Expenditures and Activities of
Hong Kong’s agricultural import market continues to command the attention of the world’s major exporters. There are many reasons. First, there are no trade barriers on any agricultural products other than alcoholic beverages and processed tobacco products. Second, it has a strategic location next to the potentially enormous mainland China market. Third, it has a highly developed marketing system, and consumers who demand high value imports.
The current economic outlook for Hong Kong is mixed. A slow economic recovery and high unemployment have affected eating and shopping habits. Most people used to eat out frequently, more now shop for groceries and prepare meals at home. When they do dine out, they choose low-end or fast food restaurants. Increasingly, Hong Kong’s shoppers are buying in supermarkets, instead of traditional wet markets. Demand for grocery store products, including meats, poultry, eggs, and fresh fruit continues to be very strong.
Canada, Australia, New Zealand, China, and the European Union are major U.S. competitors. Promotion funding comes mainly from industry sources, or industry-specific organizations, rather than government sources. China does no market promotion. It doesn’t need to, with its close proximity, low production costs, and the rising quality of its agricultural products.
Canada has done very well with the 1998 introduction of the grocery line, President’s Choice. The considerable marketing effort necessary to get President’s Choice into Hong Kong was funded solely by private industry, especially the distributor, Loblaw’s/Sunfresh of Toronto. There are approximately 100 products in the President’s Choice line on the shelves of local Park N’ Shop grocery stores, Hong Kong’s largest food retailer, with approximately 180 stores.
Australia’s Supermarket to Asia Council is part of it’s Prime Minister’s Food Initiative. The council’s programs, funded by Australian private industry, focus at the grower level. The Australian Trade Commission focuses on processed foods. The Supermarket to Asia Council has sponsored two or three Australian trade missions to Hong Kong. Recent promotional events like the Australian Food Fair, were paid for entirely with non-government funds. The Australian Trade Commission is moving away from subsidizing booth space and other trade show participant costs.
Within Australia, Austrade, The Australian Trade Commission, sponsors Regional Assistance Training Centers for current or potential exporters. They provide information, free of charge, to interested producers and manufacturers and get them export ready.
This year the European Union agreed to pay cold storage fees for imported eggs in June and July following a dioxin scare. It also cut poultry prices and paid part of the storage fees for importers. When eggs are in oversupply in the Netherlands, they flood into the Hong Kong market. EU egg subsidies have also made Dutch eggs attractive to Hong Kong importers.
China, being close to Hong Kong, benefits from a low transportation cost, which is translated into lower product cost. More importantly, Chinese eggs have improved in both quality and packaging over the years making them increasingly popular in Hong Kong.
Through the Canadian Trade Commission, a Canadian poultry industry team which visited Hong Kong in 1999, conducted a Canadian poultry seminar and visited with local trade contacts.
The Canada Beef Export Federation has a local office in Hong Kong. Its market development activities are patterned after the U.S. Meat Export Federation. For example, it conducts advertising campaigns, seminars, and they sponsor trade teams. Meat and Livestock Australia Limited, Australia’s association for promotion of export sales of beef, pork, and livestock, has a local agent in Hong Kong and does similar promotions.
The Australian pork industry is very anxious to substantially increase its share of the Hong Kong market. It plans to sell fresh chilled pork to local grocery stores. Fresh, chilled, red meat imports from Australia currently benefit from much lower air freight costs than are available to U.S. suppliers.
The New Zealand Dairy Board advertises and promotes through the New Zealand Milk Powder office in Hong Kong.
The South African orange industry is working to increase market share in Hong Kong and elsewhere in the region. Metspan International, South Africa’s orange trade association, has launched a promotional campaign in excess of $25 million for South African oranges. Local in-store promotions are being conducted in Wellcome and Park N’ Shop, Hong Kong’s two largest supermarket chains. The campaign features an array of prizes, trips to South Africa, and tickets to local sports events.
China is becoming competitive in the Hong Kong deciduous fruit market, by investing in its horticultural industry. The quality of fresh fruits, particularly apples, peaches, and grapes, continues to improve. China is now growing fruit varieties that Hong Kong consumers want, such as Fuji and Gala apples, and white peaches. Prices are competitive due to low labor and transportation costs. Quick transport also assures undamaged, unblemished fruit.
The European Union, Australia, and New Zealand continue to be strong competitors in the wine market here. Australia and New Zealand have an edge because of lower shipping costs. High government subsidies give an advantage to EU wines, particularly those from France and Italy. SOPEXA, France’s trade promotion organization, has an ambitious media plan to promote French wine in Hong Kong. Advertisements for French Bordeaux wine have appeared in major Hong Kong magazines such as Wine Now and Haute Couture. Vino Italy, the Italian Trade Commission, the Chilean Trade Commission, and the Wine Institute of New Zealand also promote wine in Hong Kong. Vino Italy and the Italian Trade Commission co-sponsor an annual master wine tasting event, and bring Italian wine industry representatives to Hong Kong.
Norway spent an estimated $500,000 in 1998 on promotional activities in Hong Kong, and a little less in Southern China. It works closely with the Hong Kong Chef’s Association, primarily promoting Norwegian salmon for use in prestigious hotels and upscale restaurants. Norway also sponsored successful salmon promotions in supermarkets and Chinese restaurants.