Post expects that U.S. products will continue to fair well due to competitive prices and consumer confidence in the quality and safety of U.S. products.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: HK1209
Exporter Guide 2012
Hong Kong imports of high value food products from the U.S. reached US$3.35 billion in 2011,
consolidating our position as the leading food supplier to Hong Kong. Hong Kong?s food market
remains strong, with restaurant receipts and food retail sales reaching a combined US$21 billion in
2011. It is expected that Hong Kong will maintain its position as one of the top 5 markets for U.S.
consumer ready food products in 2012, as it continues to be a major buying center and
transshipment point for other markets in the region. Economic growth in Hong Kong is forecast to
be 2% in 2012. Post expects that U.S. products will continue to fair well due to competitive prices
and consumer confidence in the quality and safety of U.S. products.
SECTION I. MARKET OVERVIEW
Page 1 of 24
U.S. Food Exports to Hong Kong
Overall direct U.S. agricultural exports to Hong Kong reached a record level at US$3.48
billion in 2011, eclipsing the previous record of US$2.97 billion in 2010 and representing an
increase over 17%.
Among them, U.S. exports of high value consumer-oriented food products to Hong Kong
reached US$2.56 billion, consolidating Hong Kong?s position as the 5th largest export market
after Canada, Mexico, Japan and South Korea.
The top prospects for U.S. food exports to Hong Kong include: red meat, poultry meat,
fresh fruits, tree nuts, processed fruit, vegetables and wine.
With a population of just 7.1 million, its nominal agricultural and food production leave
Hong Kong almost entirely dependent on food imports.
U.S. food products are considered to be among the highest in quality, reliable in terms of
Hong Kong Food Imports
Due to limited land resources and having a population of 7.1 million, Hong Kong relies on
imports for over 95% of it food supply. According to the latest statistics (for 2010) of the
Agricultural Fisheries and Conservation Department, the local agricultural industry produced
US$79 million worth of products. It is comprised of US$30 million in crop production
(mainly vegetables), US$23 million in livestock production, and US$27 million in poultry
production. Local production accounted for 2.5 percent of fresh vegetables, 56.2 percent of
live poultry and 6.4 percent of live pigs consumed in the territory.
Due to its central location, free port status and position as a regional purchasing and
distribution center, a significant amount of Hong Kong imports are re-exported.
Table 1 ? Hong Kong Imports (2007-2011) of Consumer Oriented Agricultural Products
(COAP) & Seafood
Growth Share in % of Re-exports
Country (in US$ Million) 2007 2008 2009 2010 2011 11 v 10 2011 of Gross Imports
World Gross Imports 9,098 11,544 12,826 15,270 18,306 20% 100%
Re-exports 2,435 3,409 3,824 4,427 5,158 17% 100% 28%
Retained Imports 6,663 8,135 9,001 10,843 13,148 21% 100%
United Gross Imports 1,042 1,615 1,972 2,766 3,354 21% 18%
States Re-exports 328 609 752 1,155 1,619 40% 31% 48%
Retained Imports 715 1,006 1,220 1,611 1,735 8% 13%
China Gross Imports 2,007 2,215 2,446 2,735 3,203 17% 17%
Re-exports 309 356 334 392 503 28% 10% 16%
Retained Imports 1,698 1,859 2,112 2,344 2,700 15% 21%
Brazil Gross Imports 989 1,441 1,575 1,415 1,649 16% 9%
Re-exports 491 630 737 658 551 -16% 11% 33%
Retained Imports 498 811 838 757 1,098 45% 8%
France Gross Imports 251 385 446 688 997 45% 5%
Re-exports 88 111 115 162 216 33% 4% 22%
Retained Imports 164 274 331 526 782 49% 6%
Japan Gross Imports 573 603 709 971 954 -2% 5%
Re-exports 36 41 43 51 51 0% 1% 5%
Retained Imports 536 562 665 920 903 -2% 7%
Australia Gross Imports 529 613 682 659 755 15% 4%
Re-exports 58 59 91 83 78 -6% 2% 10%
Retained Imports 470 553 591 576 677 18% 5%
Netherlands Gross Imports 211 306 323 386 666 72% 4%
Page 2 of 24
Re-exports 60 100 95 91 111 22% 2% 17%
Retained Imports 151 206 228 295 554 88% 4%
Thailand Gross Imports 410 486 590 527 583 11% 3%
Re-exports 226 267 350 288 312 8% 6% 54%
Retained Imports 184 219 240 239 271 13% 2%
Germany Gross Imports 148 302 287 307 435 42% 2%
Re-exports 73 180 168 166 146 -12% 3% 34%
Retained Imports 76 122 118 141 289 105% 2%
Canada Gross Imports 217 342 312 394 403 2% 2%
Re-exports 43 133 104 133 97 -27% 2% 24%
Retained Imports 173 209 207 261 306 17% 2%
Total of Gross Imports 6,378 8,307 9,341 10,849 12,999 20% 71%
Top 10 Re-exports 1,712 2,486 2,790 3,179 3,684 16% 71% 28%
Suppliers Retained Imports 4,666 5,821 6,551 7,670 9,316 21% 71%
Total of Gross Imports 2,721 3,237 3,484 4,421 5,307 20% 29%
Rest of Re-exports 723 923 1,034 1,248 1,475 18% 29% 28%
World Retained Imports 1,998 2,314 2,450 3,173 3,832 21% 29%
(Source: Calculations based on World Trade Atlas data)
(Retained Imports = Gross Imports into Hong Kong ? Re-exports out of Hong Kong)
Hong Kong is a mature and sophisticated market with a growing demand for gourmet foods.
At the same time, most Hong Kong shoppers are price conscious consumers looking for
?value for money? products. The continuous influx of tourists and capital contributed to the
economic growth in Hong Kong. As a result, the demand for food imports continued to
grow in 2011. Major import items included red meats, fruits, poultry meat, seafood and tree
Thanks to the fast-growing economy and consumer affluence, total retained imports of
consumer-oriented agricultural products (COAP) and Seafood products in Hong Kong grew
by 21% in 2011.
The U.S. consolidated its position as the largest supplier of COAP and Seafood products to
Hong Kong in 2011. Retained imports of these products from China and the U.S. in 2011
reached US$2.7 billion and US$1.7 billion, representing market shares of 21% and 13%
Hong Kong?s status as a gateway for trade with other markets in the region is increasingly
opening up greater avenues for U.S. high value food products. In 2011, Hong Kong
imported over US$18 billion COAP and Seafood from the world and re-exported 28% of
these products. (Source: Hong Kong Census and Statistics Department).
Hong Kong?s economy continued to grow in 2011, particularly with the continued influx of
investment, particularly from Mainland China. GDP and per capita GDP grew by 8.6% and
8%, and reached US$242 billion and US$34,106 respectively in 2011.
Table 2 ? Hong Kong: Gross Domestic Product and GDP per capita
2010 2011 Growth
11 vs 10
GDP US$223 billion US$242 billion +8.6%
GDP per capita US$31,593 US$34,106 +8.0%
(Source: Hong Kong Census & Statistics Department)
Outlook in 2012
Page 3 of 24
The outlook for spending on food is slightly less optimistic as the Hong Kong economy is not
currently expected to grow at the same pace as in both 2010 (7 percent) of 2011 (8
percent). Growth in food imports is expected in 2012 but at a slightly less robust pace.
However, U.S. agricultural products are well known in the market for their good taste and
quality. In addition, the peg between U.S. dollar and HK dollar will provide much needed
foreign exchange stability which will make buying U.S. products more advantageous.
Table 3 ? Hong Kong:
Summary of the Key Strengths and Challenges for the Market
Hong Kong is one of the top markets in the U.S. food products are not always price
world for food and beverages, processed, fresh competitive. China is the largest competitor of
and frozen gourmet products. U.S. exports of U.S. food products.
high value food and beverage (HVFB) products
to Hong Kong reached US$2.56 billion,
consolidating Hong Kong?s position as the 5th
largest market for the U.S. in 2011.
Hong Kong is a major trading hub where buyers Lengthy transportation time and availability of
make purchasing decisions for hundreds of product due to seasonality (e.g. fresh produce)
millions of dollars of consumer oriented products associated to importing U.S. food and beverage
that are transshipped to China and other parts products to Hong Kong can make them less
of Asia. competitive than products available in the
region or from China, Australia New Zealand
(favorable in terms of location).
U.S. food products enjoy an excellent reputation The importance of Hong Kong as a
among Hong Kong consumers, as they are transshipment point and buying center for
renowned for high quality and food safety China and elsewhere is not widely known to
standards. U.S. exporters.
The U.S. is the 2nd largest supplier of Hong Kong labeling and residue standards differ
agricultural, fisheries and forestry products to in some cases, which can impede trade.
Hong Kong. For HVFB products, the U.S.
remained as the largest supplier to Hong Kong
Technical barriers to imports of U.S. products Numerous HK food regulations are not in line
are generally very low. with Codex, which can complicate import
There is a wide variety of U.S. products While Hong Kong has one of the busiest
available to Hong Kong consumers (over 30,000 container terminals in the world, it also has the
different items). most expensive port handling charges.
The link between the Hong Kong Dollar (HKD) to Hong Kong?s top supermarkets are a duopoly
the U.S. Dollar help insulate the HKD from that often request slotting fees.
In general, implementation and application of Inflation is on the rise in Hong Kong. The
regulations is transparent and open. increase in food prices may cause some
consumers to turn to more lower-price lower-
quality food products where U.S. products do
not enjoy strong competitive advantage.
Hong Kong exporters choose to work with Hong
Page 4 of 24
Kong importers and distributers to get their
products to Mainland China because of Hong
Kong?s dependable legal system, financial
system and rule of law.
Most trans-shipments to Macau are purchased,
consolidated and shipped via Hong Kong.
Demand is increasing most rapidly for ?healthy?
and gourmet foods, market segments where the
U.S. is especially strong.
Hong Kong concerns over food safety have
made U.S. food products as a top choice for
quality and safety.
Hong Kong?s modern and efficient port terminal
and free port status make it an attractive
destination and for re-exports.
Hong Kong is a ?quality? and trend driven
market so price is not always the most
important factor for food and beverage
Hong Kong is a dynamic market with a
sophisticated international community where
new high quality products are readily accepted.
Hong Kong is dependent on imports for meeting
its food needs. With continued economic growth,
U.S. high value food & beverage (HVFB) exports
to Hong Kong grew by 21% in 2011 compared
to 2010 and consolidated Hong Kong?s position
as our 5th largest market for HVFB products in
Biotech products are freely imported and
products containing biotech ingredients are
generally not controversial.
Lack of local production means virtually no
protectionist pressures for food and agricultural
Hong Kong is in an economically vibrant region
and its economy is expected to grow by 2% in
Hong Kong?s duopolistic supermarkets have a
wide distribution network. Cold chain and
distribution channels for food products are
generally efficient and dependable, as is the
customs clearance process.
SECTION II. EXPORTER BUSINESS TIPS
Page 5 of 24
ATO provides Hong Kong importer lists to U.S. exporters and assists to arrange meeting
appointments, provided adequate lead-time is given. Please contact the ATO via
Atohongkong@fas.usda.gov for further information and other business tips.
The official written languages in Hong Kong are Chinese and English. The official spoken languages
are Cantonese (the prominent Chinese dialect in Hong Kong and South China) and English. In
general, all correspondence can be in English.
Even though Hong Kong is now part of China, there is still a border boundary between Hong Kong
and China. If you are traveling with a U.S. passport, you do not need a travel visa for Hong Kong.
However, if you are planning to go to Mainland China, you need to apply for a travel visa into
Hong Kong?s legal system is firmly based on the rule of law and the independence of the judiciary.
Hong Kong?s legal system is separate from Mainland China. Also, Hong Kong is a separate
customs territory from China.
Hong Kong importers are willing to pay by letter of credit in the beginning. When a trading
relationship has been established, many of them prefer to pay by open accounts so as to cut
General Consumer Tastes and Preferences
There is a growing popularity of frozen foodstuffs because more and more consumers
believe that frozen foods are more hygienic. However, Hong Kong consumers in general still
prefer fresh foodstuffs, particularly fish and poultry meat.
Due to the increasing prevalence of dual income families, ready-to-cook food has become
more popular. The major supermarket chains in Hong Kong have been putting more
emphasis on convenience foods, especially in their pre-prepared sections that are virtually
serving ready-to-eat foods.
There is most potential for growth in the processed/convenience sectors of Hong Kong?s
retail food markets for U.S. high value consumer foods such as general grocery items,
ingredients for home meal replacement, and health food.
Hong Kong consumers have become more aware of food safety issues and nutrition values
of food products. Clear indications of nutritional value on the package have been a good
marketing strategy for health foods.
The sales of organic products have been increasing steadily. The price discrepancy between
conventional and organic foods has also narrowed over the years. Currently, organic
products are generally priced between 20-40% higher. The most popular organic products
Page 6 of 24
are baby foods, vegetables, fruits, eggs, fresh meats, and fruit juices.
Foods categorized as natural and having benefits to health are also appealing to Hong Kong
consumers. For example, nut suppliers promote nuts as healthy snacks good for the heart,
and many cereals are marketed as an effective means of controlling cholesterol.
Hong Kong eliminated its import duty on wine in February 2008 and stimulated a surge in
volumes and quantity of wines imports into Hong Kong. Consumption of wine is growing in
popularity in Hong Kong. Hong Kong?s wine imports in 2010 reached US$1.2 billion and
45.5 million liters, an increase of 41% in value and 23% in quantity over 2010. For more
information on the wine market in Hong Kong, please refer to GAIN Report #HK1204. (This
report is available at: http://gain.fas.usda.gov/Lists/Advanced%20Search/AllItems.aspx)
Demand for promotion package and discounts. Consumers are very price sensitive.
Marketing tactics such as selling bundled economy packs or enclosing complimentary
samples are usually used to stimulate sales. The most direct and effective marketing tool is
to offer discounts.
Because of the limited living space in Hong Kong, it is inconvenient for Hong Kong
consumers to store food products. Therefore, bulk-pack food products do not sell well in
Hong Kong, and small package food products are preferred.
With the exception of spirits, all food and beverage products can be imported to Hong Kong duty
Certificates & Permits
In Hong Kong, the legal framework for food safety control is defined in part V of the Public Health
and Municipal Services Ordinance and the Food Safety Ordinance. The basic tenet is that no food
intended for sale should be unfit for human consumption. Technical requirements for imports vary
significantly according to the product. Products which require import permits/health certificates
include meat, milk and frozen confections. The Hong Kong Government (HKG) also plans to
implement a health certification requirement for eggs and seafood products. The HKG accepts
import applications from Hong Kong importers. In other words, local importers and not U.S.
exporters are required to apply for import permits. U.S. exporters need to supply their
agents/importers with necessary documentation such as health certificates from the U.S.
All prepackaged food products in Hong Kong have to comply with Hong Kong?s labeling regulation.
There are also labeling requirements for allergens and nutrients. U.S. labels may not be able to
meet with Hong Kong labeling requirements particularly for products with nutritional claims.
However, the Hong Kong government allows stick-on food labels, which could be arranged by Hong
Kong importers with the permission of the manufacturers.
The marking or labeling of prepackaged food can be in either the English or the Chinese language
Page 7 of 24
or in both languages. If both languages are used in the marking and labeling of prepackaged food,
the name of the food, ingredient lists and nutrition information have to be provided in both
Labeling for Biotech Food
The HKG does not have any specific biotechnology regulations with regard to the labeling of
biotech food products. It makes no distinction between conventional and biotech foods. All are
subject to the same food safety regulation. The HKG continues to promote voluntary labeling of
GMO products as a viable alternative for the trade. The guidelines on labeling for biotech foods,
released in 2006, are advisory in nature and do not have any legal effect. The threshold level
applied in the guidelines for labeling purpose is 5 percent, in respect of individual food ingredient.
Negative labeling is not recommended.
While the Hong Kong Organic Center provides organic certification for local produce, Hong Kong
does not have a law regulating organic food products. U.S. organic products can be sold in Hong
Kong with the USDA organic logo.
Under the food ordinances, there are regulations governing the use of sweeteners, preservatives,
coloring matters, and metallic contaminants. The Hong Kong government enforces its food safety
control according to Hong Kong?s food regulations. In the absence of a particular provision in Hong
Kong food regulations, the HKG would draw reference from Codex and/or conduct risk assessments
to determine whether a food meets the food safety standard.
The Hong Kong government is planning to introduce a regulation governing the residue limit of
pesticide in foods in April 2012. Its framework is largely built on Codex?s standard, supplemented
by standards adopted in China, Thailand the U.S.
For details on Hong Kong?s general import regulations for food products, please refer to GAIN
Report #1145. (This report is available at:
Section III. Market Sector Structure and Trends
Among the three major market sectors of Hong Kong: the retail and HRI (hotel, restaurant and
institutional) sectors present the best opportunity for U.S. exporters. The food processing sector in
Hong Kong is relatively small and presents less opportunity for market development.
Total retail sales of food and drinks in Hong Kong for 2011 reached US$9.53 billion,
representing growth of 10.7 percent compared to 2010. Relatively sound economic growth
prospects from 2012 should help maintain growth in the food retail sector and food retail
sales, which are expected to reach a level of over US$10 billion in 2012.
Table 4 ? F&B Retail Sales in Hong Kong (US$ billion)
Page 8 of 24
Channel 2007 2008 2009 2010 2011 Growth (11 vs 10)
Supermarket/Dept. Stores 3.85 4.32 4.44 4.59 5.22 13.7%
Other outlets 3.38 3.77 3.69 4.02 4.31 7.2%
Total 7.23 8.09 8.13 8.61 9.53 10.7%
(Source: Hong Kong Census and Statistics Department)
Chart 1 ? F&B Retail Sales in Hong Kong (US$ billion)
Despite a highly centralized supermarket retail network, with two supermarket chains
accounting for about 80 percent of the supermarket turnover, the total number of retail
establishments stands at approximately 14,000. Retail shops in Hong Kong generally are
very small in size, about 97 percent of which hire less than 10 employees.
Traditionally, Hong Kong consumers shop for food daily because of a preference for fresh
food. Much of the shopping is still done in traditional markets including wet markets and
mom-and-pop shops. While both wet market and supermarket sales are increasing,
supermarkets are taking a greater share of total sales. The supermarket?s share in terms of
retail sales rose from 44 percent of total sales in 1995 to 55 percent in 2011.
Table 5 ? Sales by Retail Outlet
Outlet 2007 2008 2009 2010 2011
Supermarkets/ Dept. stores 52% 54% 53% 53% 55%
Other outlets 48% 46% 47% 47% 45%
Total 100% 100% 100% 100% 100%
(Source: Hong Kong Census and Statistics Department)
Although there will not be significant growth of the number of supermarkets, the retail sales
share of supermarkets is expected to continue to expand in the future at the expense of
that of traditional markets. Many supermarkets in Hong Kong now have successfully
tapped the fresh food market by offering foods at very competitive prices and providing a
Page 9 of 24
comfortable shopping environment, which is different from traditional wet markets.
Overall, wet markets are strong in fresh foods, while supermarkets are strong in processed,
chilled and frozen, high added value, and canned food products. The competition between
wet markets and supermarkets has intensified in recent years. Some wet markets have
turned air-conditioned and provide free shuttle to nearby residential areas.
Table 6 ? Profiles of Leading Supermarket Chains in Hong Kong
Name o Annual Food f e of
Reta wnership Sales No. of Outlet
ile Or Purchasing agent
Wellcome Hong K US$1 ong Over b Around 250 Exporters illion (est.) Consolidators
ParknShop Hong Kong Over US$1 b Around 250 Exporters illion (est.) Consolidators
CRVangu Importers/Agents ard
Shop China Not available 86 shops & 11 superstores Exporters s
DCH CH Importers/Agents Food Mart Hong Kong No 41 DCH Food Mart & 42 Dt available
Food Mart Deluxe Exporters
6 supermarkets within
Japan Over US$250
(HK) Ltd. mi department stores and 5
Ci 4 Importers/Agents tySuper Hong Kong Not available
Oliver?s The mporters/Agents
De Not available 1
licatessen Hong Kong Consolidators
Uny Japan Not available 1 Importers/Agents
Sogo Japan Not available 2 Importers/Agents
There are two dominant supermarket chains in Hong Kong: The Wellcome Co. Ltd. (around
250 outlets) and ParknShop (around 250 outlets). ParknShop and Wellcome account for
about 80% of all supermarket turnovers in Hong Kong. Both supermarkets are able to work
closely with real estate developers to open stores in strategic locations, thus maintaining
their significant market share. The other players include: China Resources Vanguard Shops
(CRVanguard), Dah Chong Hong (DCH) Food Marts, Jusco and CitySuper.
In the past decade, a ?superstore? concept has emerged in the operation of supermarkets,
blending the Western supermarket style with a traditional Hong Kong wet market.
Superstores offer traditional Chinese fresh food like live fish, meats, ready-to-eat foods and
market-style fruit and vegetables as well as the most extensive range of international
ParknShop opened its first superstore in 1996 with a floor area of 45,000 sq. ft. Presently,
Page 10 of 24
its largest supermarket in Hong Kong has a floor area of 72,000 sq. ft. giving customers a
modern one-stop shopping solution. The store sells over 20,000 product categories ranging
from snacks to electrical household appliances. The ParknShop supermarket chain carries
two of its own-label product lines, namely PARKnSHOP and Best Buy, first introduced in
1995. ParknShop is also associated with other supermarkets by the name of Great,
Gourmet, Fusion, International and Taste. These high-end supermarkets cater mostly to the
expatriates and more affluent clientele. They are ideal outlets for innovative, quality and
priced international food products. These stores also carry a wide selection of organic
products. Great adopts a stylish international food hall concept and its flagship store offers
over 46,000 gourmet items. The first 35,000 square feet TASTE food galleria was opened in
November 2004, and features more than 25,000 quality food items sourced from around
the world. Gourmet, opened in 2005, occupied 15,000-square-foot store offering a selection
of over 20,000 products carried across 30 merchandise categories of quality and premium
Dairy Farm, which owns another major supermarket chain ? Wellcome, has opened an
upscale supermarket in Hong Kong?s central commercial area catering to the more affluent
clientele. The new store called ?Three Sixty? was opened in November 2006. With a floor
area of 23,000 square feet, it is Hong Kong?s largest retail outlet for organic and natural
products. About 6,000 items or 70% of the items in the store are organic or natural
products. The store includes an organic sector for baby products. ?Health? and ?natural? are
the key concepts of this store. The second ?Three Sixty? was opened in October 2007.
CRVanguard focuses on local customers. While carrying a variety of products from different
countries, a major portion of them comes from China.
Dah Chong Hong?s outlets (DCH Food Marts) are generally located near wet markets. While
being an importer of a variety of products, its retail outlets focus on frozen meat and
seafood products. Dah Chong Hong is also a major food importer.
CitySuper and Oliver?s The Delicatessen capture an upscale market. Clientele includes
mainly well-off middle class and expatriates. Customers are generally receptive to western
foods. Both high-end supermarkets require no listing fees.
Gateway Superstore and PrizeMart are two supermarkets in Hong Kong selling primarily
U.S. products. PrizeMart has 18 stores and Gateway has 1 store. Both supermarkets import
directly from US consolidators and do not charge listing fees.
Jusco, Sogo and Uny are Japanese department stores with supermarket sections. These
supermarkets attract many middle-class customers, who are receptive to new products and
do not mind to pay for higher prices for higher quality products. These three stores are
popular spots for in-store promotions as they are packed with consumers seven days a
Hong Kong supermarkets require listing fees which are fees charged to allow a new product
to be put on their shelves. This is a one-off fee for a trial period. The listing fees are
extremely negotiable and vary greatly among different supermarket chains. Major
supermarket chains, such as Wellcome and ParknShop which have many branch stores,
have expensive listing fees. Industry sources revealed that key supermarket chains may
charge HK$1,000 (US$130) per SKU for each of its store. A 30% discount may be offered to
certain suppliers. The discount offered varies tremendously depending on the popularity of
the products and the bargaining power of the supplying companies. Agents/importers will
not bear this cost as it is normally just transferred to their principals.
Page 11 of 24
U.S. exporters should be prepared to encounter numerous trading term demands from
Hong Kong food retailers, such as promotional discounts (number of discount promotions
offered each year); back-end income (flat rebate per year that a U.S. exporter has to pay
to the retail chain based on the annual turnover); D.G.A. (Distribution allowance - the fee
that the supermarkets charge for distributing the products from its warehouse to its many
branch stores); and incentive rebate (a percentage of turnover rebated to the supermarkets
in case sales exceed the agreed amount). It can be expected that the bigger the
supermarket, the harsher the trading terms. For general reference, about 15% of the
annual turnover has to be rebated to the major supermarkets and 8% to small ones. Agents
representing very popular items with large turnover usually have a stronger bargaining
power and will be able to negotiate for a lower rebate rate.
In face of strong competition, major supermarket stores often offer discounts and tend to
transfer the cost to suppliers by requesting lower prices for supplies. Given supermarkets?
strong bargaining power, many suppliers have to give supermarkets special discounts which
ordinary retailers do not enjoy.
There is excellent growth potential in Hong Kong?s retail food market for U.S. grocery store
items, particularly new and different items, as food retail outlets continue to increase and
diversify. Because of established ties and traditional relationships, most of Hong Kong?s
supermarket chains traditionally looked to Britain, Australia, New Zealand, and Canada for
supplies. In recent years, however, buying habits are shifting and many more American
items are now available on local grocery store shelves. Supermarkets tend to use
consolidators to help them source new products which are popular in the United States.
Market Entry Approach
Through setting up a representative office in Hong Kong: While this is the most effective
approach, it is very costly.
Through U.S. Consolidators: Major supermarkets in Hong Kong work with U.S. consolidators
for some of their products. However, the product quantities requested per shipment are
usually small, especially when new products are purchased to test the market.
Using Hong Kong Agents: This is the most popular approach. The advantage of having an
agent is that it can help with marketing and distribution. Some companies may secure a
very competitive price package with TV/magazine/radio for advertisements. In addition,
well-established companies have extensive distribution networks not limited to one or two
Direct to Supermarkets: For branded products to sell direct to supermarkets, supermarkets
usually require exclusive rights in selling the products in Hong Kong through their own
outlets only. Otherwise, they will not consider any direct imports. In this case, expensive
listing fees may be waived. For non-branded and large turnover products such as fruit,
meat, and vegetables, supermarkets tend to buy direct from overseas exporters to cut
Direct selling to supermarkets is difficult to handle because they demand strict on-time
delivery and very often will not be able to take a whole container. Logistics is the largest
problem that U.S. exporters have to deal with if they want to sell direct to supermarkets.
However, they can better test the market if they deal directly with retailers.
Page 12 of 24
Table 7 ? Profiles of Leading Convenience Stores in Hong Kong
Purchasing Year C
agent established age
7 Importers -Eleven Hong Kong 964 Hong Kong Ag 1981 15-35 ents
Circle K Hong Kong Hong Importers 319 Kong Ag 85 15-35 en 19ts
There are over 1,300 convenience stores in Hong Kong. Two major chains dominate the
market: 7-Eleven (964 outlets) and Circle K (319 outlets). They are targeting the customer
age group of 15-35. Convenience stores are characterized by round-the-clock operation.
Since only a limited choice of brand names is available and prices are generally less
competitive, most purchases are ?convenience? in nature, i.e. goods are normally bought in
small quantities for immediate consumption. Good sales items include packaged drinks,
beer and snack food. The average size of a convenience store is 1,000 sq. ft. Listing fees
are also required for convenience stores.
Market Entry Approach
Convenience stores largely buy goods from local importers and agents. Therefore, U.S.
food exporters have to go through Hong Kong importers to have their products sold in
Traditional markets include wet markets and mom-and-pop shops. They are widespread
throughout the territory. Traditional markets used to account for the lion?s share of food
retail. For example, they occupied around 54% of total retail food sales between 1995 and
1997. Yet supermarkets sales have exceeded traditional markets sales since 1998, and the
dominating trend of the former is likely to persist and deepen in the future. Despite the
growing significance of supermarkets in terms of food retailing, traditional markets remain
key food retail outlets, particularly for seafood, meat and groceries. Wet markets in Hong
Kong have changed gradually over the years. The newly built markets are built and
managed by the Hong Kong government with air-conditioning and a more hygienic and
pleasant environment than the old ones. Some, but not all, stalls in wet markets have
freezers and chilling equipment, which is necessary to maintain food quality.
Mom-and-pop shops around housing estates and schools are ideal retail outlets for drinks
and snack foods. Such traditional markets offer small stalls and personal services that many
Hong Kong consumers enjoy.
?Kai Bo? is a growing local supermarket chains which started business in early 1990s. Kai
Bo now has 84 stores. A typical store has a floor area ranging around 1,500 sq. feet.
Their stores sell mainly processed foods and produce. Most of the food supplies in these
shops come from China and South East Asia. They also import snack foods and drinks from
Europe. ?Kai Bo? featured more on frozen products. However, only a few U.S. foods are on
their shelves as these stores feature cheap prices and are after the mass market.
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Market Entry Approach
U.S. food exporters must go through local importers or agents that have good distribution
Trends in Promotional/Marketing Strategies and Tactics
Supermarkets expanding store size: The supermarket industry is undergoing a face-lift to
introduce larger size stores with an objective to provide one-stop shopping and convenience
for customers. In addition to traditional grocery and household products, supermarkets are
moving towards larger, more modern stores with more fresh food.
Increasing demand for promotion packages and discounts: Hong Kong consumers are very
price sensitive. Marketing tactics such as selling larger economy packs or enclosing
complimentary samples are usually used to stimulate sales. The most direct and effective
marketing tool is to offer discounts.
In face of strong competition, major supermarket stores often offer discounts and tend to
transfer the cost to suppliers by requesting lower prices for supplies. Given supermarkets?
strong bargaining power as they have many retail outlets, many suppliers have to give
supermarkets special discounts which ordinary retailers do not enjoy.
Consumers becoming increasingly health-conscious and organic products picking up in
popularity: There has been a gradual shift in what food consumers want in Hong Kong. The
importance of meat, especially red meat, has declined among some consumers, while other
food groups, such as fruits and vegetables, are gaining in popularity. Consumers
increasingly look for freshness, healthiness, new varieties and shorter meal-preparation
time for food. Consumers want foods of higher nutritional value, but also increasingly pay
attention to food safety and hygiene. In short, the marketing trend is to position food
products as healthy, natural, nutritional, etc.
Internet direct sales of food: Major supermarkets like ParknShop and Wellcome offer
grocery shopping over their websites. The service is however not attracting a lot of
interest, due to the convenience of shopping in Hong Kong, security concerns over payment
via the internet and the cost of delivery.
Growing awareness of U.S. products fit supermarkets? needs to diversify product range:
With awareness of the high quality and variety of U.S. food products increasing among
supermarkets, there are many opportunities to introduce new U.S. products to the local
market. ATO Hong Kong selectively invites key supermarket buyers to the United States on
buying missions, which are followed by in-store promotions highlighting U.S. products.
Buyers from Hong Kong supermarkets realize the quick-changing consumption
temperament of local consumers, and many have expressed the need to source new
products to capture changing tastes. With strong support from exporters and state regional
trading groups, the ATO continues its efforts to promote U.S. products and help
supermarkets expand their range of U.S. products.
To promote U.S. food products, ATO participates in major trade shows in Hong Kong. U.S.
exporters may wish to consider participating in these trade shows so as to introduce their
products to Hong Kong buyers as well as buyers from other countries in the region.
Table 8 ? Hong Kong:
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Trade Shows Featuring Food & Agricultural Products
Date Name of Show Website
May 29-31, Vinexpo Asia Pacific http://www.vinexpo.com/en/
Aug 16-20, HKTDC Food Expo http://www.hktdc.com/fair/hkfoodexpo-en/HKTDC-Food-
Aug 23-25, Natural Products Expo Asia http://www.naturalproductsasia.com
Sep 5-7, 2012 Asia Fruit Logistica* http://www.asiafruitlogistica.com/en
Sep 11-13, Restaurant and Bar http://www.restaurantandbarhk.com
Sep 11-13, Asian Seafood Exposition http://www.asianseafoodexpo.com
Sep 11-13, Frozen Food Asia http://www.frozenfoodasia.com
Nov 8-10, 2012 5th Hong Kong Int?l Wine & Spirits http://hkwinefair.hktdc.com
Dec 5-7, 2012 Agri-Pro Expo Asia http://www.AgriProAsia.com
(*USDA-endorsed trade show, more information on USDA-endorsed trade shows can be found at:
Hotel, Restaurant and Institutional (HRI)
Hong Kong restaurant industry?s purchases of over US$4.2 billion in foods and beverages
generated sales of over US$11.5 billion in 2011. This represented an increase of 10.9%
and 6.4%respectively over 2010. It is expected that restaurant purchases and receipts will
continue to grow in 2012.
Table 9 ? Hong Kong Restaurants Receipts and Purchases (US$ Billion)
2010 2011 Growth (11 vs 10)
Restaurant Receipts 10.8 11.5 6.4%
Restaurant Purchases 3.7 4.2 10.9%
(Source: Hong Kong Census & Statistics Department)
As Asia?s most cosmopolitan city, Hong Kong boasts around 13,910 restaurants serving a
wide range of world cuisines. These restaurants are comprised of 37% Chinese, 55% non-
Chinese restaurants, and 8% fast food outlets. In addition, there are over 1,000 bars, pubs
and other eating and drinking establishments.
Chinese restaurants: Chinese restaurants are popular among local citizens and tourists.
There are a variety of Chinese restaurants in Hong Kong serving different regional cuisines:
Canton, Shanghai, Beijing, Sichuan?etc. A typical lunch at a nice Chinese restaurant costs
around HK$150-300 (US$19.23-38.46) per person and a typical dinner costs around
HK$200-450 (US$25.64-57.69) per person.
Non-Chinese restaurants: Many Hong Kong consumers enjoy western food, as do the
over 41 million tourists (in 2011). 5-Star and other high-end western restaurants are as
likely to be patronized by locals as tourists/visitors. Japanese food, fast food chains, coffee
houses and casual dining establishments are also increasing their presence. A typical lunch
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at a western restaurant costs around HK$150-350 (US$19.23-44.87) per person and a
typical dinner costs around HK$250-500 (US$32.05-64.10) per person.
Fast food outlets: Fast food outlets are popular among Hong Kong consumers. The most
popular fast food chains in Hong Kong are McDonald?s, KFC and Pizza Hut. There are also
some large local fast food chains such as Café De Coral, Maxim?s and Fairwood that serve
both Chinese and western foods. Competition among fast food chains is intense, as they
each try to keep meal prices competitive. The average cost is around HK$30 (US$3.85) for
breakfast, HK$50 (US$6.41) for lunch, HK$25 (US$3.21) for afternoon tea and HK$70
(US$8.97) for dinner. To further meet competition, many fast food operators have
renovated their outlets to make them look more modern, spacious and attractive. To meet
the demand of a growing number of health-conscious customers, fast food chains have also
introduced more new ingredients and developed healthy-food options such as salads, fruits,
and fresh juices.
Coffee Shops: The coffee shop market continues to grow in Hong Kong?s commercial
areas. The two largest coffee house outlets are Starbucks ? operating 115 outlets and
Pacific Coffee 110 outlets. Most shops also offer basic menus consisting of muffins,
pastries, cakes, sandwiches, and bottled beverages (juices and water). McDonald?s has
also vigorously expanded its McCafe in order to gain share in this growing market. Of its
232 outlets, 77 include a McCafe inside their shops.
Growing Trend ? Healthy Eating: Hong Kong?s food culture is ?fresh?. Consumer
preference for fresh and live products is due to tradition, as well as concern about food
safety. Hong Kong consumers are increasingly health conscious. Hong Kong has over 50
small to medium size health food stores. The two leading supermarket chains (Wellcome
and ParknShop) and drug store chains (Manning?s and Watson?s) also sell natural/organic
products at their outlets. The growth of ?Mix? ? a juice bar that also serves food is a good
example of a successful ?healthy? restaurant chain. Organic foods are also gaining
popularity as evidenced by the growth of specialized retail outlets for organic foods. There
is increasing opportunity for U.S. products and ingredients in this sector.
Market Entry Approach
Because of small individual consumption, local hotels, restaurants and most fast food
operators usually cannot afford to import directly. The distribution of food and beverages
to these operators is generally through import agents. U.S. exporters should contact Hong
Kong importers to explore potential business opportunities.
Trends in Promotional/Marketing Strategies and Tactics
Identify key players for the products - ATO Hong Kong can provide lists of importers,
distributors, commodity cooperators and regional business groups.
Test marketing maybe required prior to establishing a presence in the market.
Communicate product benefits to end-users - although distributors maintain the
relationships with their customers, end users assert influence over the buying decisions. It
is important to directly educate all stakeholders as to the features and benefits of your
Participate in or visit trade shows ? Hong Kong has an excellent reputation of hosting
international trade shows. In cooperation with cooperators and regional groups, the shows
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will demonstrate the versatility and safety of U.S. food products. Please refer to Table 8 for
a list of major shows in 2012.
Stage menu promotions with major restaurant chains - Menu promotion dollars will be
maximized if spent on promotion events held with the major restaurant chains. With the
restaurant chains? announced intention to have an image overhaul, this provides for an
opportunity to introduce new U.S. foods.
Invite restaurant owners/chefs to seminars and/or to the U.S. - ATO Hong Kong/
cooperators organize seminars and trade missions to the U.S. with an intention to introduce
U.S. products, meet U.S. exporters, and share with them food service operations in the U.S.
The food processing industry in Hong Kong is relatively small compared to food retail and
HRI sectors. The total output of the local food processing industry is estimated at below
US$1 billion. Major local production includes instant noodles, macaroni, spaghetti, biscuits,
pastries and cakes for both domestic consumption and export. Other significant sectors
include canning, preserving and processing of seafood (such as fish, shrimp, prawns, and
crustaceans); manufacture of dairy products (fresh milk, yogurt and ice cream); seasoning
Based on the trade agreement between Hong Kong and China (called Closer Economic
Partnership Arrangement, or CEPA in short), all foods and beverages made in Hong Kong,
subject to the CEPA's rules of origin, can enjoy duty-free access to the Chinese mainland.
Non-Hong Kong made processed food and beverages products remain subject to rates
according to China?s tariff schedule.
The CEPA zero tariff product list includes aqua ? marine products, food and beverages,
(certain dairy products such as yogurt and cheese, certain prepared meats, certain sugar
confectioneries and cocoa preparations; certain preserved meats and seafood, bread,
biscuits and cakes; preserved vegetables and fruits, fruit juices; sauces, water, etc.) and
leather and fur products.
Processed food and beverages items have to comply with Hong Kong?s rules of origin in
order to be imported to China tariff free. The rule of origin of individual products is
basically determined by the manufacturing or processing operation. For example, milk and
cream products are considered as ?made in Hong Kong? only when the manufacturing
processes of mixing, freezing sterilization and cooling are conducted in Hong Kong. The
origin criteria for nuts is that the baking, seasoning, and/coating have to be done in Hong
Kong. In the case of ginseng, the principal manufacturing processes of cutting and grinding
have to be conducted in Hong Kong.
China?s zero import tariff applications for products made in Hong Kong certainly encourage
food production in Hong Kong. The expansion of the local food processing industry will then
trigger a demand for raw materials. Such demand may provide additional export
opportunities for U.S. food ingredients suppliers.
More information on CEPA can be found at: http://www.tid.gov.hk/english/cepa/index.html
Market Entry Approach
Page 17 of 24
Food ingredients are sourced both through direct import by food processors and through
middleman traders. Hong Kong traders and end-users tend to stay with suppliers with
whom they know well and have done business with for some time. While exporters would
do well exploring all channels, patience and understanding are required to establish a
relationship of trust before trading can commence.
SECTION IV. BEST CONSUMER ORIENTED PRODUCT PROSPECTS
1 95% of Hong Kong food supplies are imported. Since Hong Kong?s domestic
production is nominal the market size in the following table is equal to retained imports
without taking into account local production. U.S. exports to Hong Kong are also
based on imports minus exports.
2 Import tariff rates for all food and beverage products in the tables are zero except for
spirits with alcohol content greater than 30%, which is 100%.
3 Products listed below are either enjoying a large market import value or a significant
growth rate for the last 5 years (2007-2011).
Table 10 ? Hong Kong: Top 10 Prospects
Product 2011 2011 2007 ? Key Constraints Over Market
Category Retained Retained 2011 Market Development Attractiveness
Imports Imports Average For USA
(MT) (US$ Annual
Fish & Volume US$3 +12.9% Major suppliers of fish U.S. fish and seafood
Seafood statistics billion (value) and seafood products are products are
Products not China (20%), Japan perceived as high
available (16%), quality and safe.
Australia (8%) and the
US (6%). Many 5-star hotels in
Hong Kong are
such as king salmon,
king crab, snow crab,
black cod and
halibut. It is
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continue to be
popular among HRI
sector in Hong Kong.
Fresh Fruit 586,274 US$761 +2.8% Hong Kong consumers U.S. fresh fruit are
MT million (volume) prefer fresh fruit to frozen well known for their
fruit. Competition from large variety, good
+9.3% Thailand and China is quality and tastes.
(value) keen as these countries
supply tropical fresh fruit U.S. was the largest
at competitive prices. supplier (28%) of
The shorter travel time fresh fruit to Hong
for shipments from these Kong, followed by
countries to Hong Kong Chile (18%) and
also render their products Thailand (18%).
?fresh? to Hong Kong
consumers. The top U.S. fruit
exports to Hong
Kong were citrus
plums & sloes
(US$22 million) and
Poultry 490,221 MT US$1.09 +16% Brazil moved in as the no. U.S. exported
Products billion (volume) 1 poultry exporter to US$755 million worth
Hong Kong when U.S. of chicken products
poultry imports were to Hong Kong,
+23.6% temporarily banned accounting for 38%
(value) during February 11 to of the market share.
April 30, 2004 due to
Avian Influenza cases in U.S. products are
the United States. highly regarded in
Though the ban was later food quality and food
lifted, Brazil continued to safety.
be the largest supplier More popular U.S.
due to its price advantage chicken products
and its exporters? include chicken wing
relationships with Hong mid joints and
Kong importers. chicken legs because
of their sizes and
The depreciation of U.S. quality. These two
dollar attracted more products are
imports of U.S. products particularly popularly
to Hong Kong and the among Hong Kong
U.S. regained its leading style cafes.
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position with a market
share of 38% in 2011.
Pork 179,637 MT US$613 +3.9% China and Brazil are the U.S. exported US$49
million (volume) top suppliers of pork to million worth of pork
Hong Kong because their to Hong Kong,
products are very price accounting for 7% of
+19.1% competitive. the market share.
There is a big demand for U.S. products are
price competitive highly regarded for
prepared/preserved quality and food
meatballs and other safety.
products typical in
Chinese dishes in Chinese
restaurants, which are
made from pork. China
enjoys the advantage of
low processing cost.
Processed 156,138 MT US$260 -2.1% China is the largest U.S. processed fruit
Fruit & million (volume) supplier (31%), closely and vegetables are
Vegetables followed by the U.S. well known of their
+3.8% (26%). superior quality and
(value) tastes. U.S.
Some international processed fruit and
brands have operations in vegetables such as
China and their exports to potatoes, nuts, sweet
Hong Kong are corn, mushrooms,
considered as imports peaches and
from China. pineapples will
continue to be in
large demand in
Beef, 70,541 US$449 +8.6% Because of BSE cases in U.S. exported
Frozen MT million (volume) the U.S., Hong Kong US$162 million worth
currently allows boneless of frozen beef to
+31% beef derived from cattle Hong Kong in 2011,
(value) under 30 months of age accounting for 30%
from U.S. E.V (Export market share.
Verification) approved Although U.S. beef
plants. was banned in Hong
Kong in 2004 and
Bone-in beef and variety 2005, Hong Kong
beef from the U.S. are consumers still have
not yet allowed in. high regards for U.S.
beef in terms of
Short U.S. beef supplies quality and safety.
make U.S. beef very
Brazil beef took the
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opportunity to gain
market share. Brazil beef
imports grew from US$49
million in 2004 to US$177
million in 2011.
Wine 28.5 US$971 +14% Competition is keen in U.S. exported US$70
million liters million (volume) Hong Kong. Major million of wine to
competitors come from Hong Kong in 2011,
+70% France and Australia. accounting for 6% of
(value) French wine is the market share.
traditionally more popular
in Hong Kong. The HKG abolished
the import tax on
wine and beer in
The HRI sector in
Macau is growing,
making it an
for U.S. wine traders
to expand their
consumers are more
and more receptive
to wine. The total
elimination of the
excise tax on wine
would probably help
nurture wine drinking
culture in Hong
Tree Nuts 18,605 US$445 -22% The U.S. is very strong in No local production
MT million (volume) supplying almonds,
hazelnuts and pistachios.
(value) Some of the imports are
re-exported to Vietnam
and China for processing.
Fruit & 17,206 US$29 -2.4% The U.S. is still the Given the high
Vegetable MT million (volume) market leader, exported quality of U.S. fruit &
Juices US$13 million worth of vegetable juices,
+2% fresh fruit juices to Hong U.S. fruit and
(value) Kong, accounting for a vegetable juices such
market share of 43%. as orange juices,
apple juices, grape
juices, tomato juices
and pineapple juices
Page 21 of 24
are expected to
continue to be very
popular in 2012.
Organic Statistics Statistics Statistics Organic F&B products are As Hong Kong
Food and not not not generally 20-40% higher consumers are
Beverage available available available in prices compared to becoming more
non-organic products. health-conscious, the
(The size of demand for organic
the Hong There are many organic products will
Kong standards in the market continue to grow in
organic food and the poor quality of a 2012.
and country?s organic
beverage products may negatively USDA Organic enjoys
market is affect the image of an excellent
estimated at organic products from all reputation among
US$500 supplying countries. consumers in Hong
million, with Kong. Consumers
an annual generally have more
growth of confidence on USDA
10-15%) Organic standards
than other countries?.
are in good demand.
Other products such
as organic meat
(beef and pork),
eggs etc are starting
to have more
interest in the
There is also a strong
demand for organic
fruits, organic coffee
and tea products.
SECTION V. KEY CONTACTS AND FURTHER INFORMATION
Foreign Agricultural Service (FAS)
Home Page: http://www.fas.usda.gov
Agricultural Trade Office
American Consulate General
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18th Floor, St. John?s Building
33 Garden Road, Hong Kong
Tel: (852) 2841-2350
Fax: (852) 2845-0943
Web site: http://www.usconsulate.org.hk
Department to Implement Food Safety Control Policy
Food & Environmental Hygiene Department
43/F., Queensway Govt Offices
66 Queensway, Hong Kong
Tel: (852) 2868-0000
Fax: (852) 2834-8467
Web site: http://www.fehd.gov.hk
Department to Control the Importation of Plants & Live Animals
Agriculture, Fisheries & Conservation Department
5-8/F., Cheung Sha Wan Govt Offices
303, Cheung Sha Wan Rd
Kowloon, Hong Kong
Tel: (852) 2708-8885
Fax: (852) 2311-3731
Web site: http://www.afcd.gov.hk
Department to Issue License for Imported Reserved Commodities
Trade & Industry Department
18/F., Trade Department Tower
700 Nathan Road
Kowloon, Hong Kong
Tel: (852) 2392-2922
Fax: (852) 2789-2491
Web site: http://www.tid.gov.hk
Department to Register Health Foods Containing Medicine Ingredients
Department of Health
Import & Export Control Section
18th Floor, Wu Chung House
213 Queen?s Road East, Wanchai, Hong Kong
Tel: (852) 2961-8754
Fax: (852) 2834-5117
Web site: http://www.dh.gov.hk
Department to Issue License for Imported Dutiable Commodities
Hong Kong Customs & Excise Department
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Office of Dutiable Commodities Administration
6-9th floors, Harbor Building
38 Pier Road, Central, Hong Kong
Tel: (852) 2815-7711
Fax: (852) 2581-0218
Web site: http://www.customs.gov.hk
Department for Trade Mark Registration
Intellectual Property Department
Trade Marks Registry
24th and 25th Floors, Wu Chung House
213 Queen?s Road East
Wan Chai, Hong Kong
Tel: (852) 2803-5860
Fax: (852) 2838-6082
Web site: http://www.ipd.gov.hk
Semi-Government Organization Providing Travel Information
Hong Kong Tourist Board
9th - 11th floors, Citicorp Center,
18 Whitfield Road, North Point, Hong Kong
Tel: (852) 2807-6543
Fax: (852) 2806-0303
Home Page: http://www.hktourismboard.com
Semi-Government Organization Providing Hong Kong Trade Information
Hong Kong Trade Development Council
38th Floor, Office Tower, Convention Plaza
1 Harbor Road, Wan Chai, Hong Kong
Tel: (852) 2584-4188
Fax: (852) 2824-0249
Home Page: http://www.tdctrade.com
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