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Speech by STH on "Hong Kong as a Regional Logistics Hub - the Best Link in Your Global Supply Chain" in Dusseldorf

Following is the speech by the Secretary for Transport and Housing and Chairman of the Hong Kong Logistics Development Council, Mr Frank Chan Fan, at the seminar on "Hong Kong as a Regional Logistics Hub - the Best Link in Your Global Supply Chain" in Dusseldorf, Germany today (January 11):

Distinguished guests, ladies and gentlemen,

It gives me great pleasure to be here with you today.

Germany is a country that carries special weight in my heart. As an engineer by training, I always find German engineering and design amazing. "Made in Germany is a seal of quality" in many aspects. German machinery, equipment and automobile are no strangers to consumers in Hong Kong and the Greater China.

Germany's trade with Hong Kong and China

In Hong Kong, as in many parts of Asia, many people are attracted to German products because they are great in terms of quality, form and function. We have been importing a lot of products from Germany. In 2016, Hong Kong's total imports from Germany amounted to US$6.6 billion. In terms of trade value, Hong Kong and Germany had a total bilateral trade of US$15.1 billion, while Germany's trade with China valued at some US$151 billion, making China Germany's largest trading partner. Of course, this comes as no surprise, as the Chinese market has at least 300 million of middle class which is going to be more in the years to come.

Demand for logistics services

Every time when we talk about bilateral trade, it is natural for us to focus on the trade value, the trade volume, whether we are doing better this year than we did last year. But behind these trade figures, there are many essential services that enable the flow of goods, and logistics is one of the backbone services that underpin trading.

The interdependence between logistics and trading is self-evident, and they become inseparable today. Innovations and improvements of logistics technologies and practices have redefined, time and again, the logistics industry as well as trading across the globe, for example, containerisation is still being regarded the most significant innovation that boosts international trade.

For trading to grow and bloom, we need a strong logistics sector to support it. Speaking of which, Hong Kong does have a very strong trading and logistics sector, which has been the driving force of Hong Kong's economic growth and providing impetus to development of other sectors. In 2016, the trading and logistics sector contributed 22 per cent of our GDP and 19 per cent of the overall employment.

Hong Kong as a premier logistics hub

The booming e-commerce is changing the landscape of supply chain management. Customers are expecting more competitive prices, more choices of merchandise, and more personalised experience. They demand fast and reliable delivery. They want to be able to track and trace their purchases throughout the process. They expect to be able to return purchases they don't feel satisfied hassle-free. And, for obvious reason, they want a low delivery cost too. To logistics service providers, this is indeed a tall order. But Hong Kong fares pretty well in providing logistics solutions to both shippers and shoppers.

Ranked by the Heritage Foundation as the world's freest economy for the 23rd consecutive year, Hong Kong has attracted thousands of international retailers from luxury goods to groceries to open brick-and-mortar shops in Hong Kong. German companies are no exception. Our robust economy, rule of law, free port status, low tax rates and simple tax regime, customs efficiency have made Hong Kong one of the best places to do business. Situated at the heart of Asia and given our superb infrastructure, Hong Kong is well connected to the world, as well as to the Mainland China. Our well-developed multi-modal transport networks enable speedy and reliable delivery, which enables firms to be more responsive to markets.

This is how we do it - high value-added and time-sensitive products that have to be shipped by air will take advantage of our location and efficiency. The Hong Kong International Airport has been crowned the busiest international cargo airport in the world since 1996. In 2016, our airport handled 4.52 million tonnes of air cargo. We host more than 100 airlines operating over 1 100 flights daily to 220 destinations spreading all over the world, including 50 destinations in Mainland China. From Hong Kong, your product can reach all of Asia's major markets within four hours by air; and half the world's population within five hours.

Our airport is currently operating on two runways. To cater for future demand, we are now improving the airport facility with the introduction of a three-runway system. By the time when the first plane is ready to take off from our third runway, our airport shall be capable of handling about 9 million tonnes of cargo each year. This will further strengthen our position as a regional aviation hub.

For more bulky and less time-sensitive goods, they can be moved through our natural seaport. The Hong Kong Port is one of the busiest and most efficient ports in the world, with an annual throughput of 19.8 million TEUs (Twenty-foot Equivalent Units) in 2016. About 330 container vessel sailings a week connect Hong Kong to some 470 destinations worldwide. Our port is also a regional transshipment hub. Many shippers prefer to take advantage of our connectivity and high frequency of vessel callings to consolidate their cargo in Hong Kong before shipping them to other parts of the world. In 2016, about one-third of the cargo from Hong Kong to Germany was transshipment cargo from Mainland China.

On land, our road network with Mainland China has also facilitated the movements of goods. Hong Kong is connected to the Mainland by different land crossings. Hundreds and hundreds of container trucks move between the cities in Southern China and Hong Kong every day, bringing goods from Mainland China to our airport and seaport for consolidation before they are being shipped to the rest of the world. On top of this, we are building a mega-bridge that will link up Hong Kong, the city of Zhuhai in Southern China and Macao. This will greatly shorten the transport time from the city of Zhuhai to our airport in 45 minutes, and to the container terminal in 1 hour and 45 minutes. In fact, when this mega-bridge commences operation, most of the major cities in the Pearl River Delta region will be within reach in three hours' drive. In logistics business where time means money, this reduced journey time will further attract goods to be shipped through Hong Kong.

Opportunities in China - Bay Area and Belt and Road Initiative

China is now the centre of global trade. Because of the close relations between trade and logistics, the demand for reliable logistics services in China will be huge. To assist you to seize every opportunity in this fast growing market, Hong Kong logistics service providers and talents stand ready to work with you and to provide integrated solutions meeting your customised needs, ranging from pick and pack, labeling, return and repair, to any specific requirements that you may have. And our focus is not just Hong Kong alone.

Hong Kong and Macao, together with nine cities in Guangdong Province along the Pearl River, constitute the Bay Area – the leading economic region and manufacturing center in China. The GDP of this city cluster stood at US$1.4 trillion in 2016, equivalent to 40 per cent of Germany's GDP (US$3.5 trillion). Residing with about 68 million people, the Bay Area is also a gigantic consumer market. The Bay Area Development will allow us to draw on the combined strengths of the cities therein. The Hong Kong Government is ready to work with the trade and to facilitate with a view to enabling the logistic sector to contribute and tap the greatest benefits of the Bay Area Development.

Hong Kong is also well positioned to play an important role in the Belt and Road Initiative. Brought along by the new Silk Road are massive opportunities with about 70 economies along the Belt and Road corridors. The Hong Kong port has marine cargo movements with 47 of these economies. We have also signed air services agreement or international air services transit agreements with over 40 of them. Our established ties with these economies gives Hong Kong a clear edge in meeting the increasing need for logistics services in the Belt and Road regions, particularly in emerging economies where high quality logistics services are in high demand.

Ladies and gentlemen, with me here today are members of the Hong Kong Logistics Development Council. They are experts who know the industry inside out. They have first-hand experience to share with you why Hong Kong should be your choice to ship and consolidate your goods. They will be able to tell you how Hong Kong can be the springboard, the gateway and the "super connector" to the Chinese market as well as destinations along the Belt and Road corridors. Also with me here today are colleagues from the Hong Kong Economic and Trade Office in Berlin and the Hong Kong Trade Development Council. The Hong Kong Government has set up an economic and trade office in Germany, based in Berlin, because we know we have common interests to pursue and that our trade, economic and cultural links can be further enhanced. If you are interested in setting up your businesses in Hong Kong or in knowing more about our logistics sector, we are here to provide you with the information you need, to connect you with the right agency to help you expand your business in Hong Kong.

In closing, I would like to thank you all for taking time to join this seminar today. May I wish you and families the best of health, and prosperity. Thank you.

11.1.2018


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