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THE COMPETITION IN 1997
U.S. and
Competitor Expenditures on Export Promotion and
Export Subsidies for Agricultural, Forestry and Fishery Products
Hong Kong
While Hong Kong is not a significant agricultural producer or exporter, it is one of the most commercially vibrant trading centers in the world and the premiere business hub in Asia. It plays an important role as an international financial, communications and trading center, serving the needs of the region. Consequently, many countries establish a presence there as a springboard for expansion into China and other markets in the region. The Hong Kong itself is a premium and highly competitive market which attracts trade from all around the world. The FAS office in Hong Kong has identified a dozen countries as core competitors for about 40 food and agricultural products. These core competitors include China, Canada, Australia, New Zealand, the Netherlands, Thailand, Vietnam, Indonesia, India, Japan, Brazil and Argentina.
Hong Kong is primarily a market for consumer foods, since there is very little livestock raised in this Special Administrative Region of China. Horticultural products, meat and processed products are the biggest agricultural import categories with oilseeds, dairy and grains imported in smaller amounts. Hong Kong is also a big importer of fish and forest products.
Horticultural Products: The United States is a major supplier of horticultural products to Hong Kong. A substantial portion of U.S. horticultural products are re-exported to China. Fresh and dried fruit exports include for oranges, apples, grapes, canned fruit and raisins. Nuts, vegetables and beer and wine are also important U.S. exports.
Australia and South Africa are major competitors for oranges. The Australian Horticultural Corporation and the Australian Chamber of Commerce have devoted considerable resources to promoting Australian oranges, including in-store promotions and trade services, as well as organizing visits to Australia for trade delegations of Hong Kong fruit importers. South Africa is liberalizing its trade regime which may result in a larger number of companies getting involved in citrus exports.
U.S. Red Delicious apples have long been preferred by Hong Kong consumers, but New Zealand and China are making inroads with their Gala and Fuji apples respectively. The New Zealand Fruit Board has an office in Hong Kong and spends $150,000-200,000 a year on promotion campaigns, including television advertising and distribution of point-of-sale materials. France’s SOPEXA also actively promotes apples in Hong Kong using seminars for fruit importers to educate them about French apples.
The United States, Chile and to a lesser extent, Australia are the major suppliers of fresh grapes to the Hong Kong market. A significant portion of these imports are re-exported to China. Chile and Australia are not directly competitive with U.S. grapes because of seasonal differences. Turkey, Chile, South Africa, China and Iran are major competitors for U.S. raisins, although the United States is the dominant supplier.
The United States is also a major supplier of nuts to Hong Kong. About half of all U.S. exports are in-shell pistachios. These are generally re-exported to China where they are roasted and then sold in China, Hong Kong and other Asian markets. Iran is a substantial major competitor, but currently has a very small market share. Almonds and roasted nuts are also important U.S. exports, although they also face competition from China.
The United States supplies about one-fourth of Hong Kong’s vegetable imports which total about $400 million annually. Our main competitor is China, which supplies half of Hong Kong’s vegetable imports, Australia, and to a lesser degree, New Zealand and Thailand. The United States supplies most of Hong Kong’s frozen vegetables and lettuce, as well as substantial portions of its imports of cabbage, potatoes and onions. There is very little promotional activity specifically for vegetables. Instead, there is frequent contact between suppliers and Hong Kong buyers. Often, country consulates facilitate these meetings when their national exporters visit Hong Kong.
The United States is also a substantial exporter of beer and wine to Hong Kong. It is second only to the Netherlands for beer, although the Netherlands market share is growing . France is by far the biggest supplier of wine to Hong Kong, with more than half of the market. The United States, Australia, each have less than 10 percent shares. Japan and China are major suppliers of fermented beverages other than wine. Demand for wine in Hong Kong and for re-export to China is growing rapidly. It is estimated that France spends about $500,000 a year to promote its wine in Hong Kong while Australia spends about $300,000, Italy spends $120,000 and Chile and New Zealand each spend less than $100,000. Typical promotion activities include participating in trade shows, sponsoring wine tastings, special promotions and education seminars. Some countries sponsor trips for buyers to their home countries. France also uses advertising.
Meat: The United States is a major supplier of meat to Hong Kong, accounting for nearly two-thirds of its poultry imports and more than one-third of its beef imports. China, and Brazil are important competitors for poultry and the main suppliers of pork to Hong Kong. China, New Zealand, Australia, Brazil and Argentina are the major competitors in the beef market. A significant part of Hong Kong’s imports of beef and pork offal is re-exported to China. Hong Kong’s poultry imports are primarily feet and wing tips, rather than muscle meat and more than half is re-exported to China.
Hong Kong’s beef market is supplied entirely by imports and is one of the most competitive in the world. Most competitor promotion activity in the meat sector is directed at the beef market. Australia, New Zealand and Canada have active promotion campaigns which utilize trade shows, in-store and restaurant promotions. Australia also conducts advertising campaigns and hosts foreign buyers visits to Australia. Australia has hired a local public relations firm to conduct its promotions for beef and other products. The New Zealand Meat Producers Board and the Canadian Beef Export Federation conduct promotion activities through their Hong Kong offices.
Processed Products: Hong Kong’s processed food market, fueled by high disposable income and a well developed distribution system, is also very competitive. Aside from dried and canned fruit, which are discussed above, the United States supplies mainly prepared and preserved meat and snack foods in this category. The high quality of U.S. processed or snack foods is well received by Hong Kong consumers, who are willing to pay higher prices for quality products.
Heavy marketing campaigns including advertising of branded products, sample distribution and in-store promotions are the main tools used to promote these foods. Canada and Australia have the most active promotion efforts. Agriculture and Agri-Food Canada (Canadian agriculture ministry) operates out of the Canadian Consulate. It conducts market research and arranges appointments for exporters to meet local buyers and sponsors Hong Kong buyers at Canadian food shows. Australia is represented by its national marketing agency, Austrade, as well as by provincial offices in Hong Kong. They also utilize the type of promotion tools mentioned above.
Dairy: The Netherlands, New Zealand, the U.K, Australia and China are our major competitors in Hong Kong’s dairy sector. The United States is not a big supplier of bulk dairy products such as milk powders, butter, cheese or UHT milk. However, the United States is the main supplier of ice cream to Hong Kong. Per capita consumption of cheese in Hong Kong is very low, but is rising as foods such as pizza become more popular. Australia is the major cheese supplier, including U.S. companies based in Australia. Promotion activities are limited to in-store promotions and advertising.
Grains and Oilseeds: As China has improved its port and transportation facilities for handling bulk commodities, the importance of Hong Kong as an entry point for U.S. grains has declined. The local market is dominated by Thailand for rice and Australia for wheat, although some U.S. wheat is still imported. Hong Kong is an important showcase for introducing new wheat based consumer products to China, such as croissants, pizza and hamburger and hot dog buns. It is also a good base to work from for promotion efforts into China. Therefore the Australian and Canadian wheat boards have offices there which run training seminars for the industry and conduct other promotion activities. It is estimated that the Australian Wheat Board office in Hong Kong has a budget of over $500,000 and that the Canadian Wheat Board spends about $250,000 there.
Hong Kong has no crushing facilities for oilseeds and imports only vegetable oil, primarily peanut oil. China is the major supplier with the United States and Canada the other major players. Corn and soybean oil are becoming more popular. There is very little promotional activity for vegetable oils in Hong Kong.
Fish: The biggest suppliers of seafood to Hong Kong are Japan, China, Australia and Thailand. The United States is developing niche markets in the shellfish, dried/salted and frozen fish sectors, but still supplies less than 10 percent of Hong Kong imports in these sectors and less than 5 percent of total seafood imports. The biggest barriers faced by U.S. exporters are freshness and price. Of our competitors, only Norway conducts consistent market promotion activities, including menu-promotions, in-store promotions and advertising.
Forest Products: Hong Kong imports of forest products have increased rapidly in recent years. The biggest suppliers are China, Malaysia and Indonesia. The United States and Taiwan are also significant suppliers but each account for less than 10 percent of imports. The United States is the primary supplier of oak logs and lumber to Hong Kong and is a major supplier for particle board and fiber board, although these sectors are very competitive. Other suppliers in these categories include Malaysia, Canada, New Zealand, Italy and China. Promotional activities include trade missions and trade fairs, distribution of literature and publications, trade servicing, conventions, conferences, seminars and technical assistance programs.
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