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Hong Kong Industry Profiles

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Import and Export Trade Industry in Hong Kong


  • Hong Kong’s total merchandise trade in 2018 increased by 7.9% to US$1,138 billion (HK$8,880 billion) after growing by 8.4% in 2017.

  • Hong Kong handles a large amount of offshore trade, estimated by the Hong Kong government at a value of US$571 billion (HK$4,456 billion) in 2017, increasing by 5% over 2016. In comparison, re-exports amounted to US$511 billion (HK$3,832 billion) in 2017, up 8.1% over 2016.

  • As at December 2018, 474,758 people were employed in the import and export sector, which had 99,986 establishments. In 2017, the sector accounted for 17.5% of Hong Kong’s GDP.
  • Hong Kong handles a good portion of Mainland China's external trade. In 2018, about 12.1% of the Mainland's exports (valued at US$301 billion) and 13.8% of imports (US$291 billion) were handled via Hong Kong and 57% of Hong Kong's re-exports were originated from the Mainland.

Industry Data

Table: Import and Export Trade Industry Data
Table: Import and Export Trade Industry Data

Table: Exports of Merchanting and Trade-related Services (US$ billion)
Table: Exports of Merchanting and Trade-related Services (US$ billion)

Range of Services

Hong Kong's import and export trading firms are active in sourcing various types of goods, including raw materials, machinery and parts, and a wide range of consumer goods. There are three main types of sourcing activities: (1) sourcing goods produced in Hong Kong; (2) sourcing goods from around the region for re-exports; and (3) sourcing goods from one country to be shipped directly to a third country without touching Hong Kong ground.

The import business of Hong Kong trading firms is mainly generated by the distributing capabilities under the identity of agents or dealers. These trading firms usually specialise in one area of products and represent one or more foreign brands. Their trading map usually encompasses Hong Kong, the Chinese mainland (or certain parts of it) or other Asian countries.

Due to the development of trade supporting services on the Chinese mainland, trading firms increasingly source goods offshore for sales in international markets. Some of these goods are either transhipped via Hong Kong or shipped directly without touching Hong Kong ground. Such offshore trade is not reflected in Hong Kong's trade statistics. According to official statistics, Hong Kong's offshore trade in 2017 (including both “merchanting” and “merchandising for offshore transactions”) was estimated to be US$571 billion (HK$4,456 billion), increasing by 5% over 2016. In comparison, re-exports totaled US$511 billion (HK$3,832 billion) in 2017, up 8.1% over 2016, representing some 92.3% of the amount of offshore trade.

Service Providers

Hong Kong's import and export trading firms are typically small, employing less than 10 persons on average. There were 99,986 import and export trading firms in Hong Kong as of December 2018, with the majority of them being SMEs. There are three broad categories of import and export trading firms:

  • Left hand-right hand traders: these refer to trading firms which match sellers and buyers without adding any significant value to the process. These firms are characterised by the conduct of a straight-forward sourcing operation, usually identifying goods produced on the mainland or Hong Kong and shipping them to overseas markets. These firms rely on their specialist knowledge of the sources of products in the region and the low costs of their supplies as their main competitive advantages.

  • Traders with some value-added services: many firms now source raw materials for their suppliers and provide finance for these materials. They often use letters of credit from their customers as a guarantee for raising finance for their purchase orders. Other firms develop a sub-contractor relationship with a number of factories in which they exert significant control over the management of production, including quality control.

  • Traders with sophisticated value-added services: in certain cases exporting firms have added value to their traditional activity to such an extent that it may be difficult to retain the label of being exporters. For example, some firms have become designer and manufacturer of components for their supplier factories to produce finished goods, which the firms subsequently export. These firms add value mostly from their design team and their competitive edge comes from their ability to design products which sell well in the target markets.

The business environment for Hong Kong's trading firms is becoming more challenging amid the growing trend toward direct dealing between customers and manufacturers, known as “trade disintermediation”. In response to trade disintermediation, Hong Kong traders adaptively provide more value-added services in addition to finding more competitive sources of supplies. For example, Hong Kong traders help their overseas clients inspect the goods produced by the manufacturers to ensure they meet the procurement standard, and monitor production schedules to meet delivery. Hong Kong traders can also help overseas buyers coordinate production when the buyers have a sudden surge in orders and quick turnaround is needed.

In 2017, the rate of gross margin[1] of merchanting improved to 6.6% from 6.5% in 2016 to reflect the gradual recovery of the export market, though still shy of 6.9% recorded in 2009. In the same year, the commission rate of merchandising[2] for offshore transactions stood at 6.9% (2016:7.1%; 2015: 6.9%).

The operations of small and big trading firms are quite different. Smaller firms are usually strong in introducing foreign products to the mainland market. In most cases, they specialise in one area, such as medical equipment, and represent some foreign brands as their agents or distributors. Bigger trading firms are usually strong in sourcing products from the region. They usually have regional or even global sourcing networks and do not specialise on a particular type of product.


Hong Kong's import and export trading sector exports its services mainly in the form of offshore buying and selling of goods. Given Hong Kong's proximity and the relocation of Hong Kong's manufacturing bases to the Mainland, particularly the Pearl River Delta, Mainland China is a major source of offshore trading activities. As Hong Kong manufacturers are diversifying their production activities to other low-cost countries, the offshore trading pattern is expected to reflect the move. In 2018, Hong Kong earned US$40.5 billion from exporting merchanting and trade-related services, accounting for 27.1% of total services exports.

Industry Development and Market Outlook

  • Benefitting from the global economic recovery, Hong Kong’s total merchandise trade increased by 7.9% to US$1,138 billion (HK$8,880 billion) in 2018, after growing by 8.4% in 2017. In the same period, Hong Kong’s merchandise exports saw a year-on-year increase of 7.3%, after increasing by 8% in the previous year. In 2018, Hong Kong's major export markets were Mainland China (55% of total), the EU (9.2%) and the US (8.6%).

  • In recent years, Asia has become a more integrated market, thanks to the various free trade agreements (FTAs) signed in the region. In particular, the product trade arrangements under the China-ASEAN Free Trade Area (CAFTA) pact, which commenced in 2005 with scheduled tariff elimination completed in 2010, have contributed to higher intra-Asian trade. In November 2015, China and ASEAN concluded an upgraded FTA that covers further liberalisation of trade as well as economic, investment and regulatory cooperation. The upgraded protocol of the CAFTA took effect on 22 October 2019.

  • Over the past few years, there has been an increase in companies in developed economies treating Asia as a market instead of a pure production base. During 2012-2017, North America’s exports to Asia expanded by a CAGR of 1.3%, surpassing the CAGR of 0.1% in respect of its exports to Europe in the same period.

  • ASEAN as a group is the fourth largest export market and second largest trading partner of Hong Kong, with Vietnam, Singapore and Thailand being the top three markets for Hong Kong products. To foster stronger economic ties between Hong Kong and ASEAN, the two sides signed the Hong Kong-ASEAN Free Trade Agreement (HAFTA) in November 2017. In addition to the reduction and/or elimination of import tariffs, other key elements covered by the HAFTA include, rules of origin, liberalisation of trade in services, promotion and protection of investment, as well as intellectual property co-operation. Part of the HAFTA has entered into force since June 2019.

  • The Belt and Road Initiative (BRI), announced by Chinese President Xi Jinping in 2013, is an ambitious plan aimed at promoting economic and social cooperation among more than 60 countries (which has now expanded to over 130 countries) along the proposed BRI corridors. This development will certainly lead to an expansion in the volume of international trade and create fresh demand and business opportunities for Hong Kong’s trade sector.

The Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA)

CEPA is a free trade agreement concluded by the Mainland and Hong Kong. At present, all products of Hong Kong origin, except for a few prohibited articles, can be imported into the Mainland tariff free under CEPA. Relating to services sector, Hong Kong service suppliers (HKSS) can provide, in the form of wholly owned operations, commission agents' services and wholesale trade services and to set up wholly owned external trading companies on Mainland China.

After ten Supplements between 2004 and 2013 to keep widening and broadening the liberalisation measures in favour of HKSS, Hong Kong and the mainland entered into a subsidiary agreement under CEPA in 2014 to achieve basic liberalisation of trade in services in Guangdong (Guangdong Agreement). This was then followed by the Agreement on Trade in Services (ATIS) to extend the coverage of the 2014 agreement from Guangdong to the rest of the mainland from June 2016. Unlike the previous Supplements which adopted a positive-list approach to introducing liberalisation measures, the two latest CEPA agreements adopt a hybrid approach to granting preferential access to Hong Kong using both positive and negative lists. With basic liberalisation of trade in service between Mainland China and Hong Kong now achieved, Hong Kong’s status as an international trade hub as well as the gateway to the Mainland is set to strengthen. Please click to view further information on the latest CEPA agreements.

[1] “Rate of gross margin” refers to the gross margin from merchanting expressed as a percentage of the sales value of goods involved, while “commission rate” is the commission from merchandising for offshore transactions expressed as a percentage of the sales value of goods involved. “Rate of re-export margin” is defined as the re-export margin expressed as a percentage of the value of re-exports.

[2] The difference between “merchanting” and “merchandising” is that, an establishment engaged in “merchanting” takes ownership of the goods involved, whereas one engaged in merchandising transactions does not take ownership of the goods involved.

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