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Market Research

Pollution Control Technology in Hong Kong

The food industry in Hong Kong is segmented into two areas: manufacturing and service. The manufacturing sector includes approximately 720 food and beverage production facilities and is the sixth largest manufacturing industry in Hong Kong. The service sector comprises an estimated 8,000-9,000 prepared food outlets, including restaurants, cooked food stalls and pig/meat roasting factories.

Increasingly strict pollution control regulations are forcing the food processing industry to evaluate production practices and consider retrofitting existing waste treatment systems or installing new ones. The fines for non-compliance drive the market for pollution prevention and treatment technology, but there is evidence that public awareness is increasing.

The primary issue for this industry is wastewater. The effluent is typically high in biological oxygen demand, chemical oxygen demand, oil and grease, and suspended solids. The most commonly used treatment system is the sequencing batch reactor. While most engineering and construction will be done locally, there is a demand for specialized products (e.g. pH controllers, centrifugal pumps, on-line analyzers etc.) and chemical additives. Cleaner and more efficient production processes are also being promoted. For the service sector, there is a growing market for biological products which enhance the effectiveness of existing in-situ oil and grease collection devices. Air filtration systems are also increasingly needed to reduce oily fumes and cooking odors from restaurant kitchens.

In general, there is growth potential for pollution prevention and treatment technology in both the manufacturing and service sectors, but it hinges on overall growth of the food processing industry, government policy, and partnerships with local firms.


Water Pollution Control Ordinance

All pollutants in wastewater from the food processing industry are regulated by the Water Pollution Control Ordinance. Both the service and manufacturing sectors are required to apply for a license from the Environmental Protection Department for all effluents discharged into sewers, storm water drains, and inland and coastal waters. A technical memorandum was issued in 1991 which incorporates a set of effluent standards to guide EPD in setting license requirements.

Affected effluents include oil and grease, Chemical Oxygen Demand, Biological Oxygen Demand, pH, and suspended solids B all common waste products of food processing.

All food processors must abide by the strict effluent guidelines set out in their license or face penalties. While the maximum sentences for violation of a license are very high, industry sources say that the standard fine is $1,300 for the first offense and $2,000 for subsequent offenses. Sources say that these fines are largely responsible for the increased interest in waste treatment systems by food processors.

Sewage Services Ordinance

In line with the new polluter pays principle, the Drainage Services Department in 1995 began levying fees on all discharges into the public sewerage system.

In addition to a general charge of $0.15/m3 discharged, an automatic Trade Effluent Surcharge is levied against the food processing industry. The discharge rate for surcharge is calculated at 80% of the potable metered water supplied. It is between $0.22 and $0.75 per cubic meter discharged depending on the type of food or beverage manufactured. The rate for restaurants is $0.48/m3.

The food industries included on the list of affected industries are as follows:

It is the processor's responsibility to prove that their effluent is cleaner through an appeals process. A preliminary test is done which costs $250-400. If the results are promising, a certified lab is hired to conduct a thorough test costing $2,500. If it is proven that the chemical oxygen demand of the effluent is less than the Drainage Service Department's standard assessment estimate, the Trade Effluent Surcharge will be reduce by a commensurate amount.

Air Pollution Control Ordinance

Oily fume and odor emissions from cooking are among the air pollutants which come under the control of the Air Pollution Control Ordinance. The primary impact that this ordinance has on the food industry is in response to complaints.

The Environmental Protection Department urges restaurant owners and operators to
“employ competent professionals to design, commission and maintain the complete
exhaust system, including air pollution control equipment.”


Market Profile

Manufacturing Sector

The government is actively promoting the food processing industry. Its objective is to upgrade automation and processing technology and machinery. As imports of advanced processing and packaging machinery continue to grow, it is likely that the equipment will increasingly incorporate greater efficiency in the use of energy and water with a commensurate decrease in waste water produced.

The Hong Kong Productivity Council is currently undertaking a study and promotion of environmentally friendly food production techniques that could be used in Hong Kong.

Effluent treatment consists of solid-liquid separation, biological and chemical treatment to lower bio-chemical oxygen demand (BOD and COD), pH neutralization, and the removal of oil and grease.

The market is estimated at about $10-15 million annually. However, these systems are usually locally designed and built, with U.S. imports concentrated around specialized equipment. Treatment additives are an important part of the market. Most treatment systems, and even some production processes, require some kind of chemical additive. The most common used in treatment are silicone polymers which enhance both large scale production and treatment systems as de-foaming and anti-foaming agents.

Sales of silicone polymers by the food processing industry is estimated at $2-3 million annually. The major U.S. companies which supply the polymers to the Hong Kong market are General Electric, Dow Corning and Witco. Together, they control about 70% of the market. Two Japanese firms, Shinetsu and Toshiba have 20% market share. A European firm, Wacker, has the remaining 10%. The market is considered mature with potential future growth pegged to overall local industry growth. The number of complaints that EPD has received about liquid waste from food and beverage processors has increased from 118 in 1993 to 265 in 1996. It is worth noting that complaints about liquid waste from the food industry constitute nearly one quarter of all complaints about liquid waste. Improvements in the treatment practices of other industries and increased environmental awareness are probably the cause.

Service Sector

Wastewater Treatment

Grease traps are required by law in Hong Kong, and are usually the only in-house treatment done by the service sector. It is estimated that there are around 15,000 grease traps in Hong Kong, all designed and built locally. There is currently no import market for pre-fabricated grease traps given the low cost of local materials and labor.

Currently, only about 225 of the grease traps in Hong Kong are biologically assisted. It is estimated that for every grease trap, $400 is spent on U.S. biological products annually. Thus, around $10,000 per year is currently spent for these products in Hong Kong.

However, given the increased costs of non-compliance with EPD regulations, an estimated 75% of the market (11250 grease traps), including almost all large Chinese restaurants, could potentially save money using biological products in combination with proper trap management. The total market could

Air Filtration Systems

Oily fumes are an increasing concern to restaurants, primarily those cooking in the Chinese style. Current ventilation systems rarely incorporate any form of treatment. New guidance released by the Environmental Protection Department in June 1998 recommends the use of advanced air treatment systems for kitchen ventilation to ensure compliance with the air pollution ordinance.

Unlike waste water, air pollution regulations for restaurant emissions are generally enforced only once complaints are lodged. If EPD determines that the complaint is justified, the restaurant must install an adequate air filtration system. In 1996, 595 air pollution complaints against restaurants were filed, up from 376 in 1993.

EPD estimates that about 10% of the restaurants need some degree of exhaust fume filtration. In general, these are the larger restaurants which are required to have a permit from EPD if their fuel consumption is above a certain amount. They have annual inspections. Smaller restaurants are at the discretion of the local control office of EPD. The larger restaurants must install a proper ventilation filtration system.

Statistical Data

Estimated trade in pollution technology for the food processing industry (in $millions):

Average Annual Growth- 199519961997Est. Next 3 years
Local Production101214
Total Market 15182010%
Import from U.S.34610%
Exchange Rate--7.75
Future Inflation Rate Assumed: 5%

1997 Import Market Share:

US 37%; Japan 22%; Germany 20%; Other 17%
(These figures are based on total industrial waste water control equipment imports)

Source: Estimates based on local trade sources

Best Sales Prospects

Given the increased enforcement of water pollution regulations, smaller food processors will increasingly need effluent treatment systems which are compact, efficient and do not require a great deal of supervision. Appropriate technologies to treat wastewater include sequencing batch reactors, dissolved air flow systems, and cavitating air floatation systems.
For air filtration systems for restaurants, the following are recommended by the Environmental Protection Department: grease filters using metallic and synthetic fibers; water spray hoods (hydrovents) and air washers; electrostatic precipitators; venturi and packed tower scrubbers; and activated carbon filters.


The most efficient strategy for U.S. firms is to link up with a local consultant or environmental engineering firm. Hong Kong's food processing plants demand that companies in the waste treatment business fulfill the entire range of needs, including agent, trader, manufacturer, engineer and consultant. By importing necessary technical instruments and specialized equipment, sourcing basic items locally, assembling the project on-site and providing consulting and other support as necessary, Hong Kong’s waste specialists offer one-stop shopping. U.S. companies not in a position to enter into cooperative assembly agreements will find the best opportunities will be selling individual components (pumps, gauges, mixers, chemical additives, specialized treatment technology) to agents and consultants in Hong Kong who can fit them into complete systems. U.S.-origin products in this sector are looked-upon as both high quality and good value. Competition from European and Japanese companies, however, is increasing.


Manufacturing Sector

According to the most recent statistics available, there are 720 food and beverage manufacturing factories in Hong Kong, employing 21,139 persons. The majority of these food and beverage factories were small, employing an average of 29 persons. The industry can be classified into two categories: traditional Chinese and modern. Factories using traditional Chinese methods are mostly small-scale operations. Their manufacturing processes are usually manual and require experienced employees. It is unlikely that such factories will have the capital or interest to adopt modern waste treatment techniques.

Modern factories using up-to-date mechanized production techniques are generally much larger in size. With the exception of a few purpose-built factories in industrial estates, most operations are located in ordinary, multi-story factory buildings. Space requirements for treatment systems become a major concern.

Service Sector

The service segment is made up of 8,000 to 9,000 licensed restaurants, including fast food shops. The primary system for treating wastewater is a grease trap. Of the total number of restaurants, around 4,000 to 5,000 are large, Chinese establishments. Chinese style cooking practices result in wastewater with high concentrations of oil and grease, and the volume of water used is also well above Western norms. High cooking temperatures allow hot oil to more thoroughly permeate water making final effluent separation more time consuming. Furthermore, given Hong Kong's intense space pressures, the area provided for grease traps is usually inadequate. Finally, the high volume of chemical detergents used in cleaning kill any resident bacteria in the trap.

For these reasons, most grease traps currently in use are totally inadequate to comply with the stringent new regulations. Even if grease traps are pumped out and cleaned regularly, they are unlikely to comply. Thus restaurants are vulnerable to fines and high trade effluent surcharges. It is increasingly making economic sense for restaurants to invest in pollution control technology.

One emerging method is to improve the efficiency of grease traps using specially chosen grease-eating bacteria. This type of biological product has high growth potential if it is proven to be effective under Hong Kong conditions. Without active management, biological agents have not been proven particularly successful.


Import and Export Regime

Hong Kong is a free port and one of the world's best examples of an "open market economy". The Hong Kong Government pursues economic policies of non-interference in commercial decisions, low and predictable taxation, government spending increases within the bounds of real economic growth, and competition subject to regulation and law. Market forces determine wages and prices with price controls limited only to certain government-sanctioned monopolies in the service sector. There are no restrictions on foreign ownership of capital, nor are there export performance or local content requirements. Profits can be freely repatriated. These policies have spurred high rates of real growth, low unemployment, rising wages, and an overall steady increase in standard-of-living judged in economic terms.

Hong Kong is a member of GATT in good standing, and is a founding member of the WTO as well as a member of APEC. There is no legislation or practice which restricts access to the Hong Kong markets by foreign exporters or which mandates preference for locally manufactured products. Hong Kong companies (and the Hong Kong Government itself) do not have any predisposition to any one supplier -- and are far more inclined to purchase based on the terms of price, delivery, quality and service. Technical and safety standards are not used as a political or trade control mechanism, and they are normally accommodated with little difficulty.

The Hong Kong Government levies no import tariffs. However, domestic consumption taxes (referred to as duties in Hong Kong) are imposed on a small number of goods, including tobacco, alcoholic beverages, methyl alcohol and some fuels. These taxes are levied equally on local manufactures and imports.

The Hong Kong Government imposes restrictions on the export of high-technology products to countries proscribed under the former COCOM regime, including the People's Republic of China. Restrictions on trade with China were relaxed significantly by the United States in 1991, allowing Hong Kong to re-export to China on a more liberal basis. Textiles are subject to import and export licensing because of Hong Kong's obligations under agreements with the US and other countries. Hong Kong's export control system has not changed as a result of Hong Kong's July 1, 1997 reversion to Chinese sovereignty. Additionally, Hong Kong's status with regard to access to controlled U.S. technologies has not been altered as a result of reversion.

Useful contact for inquiring about specific products:

Customs and Excise Department
8th Floor, Harbour Building
38 Pier Road
Central, Hong Kong
Tel: (852) 2852-3324
Fax: (852) 2541-9827 (Dutiable Commodities Division)

Guidelines for Selecting and Working with an Agent or Distributor in Hong Kong

One of the best ways to sell products in the Hong Kong market is through the use of agents or distributors. It is also an excellent way of minimizing the initial investment in the market. As outlined below, there is a wide range of companies which can serve as agents or distributors for U.S. firms. Other options for pursuing Hong Kong’s market are establishing an office or partnering. Companies looking to sell equipment needing long term maintenance or technical support or installation or who are seeking to become involved in infrastructure projects frequently seek to partner with local companies.

Working with agents and distributors in Hong Kong is very much like working with an agent in the United States. An agent takes orders in the supplier's name. Distributors act in their own name and may stock products purchased from the manufacturer for resale. The choice depends on the relationship with which the manufacturer/supplier is most comfortable and the nature of the business.

Hong Kong has no special legislation regarding agents and distributors. Virtually anything which both sides can agree to and put into a written contract is acceptable and enforceable, including restrictions on territory and a grace period for termination of the agreement. While not required by Hong Kong law, the more complex the contract, the more helpful it is to have legal counsel. Items that should be considered for inclusion in a contract include:

- Discussion of exclusivity and sales territories (always a sensitive issue; business people should be careful about granting an exclusive agency too soon or in too large a territory if the agent is to cover beyond Hong Kong.)

- Discussion of proprietary information (theft of intellectual property is prohibited by local law, but prevention of piracy is always less expensive and more effective than post-facto legal action.)

- Levels of sales activity -- set specific targets and goals to qualify for maintaining or renewing the agreement

- Time duration

- Payment terms

- Quality control -- inspection -- verification

- Rule of law -- jurisdiction in the US vs. Hong Kong (It is generally Hong Kong, but another location may be specified -- for arbitration, for example.)

- Covenants restricting activity following cancellation of the contract.

There are many types of agents and distributors in Hong Kong, ranging from those who simply stock retail stores with standard items to agents who provide sales, engineering and technical support for complex systems. It is common for a single company to deal in a wide variety of products in a particular sector. Agents and trading companies may be less specialized than companies in a large economy like the US, but the best ones are focused and have contacts in a general line of business.

One area that FCS has seen as troublesome for Americans in their business relationships in Hong Kong is the American businessman's perception of the loyalty of their local representative. US firms complain that as soon as they get an agent trained, he/she drops them for a competitor's product, taking the client list with them.

FCS Hong Kong offers the following advice and suggestions to prevent this from happening. Most basic is the need to see the relationship from the agent's viewpoint, and to take actions which will make you and your product of maximum value and minimum bother and expense:

a. A major sore point with Hong Kong reps/distributors is the American suppliers' failing to see the difference between business development (marketing) and selling. Local reps have little problem with paying commissions, but have a serious problem paying business expenses (samples, technical assistance, warranties). We recommend that the U.S. suppliers consider paying these expenses directly. That's what most of your competition is doing.

b. Respect the Hong Kong people's attitude toward time. The pace is very fast, and business deals that take more than 24 hours to complete can be considered slow and therefore of low priority. Respond immediately to all faxes and phone calls. Your speed of response will be a major factor in building credibility.

c. Keep in mind that space in Hong Kong is extremely expensive. This affects everything from manufacturing to retailing. For every step of business in Hong Kong, the question you must be able to answer is "how will the use of your product/service help to make money for the Hong Kong agent/distributor?"

d. The Hong Kong Government is extremely laissez faire. It has few environmental laws, safety laws, child worker laws, product performance laws, etc. Conclusion: sell on economics, not legislation (as per c above).

e. Remember that the Hong Kong agent has many options to choose from in addition to yourself: Australians, Europeans, Japanese, Singaporeans, Chinese, and so on. You must make it as easy for your Hong Kong partner as possible to deal with you:

- Quote in metric

- Quote on a delivered basis to Hong Kong (not F.O.B.)

- Use 220v, 50hz

- Spell out the name of your state on your business card; include a fax number with an area code; put "USA" into every address that you use.

By following these steps you can find, as have hundreds of other American companies, that working with an agent or distributor in Hong Kong is an effective way of doing business.

Key Contacts:

Subsidized Consultants

There are two large and well-organized groups which U.S. businesses in Hong Kong should be aware of: the Hong Kong Productivity Council and the Centre of Environmental Technology, Ltd. Both organizations receive over half of their operating budget from outside sources, HKPC from the Hong Kong Government's Industry Department and CET from a 23 member corporate committee of Hong Kong’s biggest conglomerates. They are both often called upon by smaller firms to address their pollution treatment needs.

Mr. C.M. Lin
Environmental Management Division
Hong Kong Productivity Council
78 Tat Chee Avenue, Kowloon
Tel: 852-2788-5678
Fax: 852-2788-5608

Mr. Andrew Thompson
Project and Business Manager
Centre of Environmental Technology
78 Tat Chee Avenue, Kowloon
Tel: 852-2784-3900
Fax: 852-2784-6699

Local Industrial Waste Water Specialists

The growth of the market for pollution prevention and control equipment in Hong Kong has spurred corresponding growth in the number of firms dealing in the sector. Many small and medium sized enterprises that previously specialized primarily in production equipment are now offering their long standing clients access to waste water treatment technologies. These firms offer custom solutions to their clients and therefore are good contacts for component and part suppliers.

Mr. James W.H. Wong
Managing Director
Allied Environmental Consultants Ltd.
1408 Unicorn Trade Centre
127-131 Des Voeux Road Central
Hong Kong
Tel: 852-2815-7028
Fax: 852-2815-5399

Mr. Daniel M. Cheng
Group Managing Director
Dunwell Industrial (Holdings) Ltd.
13/F Bright Way Tower
33 Mongkok Road
Hong Kong
Tel: 852-2391-0371
Fax: 852-2789-3346

Mr. Gary Tse
Managing Director
ECCO Engineering Company Ltd.
1408 Riley House
88 Lei Muk Road
Kwai Chung
New Territories
Hong Kong
Tel: 852-2410-9200
Fax: 852-2401-0385

Mr. Raymond Lee
Euro Mark Technologies Ltd.
Room 1907, Kodak House II
321 Java Road
North Point
Hong Kong
Tel: 852-2880-5008
Fax: 852-2590-0305

Mr. John K.F. Fung
Managing Director
Four Gay Engineering Company
Unit B, 4/F, Siu Fung Building
9-17 Tin Lok Lane
Hong Kong
Tel: 852-2572-2393
Fax: 852-2572-1489

Mr. Alfred M.S. Leung
Technical Director
Hydrex Asia
1 Lockhart Road
Hong Kong
Tel: 852-2527-9544
Fax: 852-2865-1533

Mr. C.T. Tang
General Manager
HydroTech Professional Limited
Flat 11, 5/F, New Trend Centre
704 Prince Edward Road East
Hong Kong
Tel: 852-2544-8266
Fax: 852-2544-3323

Ms. Louisa Leung
Senior Sales Executive
Environmental Engineering Department
Jardine Engineering House
260 King’s Road
North Point
Hong Kong
Tel: 852-2807-4366
Fax: 852-2503-2690

Mr.Anthony Mak
Managing Director
Kinghope Limited
1/F, Mei Kwok Building
Block B
12-16 Amoy Street
Hong Kong
Tel: 852-2527-1114
Fax: 852-2527-5983

Mr. Cedric Chan
General Manager
Prominent International (Environmental)
Room 611, Hong Leong Plaza
33 Lok Yip Road
Hong Kong
Tel: 852-2676-2545
Fax: 852-2676-2860

Mr. Jimmy Kwok
Managing Director
Rambo Chemicals (HK) Ltd.
11/F, Blk B-D
Wah Wing Industrial Bldg.
14-20 Wing Yip Street
Kwai Chung
New Territories
Hong Kong
Tel: 852-2429-7031
Fax: 852-2420-7904

Mr. W.M. Yeung
Senior Manager
Ryoden Engineering Co., Ltd.
11/F, Ryoden Industrial Centre
26-38 Ta Chuen Ping Street
Kwai Chung
New Territories
Hong Kong
Tel: 852-2619-8888
Fax: 852-2481-2857

Mr. S.C. Lam
Customer Support Technical Manager
Schmidt & Company (Hong Kong) Ltd.
36/F, Dorset House
Taikoo Place
Quarry Bay
Hong Kong
Tel: 852-2507-0222
Fax: 852-2827-5656

Mr. Tony Leung
Science International Corporation
14/F, Gee Tuck Building
16-20 Bonham Strand East
Hong Kong
Tel: 852-2543-7442
Fax: 852-2541-4089

Mr. Joseph M.W. Lau
Executive Director
Timard Industries Ltd.
1216 Kenning Industrial Centre
19 Wang Hoi Road
Kowloon Bay
Hong Kong
Tel: 852-2727-1668
Fax: 852-2772-7110

Mr. Johann Wong
Sales Manager
Uyemura - Solar Co. Ltd.
19/F, Flat A & B
CDW Bldg.
388 Castle Peak Road
Tsuen Wan
Hong Kong
Tel: 852-2414-4251
Fax: 852-2413-6266

Full Service Environmental Engineers and Consultants

Full service environmental engineering and consulting firms are the mainstay of the pollution treatment market. These firms have long been addressing the pollution control needs of Hong Kong's municipal and industrial sectors. Local firms dealing mainly with medium to large sized clients have the resources to tackle their pollution prevention and treatment needs with state-of-the-art equipment. These firms have the ability to act as agents, distributors, and/or joint venture partners for U.S. firms looking to make a large commitment to the market.

Mr. Stephen Yip
Managing Director
Advance Environmental Engineering Ltd.
Office A, 9/F, Manly Commercial Building
15 Soy Street
Mong Kok
Hong Kong
Tel: 852-2332-3193
Fax: 852-2385-0696

Mr. Alan Kwok
Managing Director
Consultants in Environmental Science (CES)
Room 1201, Tai Yau Building
181 Johnston Road
Hong Kong
Tel: 852-2893-1551
Fax: 852-2891-0305

Dr. Sarah Liao
Managing Director
EHS Consultants Ltd.
22/F, Loyong Court Commercial Building
220 Lockhart Road
Hong Kong
Tel: 852-2507-2203
Fax: 852-2507-2293

Dr. S.L. Wan
Managing Director
Enviro-Chem Engineering and Laboratory (ECEL)
7-8/F, 93-97 Des Veoux Road West
Hong Kong
Tel: 852-2803-2202
Fax: 852-2559-0158

Getting Paid

The preferred method of quoting is "CIF" or "C and F" in HK$. U.S. and other freely convertible currencies may be accepted for bids and pro forma invoicing.

Terms of payment depend on the relative negotiating strength of the buyers and sellers. U.S. suppliers should seek to obtain letters of credit or sight draft terms when dealing with buyers who are not well known to them. Asking for a letter of credit is a standard business practice, and your potential customer will not interpret this as a sign of mistrust.

Hong Kong is one of the region's leading financial centers. By the end of 1997, Hong Kong had 180 licensed banks (149 were incorporated overseas), 66 restricted licensed banks (27 were incorporated overseas), 115 deposit-taking institutions (2 were incorporated overseas), and 159 representative offices (all were set up by foreign banks). Thirty-two American "authorized financial institutions" operate in Hong Kong, including 7 of the top 10 U.S. banks. Most banks in Hong Kong maintain U.S. correspondent relationships. Letters of credit, document collection and international remittance are widely available. All licensed banks are authorized to provide loans to residents and nonresidents. The risk of financing receivables can be readily evaluated via locally available credit information. Prospective exporters should make use of banking relationships to determine credit risk.

The importance of trade finance to the territory has resulted in a high level of bank efficiency in providing import payment services. The local currency, the Hong Kong dollar (HK$), is freely convertible and there are no regulations that hamper inward or outward remittance of capital or profits. Currently the HK$ is pegged at 7.8 to the US$ and has fluctuated little since the inception of the linked rate policy in 1983.

Selling to the Hong Kong Government

The Government Supplies Department (GSD) is the central purchasing, storage and supply organization for the Government of the Hong Kong Special Administrative Region, serving over 80 government departments and certain non-government organizations. The GSD normally purchases by open tender, with decisions based on compliance with tender specifications, competitiveness in price, back-up service and delivery. The GSD gives no preference to any particular source of supply from any country or organization. The GSD spent $549 million in 1997, with American products winning around 26% of the total procurement contracts (about $141 million). Hong Kong joined the WTO Agreement on Government Procurement in June 1997. As of May 1998, the Government of the Hong Kong Special Administrative Region was in the process of establishing a Bid Challenge System consistent with the WTO's Government Procurement guidelines.

Invitations to open tender are published in the Government of the Hong Kong Special Administrative Region Gazette and in selected Hong Kong newspapers. Tender notices are also published on the Internet on the GSD Home Page (http://www.info.gov.hk/gsd). Tenderers usually have about six weeks to prepare their offers. Tenders normally have a 90-day validity period unless otherwise indicated. Payment is usually effected by check or telegraphic transfer within 30 days upon acceptance of the goods. Contract awards with the names of successful tenderers and contract sums are published monthly in the Government Gazette and on the Internet.

For information about a subscription to the Government of the Hong Kong Special Administrative Region Gazette contact:

Information Officer
Publications Sales Section
Information Services Department
28th Floor, Siu On Centre
188 Lockhart Road
Wanchai, Hong Kong
Tel: (852) 2598-8197
Fax: (852) 2598-7482

The GSD maintains lists of registered suppliers for issuing tender invitations. Any company not currently registered with the GSD wishing to be considered for inclusion in these lists may apply in writing to the Director of Government Supplies. Companies are required to provide basic information about their organizations and the goods they offer, such as the business registration certificate, company profile, annual report and product catalogues. The GSD evaluates this information and those companies that are found acceptable will be included on the lists.

The U.S. & Foreign Commercial Service at the US Consulate General in Hong Kong office regularly reports on government tenders which are available via the NTDB. For information call the U.S. Department of Commerce at 1-800 stat-usa.

Companies seeking more information on the GSD are encouraged to contact:

The Director of Government Supplies
Government Supplies Department
10/F, North Point Government Office
333 Java Road
North Point, Hong Kong.
Tel: (852) 2231-5100
Fax: (852) 2510-7904

Trade Promotion Activities

Many promotional vehicles are open to suppliers to introduce and develop their services in the Hong Kong market. These include:

- special trade fairs and exhibitions
- advertising in the media and other public relations activities
- holding seminars
- in-store promotions
- joint promotions with wholesale and retail outlets

Hong Kong is a major conference and exhibition center. Hundreds of international exhibitions are held annually. The Hong Kong Conference and Exhibition Center (operated by the quasi governmental Hong Kong Trade Development Council), has approximately 500,000 square feet of exhibition space, including 300,000 square feet added in a major expansion completed in the summer of 1997. A privately built facility, the International Trademart, opened in Kowloon Bay in early 1996 with 158,000 square feet of exhibition space. Television is a widely used medium with an estimated daily audience of 5.27 million out of a population of 6.5 million. Hong Kong Television also reaches much of neighboring Guangdong Province in China, where it is very popular.

As one of the largest centers in the world for Chinese language publications, the territory produces almost 700 publications, including some 60 Chinese newspapers, approximately 625 periodicals, and 2 English daily newspapers. Advertising agencies, including many of international standing, offer a full range of services.

Suppliers should provide technical catalogs in English, and desirably in Chinese, for distribution to agents and firms. Company brochures are particularly useful when visiting Hong Kong for the first time. English-Chinese business cards are also helpful.

Conferences and exhibitions scheduled within the next 24 months include:

WasteExpo - 1999
June 7-10, Dallas, Texas
Ms. Jacqueline Wolfe
Environmental Industry Association
4301 Connecticut Avenue, NW
Suite 300
Washington, DC 20008
Tel: 202-244-4700
Fax: 202-966-4841

AWMA - 1999
June 20-24, St. Louis, Missouri
Michael Roy
International Programs Manager
Air & Waste Management Association
One Gateway Center, Third Floor
Pittsburgh, PA 15222
Tel: 412-232-3444 ext. 3144
Fax: 412-232-3450

Protecting your product from IPR Infringement

The best protection for an American company is to aggressively market in Hong Kong. By using a good local agent, American manufacturers or suppliers can make their product legally available. Dealers have a strong incentive to stop any piracy, and with good local connections, have a better chance of making that happen than an American company which is not actively participating in the market. The chief law enforcement body for Intellectual Property Rights (IPR) is the Hong Kong Customs and Excise Department. However, protecting copyrights or trademarks takes vigilance, and even with the U.S. Government vigorously pressing Hong Kong on this issue, enforcement is still dependent on reporting incidents of product piracy to the authorities and, in some cases, providing evidence in court. For more information on intellectual property legislation and registration, see the following paragraphs.

Protection of Property Rights

Hong Kong's commercial and company laws provide for effective enforcement of contracts and protection of corporate rights. The Intellectual Property Department, which includes the Trademarks and Patents Registries, is the focal point for the development of Hong Kong's intellectual property regime. The Customs and Excise Department is the principal enforcement agency for intellectual property rights (IPR). While the Hong Kong Government has taken significant steps to improve its intellectual property rights regime and enhance enforcement efforts, production and retail sale of pirated software, recordings, and films remain serious problems. As a result, the United States Trade Representative again placed Hong Kong on the Special 301 Watchlist in 1998.

1997 saw a dramatic increase in factories producing compact discs, including pirated compact discs, in Hong Kong. Industry estimates the number of production lines at well over 100 and possibly as many as 250. The Hong Kong government responded by instituting a licensing regime for the import and export of production equipment and by passing a new law that requires factories to register and use source identifier codes.

This new legislation should enable enforcement authorities to gain control over illicit production by the end of the year. Meanwhile, authorities have stepped up seizures of production equipment and pirated compact discs. In a dramatic raid in late April, 1998, officials seized 41 production lines and some 8 million pirated compact discs.

The Customs and Excise Department, which has a special IPR unit with over 200 investigators, has also stepped up raids against retail shops selling pirated goods. Using new enforcement tools from the June 1997 Copyright Law, Customs officers have been able to substantially increase seizures of pirated goods. Although aggressive raids have curtailed activity at the three most notorious retail centers, pirated goods remain widely available in a number of other retail arcades.

Hong Kong successfully localized its intellectual property laws to ensure the maintenance of a strong legal regime after the July 1997 reversion to China. Protection continues under both local laws and international conventions, which continue to apply to Hong Kong. Hong Kong has acceded to the Paris Convention for the Protection of Industrial Property, the Bern Convention for the Protection of Literary and Artistic Works, and the Geneva and Paris Universal Copyright Conventions. Hong Kong also continues to participate in the World Intellectual Property Organization, as part of China's delegation.

The new copyright law protects any original copyright work created or published by any person anywhere in the world. It provides for rental rights for sound recordings and computer programs but not films. It provides for enhanced penalty provisions against copyright piracy and additional legal tools to facilitate enforcement. It decriminalizes parallel imports of copyrighted products one year after their release anywhere in the world, but maintains civil penalties. Registration is voluntary.

The patent ordinance, approved in June 1997, allows for granting of an independent patent in Hong Kong based on the patents granted by the UK be independent, and would be capable of being tested for validity, rectified, amended, revoked and enforced in the Hong Kong courts in accordance with Hong Kong law. Based on the law, Hong Kong has established an independent patents registry. Continuity is preserved so that pre-existing patents eligible for protection continue to enjoy protection in Hong Kong.

The new registered designs ordinance is modeled on the proposed EU design registration system, with certain modifications. To be registered, a design must be new. The system requires no substantive examination. Protection will be for an initial period of five years, and may be extended for four periods of five years each, up to a maximum of 25 years.

Hong Kong's existing trademark law is not dependent on that of the UK, and so does not need to be "localized." The law is already TRIPS-compatible, and is in the process of being modernized. All trademark registrations originally filed in Hong Kong are valid for seven years and renewable for 14-year periods. Proprietors of trademarks registered elsewhere must apply anew and satisfy all requirements of Hong Kong law. When evidence of use is required, such use must have been in Hong Kong. Trademarks are registered under the Trademarks Ordinance, with provisions similar to trademarks legislation in the United Kingdom. The Trademarks (Amendment) Ordinance, which came into effect in 1992, extends the trademarks law to allow for registration of trademarks relating to services.

Hong Kong has no specific ordinance to cover trade secrets. Under the Trade Description Ordinance, however, the government has the duty to protect the information being disclosed to other parties. The Trade Description Ordinance prohibits false trade descriptions, forged trade marks and misstatements in respect of goods supplied in the course of trade.

The Legislative Council passed an Intellectual Property (World Trade Organization Amendment) bill in May 1996 to fulfill Hong Kong's international obligation as a WTO member. The bill expanded the definition of what can be trademarked, provided new anti-piracy tools to the Hong Kong Government and provided for civil detention orders at the border to stop import of infringing product. The Hong Kong Government has claimed a developing country status exemption to the Trade-Related Intellectual Property requirements of the World Trade Organization. In theory, this gives Hong Kong five years to phase in the requirements.

The Government has committed, however, to meeting the requirements well within that period.

Useful contacts

Director of Intellectual Property
15th Floor, Queensway Government Offices
66 Queensway
Central, Hong Kong
Tel: (852) 2867-2817
Fax: (852) 2375-7375 (TM & Patent Registries)
(852) 2736-8297 (Headquarters)

The Intellectual Property Department also has a web page, at http://www.houston.com.hk/hkgipd/

Also Chairman
Intellectual Property Committee
The American Chamber of Commerce in Hong Kong
Room 1904, 19/F, Bank of America Tower
12 Harcourt Road
Central, Hong Kong
Tel: (852) 2526-0165
Fax: (852) 2810-1289


Few product safety standards are required for the domestic Hong Kong market. What little there are relate to fire control (gas and electricity) in the city's high rise buildings. One exception is an ordinance which does not accept U.S. safety standards for certain baby products. Other standards of quality and safety control imposed on domestic manufacturers are for goods made for export or re-export outside Hong Kong. Currently, building materials and electrical/mechanical supplies have to meet British standards. However, Hong Kong is gradually recognizing other standards so US companies seeking to export to Hong Kong check with potential agents and customers to determine exact standards required.

Another guideline to use regarding quality control is the "ISO 9000" series, published by the International Organization for Standardization (ISO). These standards, now in the process of being adopted in Hong Kong via the Hong Kong Quality Assurance Agency, provide a framework for all types of manufacturing industries. The Hong Kong Housing Authority has also adopted ISO 9000 for all of its consultants/contractors, and the Works Branch has extended ISO 9000 to engineering and architectural consultants as of April 1, 1996. The Airport Authority also requires suppliers and contractors to conform to ISO 9000.

Weights and Measures

Metric, British Imperial, Chinese and US units are all in use in Hong Kong.

The territory is promoting the adoption of a metric system of units, the "International System of Units" (SI). Adoption of SI in areas related to length, area, volume and capacity, force, pressure and energy/power is almost complete.

The "Special Administrative Region" and the Future of Hong Kong

On July 1, 1997 Hong Kong became a "Special Administrative Region" (SAR) of the People's Republic of China. The treaty between Great Britain and the PRC which created the SAR of Hong Kong guarantees the future existence of the current territory as a capitalist enclave until at least the year 2047. The Chinese speak of "one country, two systems," which has become the standard way of describing the continued existence of capitalist Hong Kong as a part of the People's Republic of China. A similar system has been negotiated for the Portuguese colony of Macau, with the transition to take place on December 20, 1999.

Some have expressed concern about Hong Kong's ability to maintain its capitalist system, rule of law, free flow of information, etc, now that it is a part of the People's Republic of China. While it is impossible for anyone to predict the future of Hong Kong with certainty, most observers agree that the (mainland) Chinese government has scrupulously followed the "one country, two systems," formula, and all indicators suggest that the People's Republic of China will continue to abide by the Hong Kong accords. There are many reasons for this optimism, including the following:

(1) PRC behavior to date. As mentioned, Chinese leaders have repeatedly stated their commitment to maintaining Aone country, two systems, and their deeds have been true to their words so far.

(2) AFace. China does not want to preside over a decline in Hong Kong, after the territory prospered for so many years under British rule.

(3) The PRC has invested heavily in Hong Kong. In fact, the PRC is the largest investor in the territory (estimates range from $25 billion to as much as $100 billion). The PRC has been profiting from its Hong Kong investment for years, and there is no logical reason to assume that they would now want to destroy this source of income -- especially now that Hong Kong "belongs to them."

(4) China needs Hong Kong's infrastructure to sustain its policy of fostering economic growth. Indeed, the growth targets set by the PRC Government would be impossible without the use of Hong Kong's banks, trading companies, and container port facilities. Over 50 percent of all Chinese exports still flow through the port of Hong Kong.

(5) The current PRC leadership has pointed with pride to the economic growth of the southern regions of China, indicating that this is a model for the rest of China. This growth is a direct result of Hong Kong investment and management. Hong Kong has created over 5,000,000 jobs in southern China through its investment over the last several years. To explain this, a Chinese Communist leader was quoted as saying, "Just because capitalists use a certain method to run their economy, doesn't make it a capitalist method." The liberalization of China has been based on Hong Kong models, with this likely to continue.

(6) Historically, the PRC has never taken actions which were specifically designed to damage Hong Kong business interests. Even during the depths of the cultural revolution in China, Hong Kong was considered "off limits." There is no indication that this is going to change.

(7) Taiwan. The "one country, two systems" model was actually created for Taiwan, the one remaining part of A Greater China yet to be reunified. Although successfully maintaining Hong Kong's way of life does not guarantee Taiwan's return to the motherland, failure in Hong Kong would surely mean the end of China’s aspirations towards Taiwan.

Companies interested in the Hong Kong market should continue to monitor the situation, since things could always change. However, in our view, there is no reason for concern about the future viability of Hong Kong as a good market for US goods and services, and as an excellent base from which to conduct business throughout the region.

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