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Hong Kong must grasp opportunities and create more value-added services

by Kelly Yu

Mr Kelly Yu joined DHL in July 2001 as General Manager, Hong Kong. He has been appointed Chairman of the Hong Kong International Courier Assn (HICA) to represent the air express industry in Hong Kong. Prior to joining DHL, Mr Yu was MD of Vitasoy China Investment, and previously Area VP of PepsiCo Foods International-Asia Pacific Division. He has more than 20 years' experience in senior management in positions with Coca-Cola, Bausch & Lomb, PepsiCo. He graduated from the University of Western Ontario.

The relationship between Hong Kong's air express growth and the local economy is symbiotic in that Hong Kong's economy is mainly driven by exports. The US economy downturn, worsened by the September 11 incident, the US declaration of war with Afghanistan and the anthrax scare, has largely affected Hong Kong's economy, bringing import and export figures and other economic indicators to a record low (see table). In light of declining exports, I believe business for the air express industry in the first half of this year will remain stagnant until the latter half of 2002.

Performance of Hong Kong Imports & Exports in 2001
 
Q1
Q2
Q3
Oct 2001
Nov 2001
Imports
3.6%
-3.4%
-6.6%
-14.9%
-11.5%
Exports
2.2%
-4.8%
-7.2%
-13.9%
-11.3%
Note: The percentages refer to changes over the same period in the preceding year.
(Source: Census & Statistics Department, HKSAR)

The future of Hong Kong's air express industry, however, lies in the long-term development of the territory's economy, which highly depends on its ability to maintain the position as the gateway to China. Almost 90% of Hong Kong's exports are re-exports, of which over 60% are from China (Source: Census and Statistics Department, HKSAR, Jan D Oct 2001). As the total trade volume grows in China, this will translate into enormous opportunities for the air express industry, as all business transactions require timely delivery of products.

Yet, Hong Kong's role as gateway to China is under threat. Reliance on Hong Kong as the commercial port from the economies of the Pearl River Delta is waning, and our present facilities are unable to meet with current and future demands, should further integration between the Delta economies arise. Hong Kong must grasp its opportunities and create more value-added services in order to stay competitive. For example, Hong Kong could introduce integrated supply chain management solutions for manufacturers setting up factories in China.

Indeed, our greatest edge is the frequency of flights, and this takes years to build. In addition to its proximity to the mainland, Hong Kong is situated at the centre of Asia-covering most of the key destinations in the region within five hours' flight. This makes delivery and pick-up of shipments to and from Asian cities within the same day possible. Hong Kong's state-of-the-art transportation infrastructure and strategic geographical location facilitate its development of an air express hub to serve China.

In readiness for the future growth of the Chinese economy, DHL has invested extensively in infrastructure to boost shipment handling capacity. In the past two years, DHL has not only expanded the Express Logistics Centre to 58,000sqft, but also opened its 29,000sqft Kowloon West and 100,000sqft Kowloon Central Service Centres. DHL is also the first and only air express company to build its Central Asia hub in Hong Kong and enjoy the benefits of the territory's strategic location.

China's accession to WTO is a big boost for the air express industry across the whole of Asia, and DHL looks forward to supporting the further opening of international trade. If Hong Kong can continue to provide substantial shipment handling capabilities, maintain its frequency of flights and differentiate itself by developing value-added services to manufacturers based in China, we shall be in a good position to act as the doorway to the Mainland, and capitalize on the vast business potential when the worldwide economy picks up.