Hong Kong’s industrialists are moving out of mainland China to safer havens in Sino-US trade war
Malaysia, Vietnam and lower-cost economies in Southeast Asia are the new home for many Hong Kong manufacturers
Hong Kong’s manufacturers, who relocated their production of toys, electronics, textiles and plastics to factories in mainland China three decades ago, are on the move again.
This time, they are moving their production lines to Malaysia, Vietnam and lower-cost economies in Southeast Asia to avoid rising wages and land costs, and in search of safe havens from the escalating trade war between China and the US, said the president of a guild that represents 150 manufacturers with a combined workforce of 1 million and HK$200 billion (US$25.5 billion) in annual production.
“Many manufacturers have begun the relocation process of their production lines from the mainland due to rising costs and tougher regulations,” said Clara Chan Yuen-shan, president of the Hong Kong Young Industrialists Council (HKYIC) and chief executive of Lee Kee Holdings. “The outbreak of the US-China trade war escalates the wave of relocations.”
Chan’s company, founded by her great-grandfather in 1947, supplies electroplating chemicals and trades zinc, nickel, aluminium and other metals used in smartphones, toys and cars. The Hong Kong company supplies more than 70 per cent of the zinc alloy imported into mainland China.
Its 1,200 manufacturing customers, almost all of them mainland-based, are the hardest hit in the ongoing trade war with the US, since their metal products bound for US shores are subject to import tariffs.
“If the trade war continues to intensify, or extends to include toys, fashion wear and plastics, Hong Kong industrialists will be hit even harder because many of them are engaged in these industries,” Chan said.
Ian Chan, chief executive of technology component maker Kayamatics, arrived in Malaysia on Sunday to explore with his local partner the possibility of setting up production lines in Kuala Lumpur and Penang. His company sells Internet of Things devices, such as trackers for trucks to the US market while his firm has two factories in the mainland - one in Shenzhen and one in Chongqing.
