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Country experience: Hong Kong, China

6.40.       Hong Kong’s outward processing activities (the processing by non-residents of goods owned by Hong Kong residents) are substantial and are predominantly carried out in mainland China. The goods processed in mainland China may be sold in Hong Kong, but are also frequently sold directly to other markets. To support the collection of data on manufacturing services and related activities, the monthly survey on trade involving outward processing in mainland China (OPS) and the annual survey on imports and exports of services (ASIES) have been enhanced, and a new quarterly survey on merchanting and other trading activities (QSMTA) has been launched. Two main cases are identified:

Case I:  Outward processing in mainland China with processed goods returned to Hong Kong

6.41.      The OPS survey uses the import/export declarations of Hong Kong’s trade with mainland China as the unit of observation. The declarations are stratified by trade type (including domestic exports and re-exports to mainland China, and imports from mainland China) and by commodity group. For cases pertaining to imports, from a customs-based perspective, from mainland China that involve the outward processing of goods under a “processing and assembling” arrangement, data are collected on (a) the value of raw materials and semi-manufactures sent from Hong Kong to mainland China; (b) the value and origin of raw materials and semi-manufactures purchased and delivered directly from places other than Hong Kong to mainland China; and (c) the value of manufacturing services on goods owned by Hong Kong, distinguishing between the processing fees paid by Hong Kong and the value of raw materials and semi-manufactures procured directly by mainland China processors.

6.42.        A significant proportion of OPS respondents are logistics companies (rather than the owners of imported processed goods) which generally do not have readily available information pertaining to the additional data required. Therefore, efforts have been made to establish a rapport with major logistics companies, so that those companies can either acquire the relevant information from the goods owners themselves or provide the contact details of the goods owners for subsequent follow-up. This practice has successfully reduced the non-response rate.

Case II:  Offshore trade activities involving outward processing with processed goods sold offshore  

6.43.        Some of the offshore trade activities involve outward processing, in which goods owned by Hong Kong companies are processed in mainland China, or elsewhere, before they are sold offshore directly to non-residents. Those offshore trade activities cannot be collected from import/export declarations and are captured through ASIES and QSMTA.

6.44.        In ASIES, offshore trade activities involving outward processing are distinguished from conventional merchanting activities. For manufacturing services and related activities, data are collected on similar items as in the OPS survey, as well as on the sales value and cost of processed goods sold offshore by origin, destination and commodity group.

6.45.        The value and destinations of exports of manufacturing services on goods owned by companies abroad (inward processing of goods by Hong Kong) is also collected in ASIES. The new QSMTA collects similar data at quarterly intervals to support the timely compilation of relevant macroeconomic aggregates (namely balance of payments and gross domestic product (GDP). 

 

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