Hong Kong. Executive Summary. Economy. Trade. Investment. Tourism

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1 Hong Kong Executive Summary This country fact sheet provides key trade and investment related statistics for Hong Kong. Specifically, it shows Hong Kong s trade and investment flows including an analysis of top markets and products with South Africa and the Western Cape highlighting the largest and fastest growing products and sub-sectors. The key highlights in the Hong Kong country fact sheet are provided below: Economy Hong Kong s GDP was valued at USD381.3bn in 213 and it s GDP per capita was ranked 15 th globally at USD52,7. Hong Kong experienced a steady increase in GDP annual growth from 1.6% in 212 to 3% in 214. Hong Kong s largest sector in 213 was import/export wholesale and retail trade sector at 25% share of GDP. Trade Hong Kong s global exports in 212 were valued at ZAR4trn compared to ZAR3.3trn in 211, increasing by 21%. South Africa s exports to Hong Kong increased by 18% in 213 to reach ZAR13.8bn from ZAR11.7bn in 212. The leading export product to Hong Kong from South Africa in 213, was platinum, unwrought, semimanufactured or powder forms valued at ZAR6.3bn. The Western Cape s exports to Hong Kong decreased by 4.8% in 213 to reach ZAR1.3bn from ZAR1.4bn in 212. The leading export product to Hong Kong from the Western Cape was molluscs valued at ZAR231m, followed by crustaceans (ZAR192m). Investment Between January 23 and June 214 a total of 1,534 FDI projects were recorded from Hong Kong, representing a total capital investment of ZAR1,293.38bn. During the same period a total of 8 FDI projects were recorded from Hong Kong to South Africa, representing a total capital investment of ZAR921.76m. While a total of 6 FDI projects were recorded from South Africa to Hong Kong, representing a total capital investment of ZAR ZAR987m. Tourism Hong Kong s total global arrivals are expected to increase from 36 million in 21 to 88 million in 219. The number of arrivals into South Africa from Hong Kong, between 29 and 213 grew from 42,83 arrivals to 151,847. The number of arrivals to the Western Cape from Hong Kong increased overall from 26,975 in 29 to 98,549 in 213.

2 Table of Contents 1. General Information Economic Overview Trade Trade in Services Hong Kong Global Trade South Africa trade with Hong Kong Western Cape Trade with Hong Kong Trade Regulations Markings and Standards Investment Global Investment into Hong Kong Global Investment from Hong Kong Investment Relations between South Africa and Hong Kong Hong Kong FDI to South Africa South African FDI to Hong Kong Tourism Hong Kong Trends and Travel Patterns Inbound & Outbound Tourism Hong Kong Tourist Arrivals into South Africa Hong Kong Tourist Arrivals into the Western Cape

3 1. General Information Hong Kong officially known as Hong Kong Special Administrative Region of the People's Republic of China, is a city on the southern coast of China at the Pearl River Estuary and the South China Sea. Its physical location has allowed the city to establish a transportation and logistics infrastructure that includes the world's second busiest container port and the world's busiest airport for international cargo. Hong Kong is well known for its expansive skyline, deep natural harbour and extreme population density (7 million inhabitants over a land mass of 1,14 km 2 ). The current population of Hong Kong comprises 93.6% ethnic Chinese. Government type Chief of State Population Life expectancy GENERAL INFORMATION Limited democracy President of China XI Jinping 7,112,688 (July 214 est.) years Literacy 93.5% Ethnic groups Chinese 93.1%, Indonesian 1.9%, Filipino 1.9%, other 3% (211 est.) Religions Eclectic mixture of local religions 9%, Christian 1% Cantonese (official) 89.5%, English (official) 3.5%, Putonghua Languages (Mandarin) 1.4%, other Chinese dialects 4%, other 1.6% (211 est.) Sources: CIA World Factbook, 214 and World Bank Data, Economic Overview Hong Kong ranks as the 3 rd most important international financial centre, after New York City and London, with one of the greatest concentrations of corporate headquarters in the Asia-Pacific region. The economy is characterised by low taxation and free trade, with the world's most lassiez-faire economic policies. 3 Hong Kong has a free market economy, highly dependent on international trade and finance - the value of goods and services trade, including the sizable share of re-exports, is about four times GDP. Hong Kong has no tariffs on imported goods, and it levies excise duties on only four commodities, whether imported or produced locally: hard alcohol, tobacco, hydrocarbon oil, and methyl alcohol. There are no quotas or dumping laws. The territory has little arable land and few natural resources, so it imports most of its food and raw materials. Imports account for more than 9% of Hong Kong's food supply, including nearly all of the meat and rice available there. Hong Kong is a regional centre due to the following reasons: A popular venue for hosting regional headquarters or representative offices A leading telecommunications hub for the Asia-Pacific region A premier offshore Renminbi (RMB) centre The world's busiest airport for international cargoes One of the world's busiest container ports The 2 nd largest private equity centre in Asia The 2 nd largest stock market in Asia, the sixth largest in the world The 3 rd largest foreign exchange market in Asia, the 5 th in the world. Hong Kong s GDP was valued at USD381.3bn in 213 and it s GDP per capita was ranked 15 th globally at USD52,7. Hong Kong is ranked 4 th in terms of the highest percentage of millionaire households, behind Switzerland, Qatar, and Singapore.

4 Value (HKDbn) GDP (PPP) (213 est.) ECONOMIC INFORMATION USD381.3bn GDP growth (213 est.) 2.9% GDP per capita (213 est.) USD52,7 Inflation (213 est.) 4.4% Interest rate (31 December) 5% Unemployment rate (213) 3.1% Doing Business in...(215 ranking) 3 Total Exports (213) Total Imports (213) Inward FDI ZAR68bn ZAR6.8trn ZAR413.7bn Outward FDI ZAR1.3trn Source: CIA World Factbook, 214; Doing Business in Hong Kong, 214 Hong Kong s economy will experience a steady increase in GDP value during the forecast period with GDP increasing from HKD2.trn in 212 to UKD2.5trn in 219. Hong Kong experienced a steady increase in GDP annual growth from 1.6% in 212 to 3% in 214. During the forecast period 214 to 219, Hong Kong s economy is expected to grow at 3.5%. HONG KONG'S GDP & GROWTH, ,% ,5% 3,% 2,5% 2,% 1,5% 1,%,5% % Growth f 216f 217f 218f 219f HKDbn 1 964,4 2 22,2 2 82,9 2 15, ,9 2 38, , ,8 Growth 1,55% 2,94% 3,% 3,25% 3,5% 3,69% 3,74% 3,77%,% Source: IMF, 214 (Constant Prices, PPP) The leading industrial sectors in Hong Kong are: textiles, clothing, tourism, banking, shipping, electronics, plastics, toys, watches and clocks, and leading agricultural products are fresh vegetables and fruit; poultry, pork and fish. According to the figure below, Hong Kong s largest sector in 213 was import/export wholesale and retail trade sector at 25% share of GDP. Public administration, social and personal services was ranked 2 nd at 17% share of GDP, followed by finance and insurance with 16%.

5 HONG KONG'S SECTOR CONTRIBUTION TO GDP, 213 Agriculture, fishing, mining and quarrying,1% Ownership of premises 1,4% Public administration, social and personal services 17,1% Manufacturing 1,4% Electricity, gas and water supply, and waste management 1,7% Construction 3,9% Import/export, wholesale and retail trades 24,9% Accommodation and food services ^ 3,5% Real estate, professional and business services 11,1% Financing and insurance 16,3% Source: Hong Kong Census & Statistics Department, Companies Information and communications 3,6% Transportation, storage, postal and courier services 5,9% In total, there were 46 Hong Kong companies on the 213 Forbes Global 2 list. Collectively, the companies had a combined market value of USD939.3bn, with USD1.5trn in assets; generating USD574.6bn in revenues and USD82.7bn in profits. The top companies in Hong Kong, according to the Forbes Global 2 for 213 are shown below: RANK LARGEST PUBLICLY TRADED HONG KONG/CHINA COMPANIES AS PER THE FORBES 2 GLOBAL RANKING, 214 GLOBAL RANK COMPANY INDUSTRY SALES (USDbn) PROFITS (USDbn) ASSETS (USDbn) MARKET VALUE (USDbn) 1 89 China Mobile Telecommunications Services Hutchison Whampoa Conglomerates Cnooc Oil & Gas Operations China Netcom Group Telecommunications Services BOC Hong Kong Banking Jardine Matheson Food Markets Sun Hung Kai Properties Diversified Financials China Unicom Telecommunications Services CLP Holdings Utilities Cheung Kong Diversified Financials Swire Pacific Conglomerates Cathay Pacific Airways Transportation Henderson Land Diversified Financials MTR Transportation Hongkong Land Diversified Financials Wharf (Holdings) Conglomerates Bank of East Asia Banking Hongkong Electric Utilities Citic Pacific Conglomerates China Resources Ent Conglomerates Source: Economywatch, 213 5

6 2.2 Doing Business in Hong Kong According to the World Bank s Doing Business 215 report, Hong Kong is ranked 3 rd out of 189 countries in terms of the ease of doing business. Hong Kong s strengths in terms of ease of doing business include dealing with construction permits (1 st ), protecting investors (2 nd ) and trading across borders (2 nd ). HONG KONG S EASE OF DOING BUSINESS, 215 SELECTED INDICATORS RANKING OUT OF 189 COUNTRIES, 215 Starting a Business 8 Dealing with Construction Permits 1 Getting Electricity 13 Registering Property 96 Getting Credit 23 Protecting Investors 2 Paying Taxes 4 Trading Across Borders 2 Enforcing Contracts 6 Resolving Insolvency 25 Doing Business Source: Doing Business, Hong Kong s Risk Ratings According to Standard and Poors (215), Hong Kong retains a number of credit strengths supporting its very high rating including the strength of the government's balance sheet, supply-side economic flexibility, and high standards of governance underpinned by high-quality public institutions. They are also of the view that the recent unrest will have a little impact on the strong institutions and governance that underpin the government s credit ratings. The protests reflected different perceptions about Hong Kong's governance and were not unusual given its political status. 6 HONG KONG S COUNTRY RATINGS STANDARD & POORS SOVEREIGN RATINGS FITCH RATING MOODY'S RATINGS Local Currency Rating Foreign Currency Rating T&C Assessment Credit Rating Credit Rating AAA AAA AAA AA+ Aa1 Source: Standard & Poors, 214, TradingEconomics The table below shows Hong Kong s risk assessment in terms of export transactions and direct investments. Ratings are between 1 and 7, and between A and C, with 7 and C being the maximum risk indicators. The table shows that the political risk and commercial risk in Hong Kong is low both in the short- and long-term. HONG KONG S RISK ASSESSMENT EXPORT TRANSACTIONS Short Term 1 Political Risks Medium-Long term 1 Special Transactions 1 Commercial Risk A DIRECT INVESTMENTS War risk 2 Risk of expropriation and government action 1 Transfer risk 1 Source: ONDD, 214

7 Value (ZARbn) 3. Trade 3.1 Trade in Services In 212 Hong Kong experienced the highest trade in services both in terms of exports and imports over the ten year period. Hong Kong exports in services grew by 2% in 212 to reach ZAR1.2trn, while global imports increased by 18%. Over the period analysed Hong Kong has consistently maintained a positive trade balance. 1 2 HONG KONG'S TRADE IN SERVICES, Exports (ZARbn) 348,2 353,1 43,2 487,7 595,1 748,6 74,3 765,8 851,4 1 24,5 Imports (ZARbn) 195,4 199,3 215, 248,5 299,2 381,8 359,6 37,7 42,3 475,9 Trade balance 152,8 153,8 188,1 239,2 295,9 366,8 344,7 395, 449,1 548,6 Source: TradeMap, 214 The table below shows Hong Kong s trade in services for 212. Other business services (includes merchanting and other trade-related services, operational leasing (rental), miscellaneous business, professional, and technical services and other services) was the largest services export valued at ZAR357bn followed by travel (defined as covering goods and services for own use or to be given away, acquired from an economy, by non-residents during visits to that economy. Most common goods are accommodation, food, beverages and transport) and transportation valued at ZAR271bn and ZAR259bn respectively. 7 Travel was the largest import service into Hong Kong valued at ZAR164bn followed by transportation and other business services valued at ZAR138bn and ZAR9bn respectively. CODE SERVICES EXPORTED BY HONG KONG, 212 SERVICES IMPORTED BY HONG KONG, 212 SERVICE VALUE 212 (ZARbn) % GROWTH CODE SERVICE VALUE 212 (ZARbn) % GROWTH Other business services % 236 Travel % 236 Travel % 25 Transportation % 25 Transportation % 268 Other business services % 26 Financial services % 26 Financial services % 245 Communications services % 245 Communications services % 262 Computer and information services % 266 Royalties and license fees % 253 Insurance services % 253 Insurance services % 266 Royalties and license fees % 262 Computer and information services % 287 Personal, cultural and recreational services % 249 Construction services % 249 Construction services % 291 Government services, n.i.e % Personal, cultural and recreational 291 Government services, n.i.e % % services TOTAL EXPORTS % TOTAL IMPORTS % Source: TradeMap, 214

8 Value (ZARbn) 3.2 Hong Kong Global Trade The figure below illustrates Hong Kong s trend in global trade for the period 23 to 212 (note: Hong Kong 213 direct data was not available). Hong Kong global exports in 212 were valued at ZAR4trn compared to ZAR3.3trn in 211, increasing by 21%. Global imports from Hong Kong were valued at ZAR4.5trn in 212 compared to ZAR3.7trn in 211, increasing by 22%. More than 8% of Hong Kong manufacturers have established production facilities in China. More specifically, Hong Kong's trade performance is in part affected by outward processing activities in Guangdong where the majority of Hong Kong companies have extended their manufacturing base. In 213, 3.6% of Hong Kong's total exports to the Chinese mainland were related to outward processing activities; the figures were 16.7% for domestic exports and 3.7% for re-exports (HKTDC, 215). 5 HONG KONG'S GLOBAL TRADE, Exports (ZARbn) 1 711,3 1 7, , , ,2 3 3, ,2 2 92, ,8 4 31,3 Imports (ZARbn) 1 745, , , , 2 599, , , , , ,8 Trade balance ,1-5,9-87,7-145,7-184,3-189,3-296,5-397,5-495,5 8 Source: TradeMap, 215 China was the leading export market for Hong Kong with a value of ZAR2.3trn. The United States and Japan rank second and third valued at ZAR357bn and ZAR152bn respectively. Other top export markets were India (ZAR9bn), Taiwan (ZAR89bn) and Germany (ZAR82bn). RANK TOP 1 HONG KONG EXPORT MARKETS, 212 IMPORTERS Source: TradeMap, 215 VALUE 212 (ZARbn) % GROWTH % SHARE 1 China % 57.69% 2 United States % 8.86% 3 Japan % 3.77% 4 India % 2.24% 5 Taiwan % 2.2% 6 Germany % 2.4% 7 Singapore % 1.65% 8 Republic of Korea % 1.65% 9 United Kingdom % 1.49% 1 Vietnam % 1.33% 31 South Africa %.34% TOTAL EXPORTS % 1%

9 China was the leading import market in 212, valued at ZAR2.1trn. Japan and Singapore ranked second and third valued at ZAR346bn and ZAR283bn respectively. Other top import markets were Taiwan (ZAR273bn); Republic of Korea (ZAR273bn) and Switzerland (ZAR175bn). RAN K TOP 1 HONG KONG IMPORT MARKETS, 212 EXPORTERS VALUE 212 (ZARbn) % GROWTH % SHARE 1 China % 45.53% 2 Japan % 7.65% 3 Singapore % 6.25% 4 United States % 6.3% 5 Taiwan % 5.71% 6 Korea, Republic of % 3.88% 7 Switzerland % 3.14% 8 Malaysia % 1.95% 9 Thailand % 1.92% 1 India % 1.91% 26 South Africa %.21% TOTAL IMPORTS % 1% Source: TradeMap, 215 The table below shows Hong Kong s top 1 traded products for the 212 period. Electronic integrated circuits and micro assemblies were the leading export product, valued at ZAR488bn. Electric application for line telephony, including current line system and gold (unwrought or in semi-manufactured form) were ranked second and third valued at ZAR43bn and ZAR48bn respectively. Electronic integrated circuits and micro assemblies are the leading import product by Hong Kong, valued at ZAR582bn. Electric application for line telephony, including current line system and gold (unwrought or in semimanufactured forms) are ranked second and third at ZAR432bn and ZAR389bn respectively. Other top imports are automatic data processing machines; optical reader (ZAR184bn); parts and accessories of computers and office machines (ZAR182bn) and diamonds, not mounted or set (ZAR15bn). 9 RANK TOP 1 HONG KONG GLOBAL EXPORTS, 212 TOP 1 HONG KONG GLOBAL IMPORTS 212 PRODUCT Electronic integrated circuits and micro assemblies Electric app for line telephony, including current line system Gold unwrought or in semimanufactured forms Parts & accessories of computers & office machines Automatic data processing machines; optical reader Part suitable for use solely/princ with televisions, reception app VALUE 212 (ZARbn) % GROWTH RANK % % % % % 5 PRODUCT Electronic integrated circuits and micro assemblies Electric app for line telephony, including current line system Gold unwrought or in semi-manufactured forms Automatic data processing machines; optical reader Parts & accessories of computers & office machines VALUE 212 (ZARbn) % GROWTH % % % % % % 6 Diamonds, not mounted or set % 7 Diamonds, not mounted or set % 7 Petroleum oils, not crude % 8 9 Electric transformer, static converter (for example rectifiers) Printing machinery; machines for uses ancillary to printing % 8 1 Printed circuits % 1 Part suitable for use solely/princ with televisions, reception app % % 9 Articles of jewellery & parts thereof % Diodes/transistors & sim semiconductor devices % TOTAL EXPORTS % TOTAL IMPORTS % Source: TradeMap, 215

10 7th Global Exporter for Clocks and watches and parts thereof 7th Global Exporter of Knitted or crocheted fabric 8th Global Exporter Bird skin, feathers, artificial flowers, human hair Top Global Importer for Furskins and artificial fur Top Global Importer for Pearls, precious stones, metals, coins, etc Top Global Importer for Clocks and watches and parts thereof Hong Kong's imports represent 3% of world imports and is the world s 7 th largest importer. Hong Kong's exports represent 2.7% of world exports and is the world s 1 th largest exporter. Source: TradeMap, 214 1

11 Value (ZARbn) 3.3 South Africa s trade with Hong Kong South Africa s trade with Hong Kong significantly increased from 24 to 213. South Africa s exports to Hong Kong increased by 18% in 213 to reach ZAR13.8bn from ZAR11.7bn in 212. Imported goods were valued at ZAR2.2bn in 213 compared to ZAR2bn in 212, increasing by 15%. Except for 26, South Africa has maintained a trade surplus with Hong Kong, with exports exceeding imports over the period 24 to Source: Quantec, 214 SOUTH AFRICA'S TRADE WITH HONG KONG, Exports (ZARbn) 3,4 3,8 2,6 4,5 5,2 7,9 6,7 8,7 11,7 13,8 Imports (ZARbn) 2,7 2,5 2,7 2,8 2,7 2, 2, 1,9 2, 2,3 Trade balance,7 1,3 -,1 1,7 2,4 5,9 4,7 6,8 9,6 11,4 The leading export product to Hong Kong from South Africa in 213, was platinum, unwrought, semi-manufactured or powder forms valued at ZAR6.3bn, followed by waste or scrap of precious metal and nuts valued at ZAR1.5bn and ZAR776m respectively. The fastest growing products were manganese ores, concentrates, iron ores (252%), electric apparatus for line telephony, telegraphy (215%) and nuts except coconut, Brazil and cashew (52%). 11 Electric apparatus for line telephony, telegraphy was the leading import product into South Africa from Hong Kong was valued at ZAR361m, followed by diamonds, not mounted or set (ZAR114m). It is evident from the basket of goods shown that Hong Kong has an appetite for South Africa s metal and agribusiness products. RANK 1 SOUTH AFRICA S EXPORTS TO HONG KONG, 213 SOUTH AFRICA S IMPORTS FROM HONG KONG, 213 PRODUCT Platinum, unwrought, semi-manufactured or powder forms VALUE 213 (ZARm) % GROWTH RANK % 1 PRODUCT Electric apparatus for line telephony, telegraphy VALUE 213 (ZARm) % GROWTH % 2 Waste or scrap of precious metal % 2 Diamonds, not mounted or set % 3 Nuts except coconut, brazil & cashew, fresh or dried % 3 4 Diamonds, not mounted or set % Manganese ores, concentrates, iron ores >2% Manganese Electric apparatus for line telephony, telegraphy % % 6 7 Chromium ores and concentrates % 7 8 Unwrought aluminium % 8 Watches with case of, or clad with, of base metal Automatic data processing machines (computers) Cargo containers designed for carriage of goods Electric transformers, static converters and rectifiers Prepared unrecorded sound recording media (non-photo) Jewellery and parts, containing precious metal % % % % % % 9 Citrus fruit, fresh or dried % 9 Printing and ancillary machinery % 1 Molluscs % 1 Audio-electronic equipment, except recording devices % TOTAL EXPORTS % TOTAL IMPORTS % Source: Quantec, 214

12 Value (ZARm) 3.4 Western Cape s Trade with Hong Kong Western Cape trade to Hong Kong increased from 24 to 213. The province s exports to Hong Kong decreased by 4.8% in 213 to reach ZAR1.3bn from ZAR1.4 in 212. Imported goods were valued at ZAR371m in 213 compared to ZAR366m in 212, increasing by 1.4%. Except for 24 and 25, the Western Cape has maintained a trade surplus with Hong Kong, with exports exceeding imports over the period 24 to Source: Quantec, 214 WESTERN CAPE'S TRADE WITH HONG KONG, Exports (ZARm) 595,2 523,8 614,5 837,7 995,1 955, 1 135,4 1 38,1 1 41, ,4 Imports (ZARm) 73,4 68,1 555,6 548,1 435,7 463,7 277,7 317,6 365,8 37,5 Trade balance -135,2-84,3 58,9 289,6 559,4 491,4 857,7 99,5 1 45, 972,8 The leading export product to Hong Kong from the Western Cape was molluscs valued at ZAR231m, followed by crustaceans (ZAR192m). The fastest growing export products were crustaceans, molluscs, etc, prepared or preserved (121%), fish, cured, smoked, fish meal for human consumption (13%) and fresh apples, pears and quinces (12%). 12 The leading import product into the Western Cape from Hong Kong was watches with case of, or clad with, of base metal valued at ZAR36m, followed by electric apparatus for line telephony (ZAR23m). Glass fibres, glass wool, and articles thereof (4417%) and padlocks, locks, clasps with locks, keys (17%) were the fastest growing import products into the Western Cape. RANK WESTERN CAPE S EXPORTS TO HONG KONG, 213 WESTERN CAPE S IMPORTS FROM HONG KONG, 213 PRODUCT VALUE 213 (ZARm) % GROWTH Molluscs % 1 2 Crustaceans % 2 3 Citrus fruit, fresh or dried % 3 4 Grapes, fresh or dried % Fruit, nut, edible plant parts nes, prepared/preserved Crustaceans, molluscs, etc, prepared or preserved RANK % % 6 7 Apples, pears and quinces, fresh % 7 8 Grape wines(including fortified), alcoholic grape must PRODUCT Watches with case of, or clad with, of base metal Electric apparatus for line telephony, telegraphy Jewellery and parts, containing precious metal Mounted precious or semi-precious stones, not diamonds Glass fibres, glass wool, and articles thereof Electric transformers, static converters and rectifiers Printed reading books, brochures, leaflets VALUE 213 (ZARm) % GROWTH % % % % % % % % 8 Imitation jewellery % 9 Raw skins of sheep or lambs % 9 Diamonds, not mounted or set % 1 Fish, cured, smoked, fish meal for human consumption % 1 Padlocks, locks, clasps with locks, keys % TOTAL EXPORTS % TOTAL IMPORTS % Source: Quantec, 214

13 Western Cape trade with Hong Kong by sector is shown below. The largest exports to Hong Kong where in the agriculture, forestry and fishing sector accounting for 63%, food (25%) and other industries (4%). Imports from Hong Kong to the Western Cape where in other industries (19%), followed by professional and scientific equipment (14%) and electrical machinery (1%). WESTERN CAPE EXPORTS TO HONG KONG BY SECTOR (% SHARE), 213 WESTERN CAPE IMPORTS FROM HONG KONG BY SECTOR (% SHARE), 213 Agriculture, forestry & fishing 62,5% Other industries 19,13% Food Other industries 3,46% 25,47% Professional & scientific equipment Other sectors Electrical machinery 13,59% 1,72% 1,5% Beverages 2,5% Television, radio & communication equipment 1,% Basic non-ferrous metals Other mining Other chemicals & man-made fibres 1,55% 1,47%,6% Machinery & equipment Metal products excluding machinery Wearing apparel Printing, publishing & recorded media 6,% 5,92% 5,39% 4,8% Machinery & equipment,54% Glass & glass products 4,2% Leather & leather products,4% Basic chemicals 3,46% Electrical machinery Professional & scientific equipment,27%,22% Plastic products Motor vehicles, parts & accessories Food 3,14% 2,52% 1,96% 13 % 2% 4% 6% 8% % 5% 1% 15% 2% 25% Source: Quantec, 214

14 3.5 Trade Regulations Markings and Standards Import Tariff The excise tax on distilled spirits is 1%, and the rate for unleaded gasoline is USD.78 per liter. Duties on wine and beer were reduced to % effective February 27, 28. Lastly, a steep "First Registration Tax," which ranges from 35% -1% of price, is levied on new car purchases. The current list of dutiable goods and corresponding rates is available at: Trade Barriers Hong Kong is a duty-free port, with few barriers to trade in goods and services and few, if any, restrictions on foreign capital flows and investment. The Hong Kong government imposes license requirements on the import and export of items found on control lists issued by the major multilateral export control regimes (Wassenaar Arrangement, Missile Technology Control Regime, Nuclear Suppliers Group, and Australia Group). Labelling Hong Kong s non-tariff barriers related to labeling requirements, standards, and other requirements are generally minimal, but will become more restrictive for foods, beverages, and supplements. Pharmaceuticals and over-thecounter (OTC) drugs must have indications of dosage and frequency on the label in both Chinese and English. Food Labeling Hong Kong s food labeling regulations are developed and administered by the Centre for Food Safety. According to Schedule 3 to the Food and Drugs (Composition and Labeling) Regulations (Cap. 132W), the following information should be marked in either English or Chinese language or in both languages on the label of prepackaged food: Name of the food List of ingredients (including allergens) Indication of "use by" or "best before" date Statement of special conditions for storage or instructions for use Name and address of manufacturer or packer Count, weight or volume of food 14 New Food Labeling Requirements Hong Kong s nutritional labeling regulation took effect July 1, 21. The regulation requires all prepackaged food sold in Hong Kong to label the product s energy content plus seven nutrients: protein, carbohydrates, fat, saturated fat, trans fat, sodium and sugars. Packaged products which make claims such as low fat or high in Vitamin A must meet additional labeling and definitional requirements as uniquely spelled out in the legislation. Prohibited The import of ammunitions, firearms and fireworks is strictly forbidden. 3.6 Port-to-Port Rates The port of Hong Kong, located by the South China Sea, is a deepwater seaport dominated by trade in containerised manufactured products, and to a lesser extent raw materials and passengers. It is one of the busiest ports in the world, in the three categories of shipping movements, cargo handled and passengers carried. Hong Kong is a free port. There is no customs tariff on goods imported into Hong Kong. The Hong Kong government collects an excise duty on only four types of goods irrespective of whether they are imported or locally manufactured, namely, tobacco, hydrocarbon oil, alcoholic beverages and methyl alcohol. In general, any person who imports or exports any goods is required to lodge with the commissioner of customs and excise an import/export declaration within 14 days after the importation or exportation of the goods. CAPE TOWN PORT TERMINAL TO HONG KONG MAIN SEA PORTS HONG KONG PORTS DISTANCE TRANSIT TIME Hong Kong km 2 days(s) 14 hours Source: Sea-Rates, 215

15 Value (ZARm) 4. Investment 4.1 Global Investment into Hong Kong Between January 23 and June 214 a total of 2,246 FDI projects were recorded into Hong Kong. These projects represent a total capital investment of ZAR413.69bn which is an average investment of ZAR184.49m per project. During the period, a total of 169,255 jobs were created. INWARD FDI INTO HONG KONG, Projects Value (ZARm) Projects Source: FDI Intelligence, 214 The United States was the largest source market for inward FDI into Hong Kong in terms of projects, with 649 investment projects, accounting for 29%. The United Kingdom and China are ranked second and third accounting for 15% and 7% respectively. 15 RANK COUNTRY PROJECTS TOP 1 SOURCE MARKETS FOR FDI INTO HONG KONG, 23 JUNE 214 % PROJECTS CAPEX (ZARm) % CAPEX COMPANIES % COMPANIES 1 United States % % % 2 United Kingdom % % % 3 China % % % 4 Japan % % % 5 France % % % 6 Germany % % % 7 Italy % % % 8 Switzerland % % % 9 Canada % % % 1 Australia % % % Total % % % Source: FDI Intelligence, 214 The figures below show global inward FDI into Hong Kong by sector, for 23 to June 213 by number of projects and capex. In terms of FDI projects, most projects were in the following: Financial services accounting for 18% of projects, Business services accounting for 15% of projects, and Software and IT services accounting for 14% of projects.

16 In terms of sector classification of FDI by capex, most FDI went to the following: Financial services accounting for 23% of capex, Communications accounting for 14% of capex, and Transportation accounting for 1% of capex. INWARD FDI INTO HONG KONG'S SECTORS BY PROJECTS, 23-JUNE 214 INWARD FDI INTO HONG KONG'S SECTORS BY CAPEX, 23-JUNE 214 Electronic Components 2% Food & Tobacco 3% Transportation 4% Semiconductors 2% Other sectors 16% Financial Services 18% Business Services 15% Real Estate 4% Leisure & Entertainment 5% Electronic Components 4% Other sectors 16% Financial Services 23% Communications 7% Consumer Products 8% Textiles 11% Software & IT services 14% Software & IT services 5% Business Services 6% Textiles 6% Consumer Products 7% Communications 14% Transportation 1% Source: FDI Intelligence, 214 The top 1 global companies investing into Hong Kong by projects from 23 to June 214 are shown below. COMPANIES INVESTING INTO HONG KONG, 23-JUNE 214 RANK INVESTING COMPANY PROJECTS CAPEX (ZARm) SECTOR 1 Walt Disney Consumer Products 2 MVP RV Automotive OEM 3 HSBC Financial Services 4 DHL Transportation 5 Global Switch Communications 6 Datapipe Communications 7 NTT Communications (NTT Com) Communications 8 China Unicom Communications 9 Goodman Interlink Real Estate Rhombus International Hotels Hotels & Tourism Group TOTAL Source: FDI Intelligence,

17 Value (ZARm) 4.2 Global Investment from Hong Kong Between January 23 and June 214 a total of 1,534 FDI projects were recorded from Hong Kong. These projects represent a total capital investment of ZAR1.3trn which is an average investment of ZAR843.18m per project. During the period, a total of 447,452 jobs were created. OUTWARD FDI FROM HONG KONG, 23-JUNE Projects Value (ZARm) Projects Source: FDI Intelligence, 214 China was the largest destination market in terms of projects for FDI from Hong Kong, with 64 investment projects, accounting for 39%. India and the United States are ranked second and third accounting for 5.9% and 5.6% respectively. 17 TOP 1 DESTINATION MARKETS FOR FDI OUT OF HONG KONG, 23 JUNE 214 RANK COUNTRY PROJECTS % PROJECTS CAPEX (ZARm) % CAPEX COMPANIES 1 China % % India % % 43 3 United States % % 56 4 United Kingdom % % 42 5 Vietnam % % 4 6 Singapore 46 3.% % 41 7 Australia % % 28 8 Germany % % 3 9 Malaysia % % 27 1 Taiwan % % 25 TOTAL % % 626 Source: FDI Intelligence, 214 The figures below show global outward FDI from Hong Kong by sector, for 23 to June 214 by number of projects and capex. In terms of FDI projects, most projects were in the following sectors: Textiles accounting for 11.1% of projects, Transportation accounting for 9.6% of projects, Financial services accounting for 8.4% of projects, and Hotels and tourism accounting for 8.% of projects.

18 In terms of sector classification of FDI by capex, most FDI went to the following sectors: Business services accounting for 22% of capex, Real estate accounting for 13% share of capex, and Hotels and tourism accounting for 12.7% of capex. OUTWARD FDI FROM HONG KONG INTO GLOBAL SECTORS BY PROJECTS, 23-JUNE 214 OUTWARD FDI FROM HONG KONG INTO GLOBAL SECTORS BY CAPEX, 23-JUNE 214 Other sectors 28,4% Warehousing & Storage 3,7% Business Machines & Equipment 4,4% Business Services 5,2% Communi cations 5,7% Textiles 11,1% Transportation 9,6% Real Estate 7,6% Financial Services 8,4% Hotels & Tourism 8,% Consumer Products 7,8% Communications 2,1% Consumer Products 2,2% Metals 4,% Transportation 4,2% Financial Services 4,5% Warehousing & Storage 8,4% Other sectors 17,5% Coal, Oil and Natural Gas 9,3% Business Services 22,2% Real Estate 12,9% Hotels & Tourism 12,7% Source: FDI Intelligence, 214 In terms of sub-sector classification of FDI from Hong Kong by projects, most FDI went to the following: Clothing and clothing accessories accounting for 9% of projects and 1.4% capex, Accommodation accounting for 8% of projects and 13% capex, Freight/distribution services accounting for 4.4% of projects and 1.8% capex, and Computer and peripheral equipment accounting for 4.4% of projects and 1.1% capex. 18

19 OUTWARD FDI FROM HONG KONG BY SUB-SECTOR, 23-JUNE 214 Clothing & clothing accessories Accommodation Freight/Distribution Services Computer & peripheral equipment Retail banking Cosmetics, perfume, personal care & household products Warehousing & storage Jewellery & silverware Wireless telecommunication carriers Water transportation Commercial & institutional building construction Rental & leasing services Other support services Communications equipment Real estate services All other electrical equipment & components Corporate & investment banking Insurance Food & Beverage Stores (Food & Tobacco) Air transportation 1,36% 4,43% 1,83% 4,37% 1,9% 4,24% 2,65% 3,39% 1,4% 3,39% 2,67%,84% 2,48% 1,5% 2,41% 1,33% 2,35% 5,72% 2,15%,5% 2,9%,11% 1,83%,23% 1,83% 4,9% 1,83% 1,23% 1,63%,67% 1,56%,6% 1,43%,5% 1,43%,49% 9,39% 7,63% 12,65% 8,6% % 2% 4% 6% 8% 1% 12% 14% 19 % Projects % Capex Source: FDI Intelligence, 214 The top 1 global companies investing from Hong Kong by project from 23 to June 214 are shown below. COMPANIES INVESTING FROM HONG KONG, 23-JUNE 214 RANK INVESTING COMPANY SECTORS PROJECTS 1 Lenovo Business Machines & Equipment CAPEX (ZARm) The Executive Centre Real Estate The Bank of East Asia Financial Services Tommy Hilfiger Textiles Giordano Textiles Esprit Textiles AS Watson (Watsons) Consumer Products Shangri-La Asia Hotels & Tourism Crown Worldwide Holdings Transportation Hutchison Port Holdings (HPH) Warehousing & Storage Total Source: FDI Intelligence, 214

20 4.3 Investment Relations between South Africa and Hong Kong Hong Kong FDI to South Africa Between January 23 and June 214 a total of 8 FDI projects were recorded from Hong Kong to South Africa. These projects represent a total capital investment of ZAR921.76m which is an average investment of ZAR115.48m per project. During the period, a total of 251 jobs were created. DATE INVESTING COMPANY DESTINATION STATE HONG KONG FDI TO SOUTH AFRICA, 23-JUNE 214 INDUSTRY SECTOR SUB-SECTOR INDUSTRY ACTIVITY CAPEX (ZARm) Mar-14 IP Global Western Cape Real Estate Real estate services Sales, Marketing & Support Mar-14 IP Global Gauteng Real Estate Real estate services Sales, Marketing & Support Feb-14 GRMSearch Gauteng Business Services Employment services Business Services May-13 Wallem Group KwaZulu-Natal Business Services Other support services Business Services May-13 Wallem Group Western Cape Business Services Other support services Business Services Dec-11 Pacific Basin KwaZulu-Natal Transportation Water transportation Sales, Marketing & Support Jul-11 Noble Resources South Africa JOBS Mpumalanga Food & Tobacco Grains & oilseed Manufacturing Apr-11 Artificial Life Western Cape Communications Wireless telecommunication carriers Sales, Marketing & Support TOTAL Source: FDI Intelligence, 214 Key information regarding the companies above is shown below: In 214, Hong Kong-based IP Global, a provider of property advisory services, has opened a new office in Johannesburg, South Africa. The expansion is part of a wider growth strategy which has seen additional offices established in Cape Town and Abu Dhabi. 2 In 213, Wallem Group from Hong Kong invested in Cape Town, South Africa, in the business services sector. Hong Kong-based Wallem Group, provides ship management, agency and brokering services. The office will provide ship agency and logistics services for all ports in South Africa, and will handle client business for other African markets such as Mozambique, Namibia and destinations in southern parts of the Indian Ocean. In 211, Artificial Life from Hong Kong invested in Stellenbosch, South Africa, in the communications sector in a sales, marketing and support project. Hong Kong-based Artificial Life, a provider of mobile technology and applications. The company will focus on developing and expanding its mobile health care services and products customised for the country. It has also extended its health platform to include an application that will be used for the care management of HIV/AIDS patients.

21 4.3.2 South African FDI to Hong Kong Between January 23 and June 214 a total of 6 FDI projects were recorded from South Africa to Hong Kong. These projects represent a total capital investment of ZAR987m which is an average investment of ZAR164.5m per project. During the period, a total of 251 jobs were created. DATE Nov-13 Dec-11 INVESTING COMPANY De Beers Diamond Jewellers De Beers Diamond Jewellers SOURCE STATE Dec-11 LontohCoal Gauteng SOUTH AFRICA FDI TO HONG KONG, 23-JUNE 214 INDUSTRY SECTOR SUB-SECTOR INDUSTRY ACTIVITY CAPEX (ZARm) JOBS Gauteng Consumer Products Jewellery & silverware Retail Gauteng Consumer Products Jewellery & silverware Retail Coal, Oil and Natural Gas Oct-11 Diamdel Gauteng Minerals Sep-8 Sasfin Holdings Gauteng Financial Services Coal mining Jul-8 Bright World Western Cape Beverages Wineries Other non-metallic mineral products Corporate & investment banking Sales, Marketing & Support Sales, Marketing & Support Business Services Logistics, Distribution & Transportation TOTAL Source: FDI Intelligence,

22 Departure from Hong Kong (') 5. Tourism 5.1 Hong Kong Trends and Travel Patterns According to Business Monitor International (214), Hong Kong's tourism market is one of the strongest in the Asia Pacific region and, indeed, globally. Benefiting from its position as a regional travel hub and domestic economic growth. Healthy increases across all key market indicators including inbound and outbound travel in addition to tourism-related expenditure and industry value is expected. Continuing infrastructure investments and openness to foreign developers also make Hong Kong an attractive investment environment. 5.2 Inbound & Outbound Tourism The figure below shows Hong Kong s inbound and outbound tourists. Ongoing modernisation and expansion projects, including a potential third runway, will cement Hong Kong s position as a popular Asian hub, particularly for short-stay stopovers, while a relaxation of short-stay visas could attract more transit visitors. Continued high demand and high occupancy rates are driving a significant amount of new hotel construction across the territory despite limited land availability. Total arrivals are expected to increase from 36 million in 21 to 88 million in 219. TOTAL DEPARTURE FROM HONG KONG, f 215f 216f 217f 218f 219f Total Departures (') Total Arrivals (') Net tourists (') Source: Business Monitor International, 214 The breakdown of the top 1 markets table below reflects the dominance of the Asia Pacific region in terms of outbound travel for Hong Kong. The top two markets are Macau and Taiwan, both accounted for 72% in 213. Other top markets are Japan, Singapore, Thailand and South Korea.

23 Total Arrivals Departure from Hing Kong (') TOP 1 MARKETS BY DEPARTURE FROM HONG KONG, f 215f 216f 217f 218f 219f Macau Taiwan Japan Singapore Thailand South Korea Canada Australia Philippines UK Source: Business Monitor International, Hong Kong Tourist Arrivals into South Africa 23 The graph below depicts total tourist arrivals from Hong Kong into South Africa from 29 to 213. The number of arrivals between 29 and 213 grew from 42,83 arrivals to 151,847. The year on year growth rate in 21 was 62%, decreasing in 211 to 24% before increasing strongly in 212 by 56%, however slower growth of 15% was seen in 213. HONG KONG & CHINA ARRIVALS TO SOUTH AFRICA, % 14 6% % 4% 3% 2% Growth 2 1% Arrivals % change 62,32% 24,26% 55,9% 14,75% % Source: SATourism, 214

24 Total Arrivals 5.4 Hong Kong Tourist Arrivals into the Western Cape The graph below depicts total tourist arrivals from Hong Kong into the Western Cape from 29 to 213. The number of arrivals increased overall from 26,975 in 29 to 98,549 in 213. The year on year growth rate in 21 was 54%, decreasing in 211 to 14%, but increasing strongly in 212 and 213 by 45% in 212 and 44% in 213. HONG KONG & CHINA ARRIVALS TO THE WESTERN CAPE, % 5% 4% 6 4 3% 2% Growth 2 1% Arrivals % change 53,96% 14,25% 44,47% 43,76% Source: SATourism, 214 % For more information on this publication and other Wesgro publications please contact research@wesgro.co.za or for more publications visit the Wesgro publications portal on our website at 24