The geopolitical landscape is rapidly evolving as rising trade protectionism significantly impacts international supply and industrial chains. With the global economic order permanently altered, Hong Kong must proactively adapt and seek new pathways forward.

Hong Kong maintains its free port status under the “One Country, Two Systems” framework. It has consistently implemented free trade policies to ensure the unfettered flow of goods, intangible assets and capital. However, as a highly export-driven economy, the city faces mounting pressure from trade protectionism, with its export trade, manufacturing and logistics sectors bearing the brunt.

In response to the tariff measures announced by the United States, some Hong Kong businesses have had to reduce prices or split tariff costs with American importers to sustain their operations. Additionally, some companies have faced challenges with accumulating inventory due to buyers delaying payments after receiving orders and completing production, resulting in cash flow issues.

Amid these seismic shifts in the trade environment, businesses need to actively explore new markets and secure reliable trading partners. Last year, exports to the U.S. accounted for only 6.5% of Hong Kong’s total goods exports, while ASEAN’s share of exports rose to 8.7%. ASEAN now ranks as Hong Kong’s second-largest goods export market after the Mainland. While capitalizing on the vast opportunities the Mainland offers remains critical, the potential of emerging and traditional markets should not be overlooked.

Venturing into new markets inevitably brings uncertainties for Hong Kong businesses. I welcome the decision by the Hong Kong Export Credit Insurance Corporation (ECIC) to enhance support for local businesses by extending free pre-shipment risk coverage for SMEs. 

Moreover, providing a 50% premium discount for pre-shipment risk coverage for non-Small Business Policyholders and lowering premiums for emerging markets to align with traditional markets will help exporters mitigate risks and boost their confidence in entering new markets.

The U.S. tariff policies will fundamentally reshape global supply chains and create new trade networks. Hong Kong businesses must act decisively to capture these opportunities by leveraging platforms such as HKTDC’s international exhibitions to forge strategic partnerships and connections. Despite the challenging headwinds, I am confident that Hong Kong’s resilience and adaptability will ensure our city not only endures but thrives.

Jeffrey Lam
jeffrey@jeffreylam.hk