Hong Kong Sees Boost In Offshore Trade Earnings

by Mary Swire, Tax-News.com, Hong Kong

16 March 2006

Hong Kong's gross margin and commission from offshore trade saw a 13.5% year-on-year surge in 2004 to $132.2 billion, with Mainland China the largest destination in terms of offshore trade earnings, the Census & Statistics Department has announced.

According to the Department, within this total, the gross margin from merchanting was $113.5 billion, up 13.3% over 2003, while the commission from merchandising for offshore transactions was $18.7 billion, up 14.4%.

Merchanting refers to services associated with trading of goods which a party from outside Hong Kong buys and then sells to another party outside Hong Kong, without the goods ever entering and leaving Hong Kong.

Merchandising refers to the services of arranging on behalf of buyers/sellers outside Hong Kong the purchase/sale of goods according to their specifications, without those goods entering and leave Hong Kong.

Exports of services relating to offshore trade took up 90.2% of the exports of merchanting and other trade-related services, or 30.8% of Hong Kong's exports of services.

Services exports relating to offshore trade attained another year of double-digit growth, backed by strong trade flows amid the global economic upswing, and in particular the Mainland's buoyant external trade and robust domestic demand.

The total sales value of goods involved in offshore trade in 2004 remained enormous, just slightly less than the value of re-exports. In terms of growth rate, the growth in total sales value of goods involved in offshore trade was also significant. These numbers reflect the fact that offshore trade continued to play a prominent role in Hong Kong's external trade and constitutes one of the city's economic growth drivers.

The sales value of goods involved in merchanting totalled $1.317 trillion, up 11.5% over 2003. The figure for merchandising for offshore transactions was estimated at $518.8 billion, up 6.8% over a year earlier. Merchanting and merchandising for offshore transactions, if taken together, involved a total of $1.836 trillion in terms of the sales value of goods, up 10.2% over 2003.

The value of re-exports went up 16.8% in 2004, to $1.893 trillion. The rate of re-export margin was 17.3%.

Analysed by destination of exports of services relating to offshore trade, the Mainland was the largest destination in terms of offshore trade earnings, accounting for 30.3% of the total margin and commission earned in 2004. This was followed by the US (25.7%), Japan (5.6%), Germany (5.1%) and the UK (4.4%).

In terms of destination for goods sold under merchanting arrangement, the Mainland was the largest destination, accounting for 36.8% of the total value of goods sold under such arrangement in 2004. This was followed by the US (17.2%), Japan (10.3%), Taiwan (4.9%) and the UK (4.1%).

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