Hong Kong Import & Export Practices

Export and Import Practices

Hong Kong's cosmetic and toiletries market had an estimated value of $787 million in 2002. With little domestic production of cosmetics and toiletries, Hong Kong relies on imports from China, Japan, the United States, France, Singapore, Malaysia, and Taiwan. Industry sources expect import growth to continue in the coming years despite the economic slowdown in Hong Kong. The constant demand from mainland Chinese tourists will also drive the growth of imported cosmetics and toiletries.

The best prospects in Hong Kong will be in hair coloring products, skin-whitening products, nail products, color cosmetics, permanent eye makeup, and skin care products for professional beauty salons. U.S. skin care and hair care products have a reputation for quality, innovation, competitive prices, stringent quality control, and safety. While Japan is currently the market leader in color cosmetics, France is the leading perfume supplier to Hong Kong.

According to U.S. government statistics, Hong Kong was the United States' 15th-largest trading partner and 13th-largest export destination in 2001. U.S. exports to Hong Kong totaled $14.1 billion in 2001, and bilateral trade totaled $23.7 billion. U.S. exports to Hong Kong in the first quarter of 2002 were down 18.2 percent over the previous year due to sluggish domestic consumption and capital investment.

There are no import tariffs or product registration requirements on cosmetics and toiletries in Hong Kong. Hong Kong accepts U.S. product labeling and there is no local mandatory labeling or registration requirement on cosmetic or cosmaceutical products. As long as the cosmetic product or cosmaceutical product does not claim to cure a medical condition on its labels, its promotional materials or in its package inserts on usage instructions, registration is not required. Imports from the United States fell to $92 million in 2002, yet the United States remained Hong Kong's third-largest supplier. With U.S. and third-country companies increasingly manufacturing their cosmetics and toiletries in China and other low-cost Asian countries, imports from the United States should continue to decline in 2002 and onwards. More often, 43 percent of Hong Kong's cosmetic imports are re-exported, 15 percent of which are re-exported to the Chinese market.

The Hong Kong market is well worth targeting on its own, never mind the allure of the mainland. The first thing a visitor notices is Hong Kong's fast-paced business climate. Because Hong Kong is among the most competitive markets in the world, U.S. companies need to make decisions quickly and respond to buyer inquiries immediately. According to Olivia Cheng, president of California-based World Medical Trade Organization (WMTO), "Business moves quickly, and you have to be ready to act fast in Hong Kong." One of the best ways to sell products and services in Hong Kong is through agents and distributors, which minimizes initial investment in the market. Hong Kong has an extensive network of agents and distributors who are eager to buy and sell competitively priced, quality U.S. products.

For many American products and services, initial market penetration in Hong Kong does not require an investment of millions of dollars of company funds. Given that Hong Kong is a "free port" with virtually no duties or tariffs, and that it has a wide-ranging network of agents and distributors, a well-managed market penetration program with a moderate investment in market development is generally all that is required initially. Due to its open nature, however, Hong Kong is among the most competitive and price-sensitive markets in the world. Companies considering entering this market should be aware that the Hong Kong business climate is extremely fast-paced. Decisions are made quickly, and companies need to be able to respond to inquiries immediately or they risk losing the market to faster moving suppliers.

Hong Kong's sophisticated, urbanized and affluent population makes it a lucrative market for high quality beauty products. The use of skin care products is a daily routine for most women rather than an occasional luxury treatment and this will influence the way in which cosmetic products are marketed. Numerous American products and services can be found in Hong Kong, and throughout China. Many excellent agents and distributors for China are located in Hong Kong, although given China's size and diversity, it is usually necessary to work with different agents for different regions of China. Hong Kong companies are eager to talk to potential exporters and have a strong interest in representing quality, competitively priced U.S. products from companies committed to the market.

One of the best ways to sell