Hong Kong Industry Profiles

	No. of Establishments Mar 2011	Employment Mar 2011
Architectural, surveying and engineering services related to construction and real estate activities	1,936	23,143
Engineering, technical and consultancy  services, not related to construction and real estate activities	530	2,321

Sources: Quarterly Report of Employment and Vacancies Statistics for Mar 2011, Census and Statistics Department

Engineers involved in construction are multi-disciplinary, including civil, structural, building, electrical and mechanical. The residential building sector was the largest end-user group of construction activities in 2010, followed by transport, service building and commercial building projects.

The overall gross value of construction works performed by main contractors in Hong Kong has been rising since 2009. A strong growth of 201.8% in the value of transport sector drove up the construction activities by 17.7% year-on-year (YoY) to HK$61 billion in 2010. In the first three months of 2011, the transport sector has continued its robust growth (150.8% YoY), leading 30.8% YoY growth in the overall construction activities to HK$16,820 million. As the ten major infrastructure projects are being rolled out in phases as scheduled, demand of engineering services in Hong Kong, particularly demand from transport, will remain high.

Engineers working in the non-construction related industries provide a broad range of disciplines and business activities, the larger ones being:

Many engineers are members of the Hong Kong Institution of Engineers (HKIE), a local professional body for engineers. First established as the Engineering Society of Hong Kong in 1947, the HKIE was incorporated by government ordinance in 1975 to set professional standards and to encourage professional development for local engineers. In 1992, the HKIE qualification was recognized for government services appointments. The HKIE has become a key qualifying body for a wide range of engineering disciplines. It has over 10,000 qualified professional members.

Corporate Membership of the HKIE	Number of Members as at 1.Dec.2010
All discipline	12,788
Civil	5,110
Structural	2,263
Building Services	1,370
Electrical	1,417
Mechanical	1,382
Electronics	679

Note: Other disciplines include geotechnical, marine, industrial, environmental, building, information, control, automation & instrumentation, and chemical. A member may belong to more than one discipline.

Most of the export business comes from Asia, particularly the Chinese mainland. The construction sector, particularly the professionals, benefits from Hong Kong's extensive investment activities in the region. Most of Hong Kong's investments in the region are in manufacturing, property development, hotel construction and infrastructure projects. Major types of professional engineering services that are currently being exported include consultative engineering services, engineering design services for construction projects and project management.

Direct exports of Hong Kong's non-construction related engineering services are limited as the industry is domestically-oriented and entry into many foreign countries is restricted. However, such services are exported indirectly through the exports of manufactured goods, especially advanced equipment and products which embody high engineering services content.

A number of Hong Kong's engineering companies are exporting their services via working for multinational companies in Southeast Asia, North America and Western Europe, covering a wide range of industries including information technology, telecommunications, chemicals and fast moving consumer goods.

The largest market for Hong Kong's engineering service exports is the Chinese mainland. High-tech equipment and engineering services are in great demand on the mainland. Japan, the US, Germany and other European countries have already made a strong presence on the Chinese mainland in areas such as electronics, electrical and mechanical, information systems, bio-chemical, industrial and telecommunications engineering. Engineering companies from other places in Asia, such as Taiwan and South Korea, are trying to capture a larger share of the Chinese mainland market. Singapore, striving to become the region's technology centre, is also active in developing opportunities in the mainland market. Even in the face of a highly competitive market, local engineers benefit from Hong Kong's extensive investment activities on the Chinese mainland.

Based on the latest available statistics, Hong Kong's exports of architectural, engineering and other technical services amounted to HK$2,134 million in 2009, dropped by 33.2% from 2008, due to the global economic tsunami.

HK$ million

	2007	2008	2009
Exports - Architectural, engineering and other technical services	1,933	3,193	2,134

Sources: Report on Hong Kong Trade in Services Statistics for 2009, Census and Statistics Department

Ten major infrastructure projects, which were announced in the Chief Executive’s Policy Address in October 2007, are being rolled out in phases as scheduled, boosting Hong Kong‘s construction market. In addition, the HKSAR government has also forged ahead with other projects, such as Operation Building Bright and Revitalising Historic Building. As a result, the unemployment rate eased back to 4.5% in 2010 from the financial tsunami peak of 12.8%.

In the Budget 2011/12, the Hong Kong government estimated the total public spending on infrastructure to go up by 45% YoY to HK$58 billion (US$7 billion) for the fiscal year ending 31 March 2012.

Reflecting in part the country’s rapid recovery from the global economic downturn, China’ housing market has attracted a huge amount of investment, fueling real estate prices. In order to prevent bubbles in the property market and rein in rocketing home prices, the Chinese government has taken a series of measures since 2010, including the State Council’s introduction of “11 Measures” to further restrict foreign investment in the overheating property market. Residential property prices in 100 major Chinese cities, however, rose by 0.41% on average in June 2011, according to the China Real Estate Index System.

Hong Kong’s companies, such as NWS Holdings Limited and Hang Lung Properties, are leading investors in the mainland’s infrastructure and housing project, due to their knowledge about the mainland market and expertise in quality control, cost control, project management and financial support. Hong Kong’s electrical and mechanical engineering services providers can also participate in the mainland’s medium-cost housing programmes. Hong Kong's engineering service sector has been working closely with its counterpart on the mainland to lay the foundation for cooperation. HKIE, for example, signed an agreement of co-operation with China Association for Science and Technology (CAST) in 2008. Including CAST, HKIE has already signed co-operation agreements with six industry associations on the Chinese mainland.

To match up with rapid economic growth, many Asian countries (e.g. India and Indonesia) have urgent needs to upgrade their basic infrastructure, road networks, port facilities, housing and city planning. Private participation is on the rise. Foreign firms are increasingly allowed to participate as investors in the ownership as well as the management of these projects. Hong Kong’s CLP Group, for example, has been awarded to build and operate a coal-fired power plant in Haryana and its fifth and sixth wind farms in India, in western Rajasthan and southern Andhra Pradesh. According to the Asian Development Bank, Asia would require US$3 trillion on infrastructure investment from 2011-2020 that means US$300 billion will be needed for every year. Apart from infrastructure, more shopping malls are being built or renovated in many Asian countries, such as India, Thailand and Malaysia. The rise of Asian consumerism has prompted much investment in modernising their retail distribution channels.

Rapid urbanisation drives up the demand for infrastructure development on the Chinese mainland. Urbanisation is targeted to go up by 4% during the period of 12th Five-year plan, rising to 51% in 2015 from 47% in 2010. Similarly, the United Nations projected China’s urbanisation rate to reach 53.2% in 2020 and 72.9% in 2050. Infrastructure demand is likely to remain robust in the foreseeable future.

The Chinese government commits itself under the 12th Five-year plan to further increasing  infrastructure investment. Transport infrastructure (building railway track, airports and improving road networks), housing (low-cost housing), and power generation & grid infrastructure investment are included. Highway network, for example, will be increased to 83,000 km from 74,000 km by 2015. Huge demand for expertise in infrastructure development can be expected. It will create ample business opportunities for engineers, including public utilities, energy management and environmental-related work. Foreign firms can either establish wholly-owned company or form joint-venture with local companies to bid for projects. HKC (Holdings) Ltd, for example, invests heavily on wind farms on the Chinese mainland. Some of its projects are undertaken by their wholly-owned companies, while others in joint ventures with the China Energy Conservation Investment Corporation.

Ongoing awareness of environmental protection leads to an increasing demand for green buildings. The Urban Renewal Authority, for example, announced that it will adopt an environmental sustainability policy for future urban renewal projects. According to Hong Kong Building Environmental Assessment Method Society (HKBEAMS), over 210 green building developments in Hong Kong, comprising over 10 million sqm and 50,000 residential units, had applied for BEAM certification in terms of environmental protection, as of March 2010.

Apart from Hong Kong, the Chinese mainland and other Asian countries are also going green. Dongtan Eco-City in Shanghai (with an area of 84 sq.km.) aims to create a whole city that will be as energy-efficient as possible. Masdar in Abu Dhabi also aims to be a carbon-free city, relying entirely on renewable energy sources. The increasing environmental consciousness generates business opportunities for the electrical, mechanical, building services and environmental engineering sectors. Some Hong Kong companies have already grabbed the chance and won projects. Hip Hing Construction, for example, won contracts in Masdar and Arup Hong Kong is also involved in the Dongtan Eco-City in Shanghai.

The shifting of manufacturing bases by companies in developed countries into Asia has helped transform the region into the world's major exporter of electronic products, generating strong derived demand for engineering services, particularly in areas of mechanical and electrical, electronics and information technology. More and more overseas manufacturers, from places including South Korea, the US and Japan, would like to form partnership with Hong Kong's engineers to provide electronic product engineering design services to benefit from Hong Kong's proximity to low cost manufacturing bases in the Asian market.

CEPA provides many benefits to Hong Kong’s engineering businesses, which range from greater flexibility in entering the mainland market to mutual qualification recognition. Under CEPA, construction professional services include construction design services, engineering services, integrated engineering services, urban planning and landscape design services (except overall urban planning services).

Currently, China allows foreign-owned construction and engineering design enterprises to set up wholly-owned or joint-venture enterprises on the mainland. However, there are still strict restrictions on them. In comparison, CEPA offers more relaxed access conditions for Hong Kong Service Suppliers (HKSS).

In applying as a wholly-owned construction and engineering design enterprise, foreign service providers who have been qualified as certified architects or certified engineers in China shall not be fewer than 1/4 of the total certified professionals required under the qualification grading criteria (1/8 for a joint-venture (JV) construction and engineering design enterprise), and the foreign service providers who have the relevant design experience shall not be fewer than 1/4 of the total key technical personnel required under the qualification grading criteria (1/8 for a joint-venture construction and engineering design enterprise). Under CEPA, HKSS can employ mainland registered professionals to fulfil the requirements.

In addition, for a foreign enterprise applying for a JV enterprise, the proportion of total capital contributed by mainland partners of JVs should be no less than 1/4 of the registered capital, whereas mainland partners of HKSS are not subject to the required proportion of the registered capital.

CEPA also allows eligible Hong Kong residents to take part in the following 18 Mainland professional examinations related to the construction and engineering services.

Professional examinations related to construction and engineering services include:

To facilitate Hong Kong residents to apply for professional qualification examinations held in Guangdong, Hong Kong residents are also permitted to apply for the examinations via the Guangdong professional qualification examination centre.

Under Supplement V to CEPA, Hong Kong professionals who have obtained the mainland’s Supervision Engineer qualification are allowed to register and practise in Guangdong regardless of whether they are registered practitioners in Hong Kong or not.

Under Supplement VI to CEPA, the Chinese mainland is committed to continuing the recognition of Hong Kong project managers employed by Hong Kong-invested construction enterprises in relation to the qualification assessment of the latter, both during the amendment and after the promulgation of the new “Standards for the Qualifications of Construction Enterprises”. Thanks to this new CEPA provision, Hong Kong project managers can expect no change in their role in projects involved or commenced before promulgation of the new standards; and after the promulgation, until the completion of the concerned projects.

Under Supplement VII to CEPA, Hong Kong professionals, who have obtained the Chinese mainland’s Class-1 registered architect qualification or Class-1 registered structural engineer qualification, are allowed to register and practise in Guangdong, regardless of whether they are registered practitioners in Hong Kong or not. They can act as partners to set up construction and engineering design offices on the mainland in accordance with the relevant qualification requirement. For these offices, there is no restriction on the ratio of the number of the Hong Kong partners to the number of the mainland partners, the ratio of the total capital contributed by the Hong Kong partners to that by the mainland partners, and the residential period in the mainland for the Hong Kong partners.

As at 31 May 2011, there were 73 approved HKSS in the sector of construction professional services and construction and related engineering services, out of a total of 77 applications.