AboutHank S Expertise Ask me about sourcing products in China, finding manufacturers in China, importing from China, developing new products in China, moving manufacturing to China, price negotiations with suppliers in China, and logistics-related issues.
Experience I lived in China from 1993 to 2003 where I learned Chinese and worked in the fields of logistics, marketing and manufacturing services. I have visited hundreds of factories in China. I am authorized by the NYS Unified Court System as an interpreter of Mandarin Chinese. I have an MBA in international business and entrepreneurship. I work in a U.S. company as product development and sourcing manager.
Education/Credentials MBA, International Business & Entrepreneurship, City University of NY
BA, East Asian Studies & Chinese, City University of NY
Studied international trade taught in Chinese at the University of International Business & Economics in Beijing
Chinese language study at Beijing University & Nanjing University
Question I don't know if my question is going to be stupid and am I asking right person, but I don't get it why more than 50% of goods from china is re-exported through Hong Kong. I made a little research and is that only because of cowering of real export or there is some other benefit like that goods exported to Hong Kong doesn't have any custom taxation. To simplify where is difference between direct export and re-export through Hong Kong.
Answer Hi Alen, your question is not stupid and you are asking the right person. First of all it is important to distinguish between shipments that are physically passed through Hong Kong on their way to their final destination vs. those that are shipped from Mainland China directly to their final destination but are brokered by a Hong Kong trading company or agent. One reason to physically move goods to HK first and then forward to destination would be to consolidate smaller shipments together to achieve better economies of scale on shipping costs. Also, there are more cargo vessels from HK port and flights from HK airport to many worldwide destinations than there are from most Chinese ports.
You mentioned taxes. As the importer, your primary concern is import duties. This is a tax the U.S. government charges you. It is a form of protectionism -- if the U.S. government wants to protect the domestic widget industry it can raise duties on widgets imported from abroad. There may be some odd exceptions, but import duties should be the same whether goods are coming from HK or Mainland China. So this should not be a factor.
The main reason so many of China's exports are brokered by Hong Kong trading companies is because HK has been open to the West far longer than China, and the territory and its people are much more "Westernized" than Mainland Chinese, generally speaking. Because of its unique history and geography, HK has traditionally served as the "gateway" into China for Western companies and old habits die hard even if in most cases these HK trading companies are nothing but an unnecessary added layer of cost. Generally speaking, it is easier for Westerners to deal with Hong Kong Chinese than with Mainland Chinese, although this is changing. Conversely, many Chinese manufacturers are... well, manufacturers! They are not marketing people. Many of them rely on trading companies to help them reach out to the world and get orders.
