A study on global supply chain released yesterday (Nov. 13) by the Hong Kong Trade Development Council (HKTDC) revealed that despite tense China-US relations, many US companies remain deeply engaged in the Chinese market, particularly in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), due to its unique and highly concentrated supplier network that is difficult to replace.
At the same time, mainland enterprises are actively diversifying their supply chains and using Hong Kong as a supply chain management hub, reflecting the city's key role in regional supply chain transformation. The study concludes that Hong Kong, as a "super-connector," is a crucial gateway for mainland enterprises "going global" and for international companies entering mainland China and regional supply chains, holding a significant position in the global supply chain.
The HKTDC commissioned the Bay Area Council Economic Institute in the US to conduct the study, focusing on the core theme of supply chain layout, connecting Asian markets. It provides an in-depth analysis of how shifts in US trade policy are accelerating the restructuring of global supply chains, presenting a series of new challenges and opportunities. The findings further affirm Hong Kong's vital role as a "super-connector" in the global supply chain.
The study highlights that despite tense China-US relations, many US firms remain deeply involved in the Chinese market, especially in GBA, because its unique and highly concentrated supplier network is hard to replace. Mainland companies are actively promoting supply chain diversification and utilizing Hong Kong as a supply chain management centre, underscoring Hong Kong's crucial role in regional supply chain transformation.
Tariff impact less than expected
Irina Fan, Director of Research at HKTDC, said yesterday that new US tariff measures and adjustments under US President Donald Trump's trade policy have given some countries a comparative advantage in exports to the US. According to the latest trade agreement, Chinese exports to the US face a 20% tariff between November 10, 2025, and November 10, 2026.
This relatively lower tariff level places Chinese suppliers on a similar competitive footing as their Southeast Asian counterparts and offers an advantage over countries facing higher tariffs. Exports to the US accounted for 5.8% to 5.9% of Hong Kong's total exports this year, slightly lower than last year's approximately 6%. About half of these export products originate from the mainland, with the rest coming from other parts of the world. She admitted there were previous concerns about the US imposing higher tariffs on China affecting mainland-sourced goods, but the actual impact has been minimal.
However, she emphasized that mainland enterprises are not complacent. Many are proactively strengthening and diversifying their supply chains, using Hong Kong as a supply chain management hub. Hong Kong's role in regional supply chain transformation is becoming increasingly important, driven by deeper regional economic integration and a new generation of supply chain networks.
Citing previous HKTDC surveys on mainland enterprises' "going global" intentions conducted last year and the year before, she pointed out that over 90% of mainland companies plan to expand overseas within the next two years. In 2023, about 73% and 58% of companies were interested in markets along the Belt and Road Initiative (BRI) and ASEAN markets, respectively. These figures rose to 95% and 74% last year. The proportion of mainland enterprises intending to use Hong Kong as a springboard for global expansion also increased from 62% in 2023 to 77% last year. This indicates that, regardless of how supply chains are reconfigured, Hong Kong is playing an increasingly vital role in assisting mainland companies in going international.
Key platform for inbound and outbound investment
According to Fan, using the electric vehicle (EV) industry as an example from the latest study, to illustrate that Hong Kong is already acting as a hub in the regional supply chain transformation. As mainland automakers and their international partners prioritize expanding EV and battery production in Southeast Asia, Hong Kong, as an investment and financial centre, effectively channels funds into countries like Indonesia, Thailand, and Malaysia.
Furthermore, investment data shows a growing trend of mainland enterprises using Hong Kong as a support platform for regional projects. Hong Kong's share of Foreign Direct Investment (FDI) in some ASEAN countries is higher than that of the mainland. For instance, in Malaysia, Hong Kong accounted for 35.5% of FDI last year, far exceeding the mainland's 0.1%. In Indonesia, Hong Kong's share reached 13.7%, slightly more than the mainland's 13.5%. This is because mainland companies often invest overseas through their Hong Kong subsidiaries rather than directly.
She believes that Hong Kong's extensive financial and professional services, coupled with its agility in adapting to technological changes and regulatory shifts, further consolidate its position as an indispensable hub for international businesses. The study shows that Hong Kong plays a dual role as both a "super-connector" and a "super-value adder." It serves as a key gateway for mainland enterprises expanding overseas and for global companies entering mainland China and its regional supply chains.
As of the end of June last year, 1,390 US companies had established a presence in Hong Kong, demonstrating its international appeal. The study also notes that companies are actively adjusting their operational models, and Asia's role is being repositioned within this new landscape.
(Source: Wen Wei Po; Journalist: Chris Tsang; English Editor: Darius)
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