader component of exports of services in the Gross Domestic Product. The new statistics also include breakdowns by type of service and destination.

Along with continuing structural change in Hong Kong's mode of trade, some of the goods which used to pass through Hong Kong as re-exports are now diverted to 'offshore trade' without having to pass through Hong Kong, especially for goods produced in the mainland of China.

Offshore trade covers the services of both 'merchanting'* and 'merchandising for offshore transactions'**. Earnings from offshore trade include the gross margin from merchanting and the commission from merchandising services for offshore transactions.

In 2000, the earnings from offshore trade, in terms of gross margin or commission, grew markedly by 21.2% over 1999 to $84.6 billion.

Within this total, the gross margin from merchanting surged by 31.6% to $70.7 billion, while the commission from merchandising services for offshore transactions fell by 13.5% to $13.9 billion.

The sales value of the goods involved in merchanting totalled $825.7 billion in 2000 up 54% on the previous year. By comparison, the value of re-exports totalled $1,391.7 billion in 2000 up 18.1%.

The mainland of China was the largest destination for the goods sold under the merchanting arrangement, accounting for 41.6% of the total value of goods sold under this arrangement. China was followed by the United States (16.2%), Japan (7.7%), the Republic of Korea (5.4%) and the United Kingdom (3.5%).

As to the gross margin earned from merchanting, China also contributed the most, accounting for 35.8% of the total gross margin earned in 2000, followed by the United States (23.5%) and Japan (8.0%).

The United States was the largest destination of the merchandising services for offshore transactions, accounting for 42.7% of the total commission earned in 2000. The US was followed by China (9.8%), Germany (6.2%), Japan (5.7%) and France (4.1%).

A government spokesman said the availability of more detailed statistics on offshore trade gave a better understanding of the profound structural change that has been taking place in Hong Kong's external trade in recent years.

The surge in the value of offshore trade in 2000, which considerably out-performed the already distinct rise in the value of re-exports in that year, signified the increasing significance of offshore trade in generating growth of the Hong Kong economy.

*Merchanting is defined as services associated with the trading of goods which are purchased from a party outside Hong Kong and then sold to another party outside Hong Kong, without the goods ever entering and leaving Hong Kong. Also included are transactions of goods manufactured through sub-contract processing arrangements, yet sold directly to a party outside Hong Kong without the goods entering and leaving Hong Kong.

**Merchandising services for offshore transactions are defined as the services of arranging on behalf of buyers/sellers outside Hong Kong the purchase/sale of goods according to their specifications (e.g. multiple sourcing, marketing, contract and price negotiation, volume and sample procurement, shipment, inspection and arrangement of follow-up order). Again, the goods involved do not enter and leave Hong Kong. Unlike in merchanting, the Hong Kong entity, in its capacity as an agent or broker, does not take ownership of the goods involved.

Table 1 (text version) presents analysis of exports of services relating to offshore trade against re-exports of goods in 1999 and 2000.

Table 2 (text version) presents analysis of merchanting by five main destinations of sales of goods involved in merchanting in 2000.

Table 3 (text version) presents analysis of exports of merchandising services for offshore transactions by five main destinations in 2000.

Further enquiries can be directed to the Distribution and Services Statistics Section (1)B of the Census and Statistics Department (Tel: 2802 1372 or E-mail: tis@censtatd.gov.hk).

Ends/Monday, July 22, 2002