Long before China became the go-to destination for foreign manufacturing, there was Hong Kong. During the 1960s and 1970s Hong Kong was a low-cost center for manufacturing and the electronics industry’s window into the vast market that was China. Although Hong Kong’s role has changed significantly since China opened its doors to foreign trade, it is still a hub for electronics companies.
“Hong Kong has moved from being an industrial manufacturing center to a service-oriented region,” said Kent Pang, director of sales for Southeast Asia for independent distributor Smith & Associates of Houston. “It is still a gateway for many [electronics] companies.”
Prior to China joining the World Trade Organization, Hong Kong was the first stop for many electronics companies that wanted to sell into the vast and quickly-growing Asia-Pacific region. Smith opened an office there in 1997. Although much of Hong Kong’s manufacturing and procurement has moved to the mainland, Hong Kong remains a center for sales and logistics. Smith, for example, has consolidated its central inventory for Asia, logistics, hubbing, testing and quality control in Hong Kong.
Like many Western companies, Smith approached China with a “global plus local” strategy. One of the advantages Hong Kong has for foreign businesses is a diverse population: citizens from the Americas, the EU and India have settled there. “Early on there were companies that wanted to set up [sales] offices in Hong Kong to reach China but they did not understand the Chinese culture,” Pang said. “[Multinationals] were looking for local people that understood the Chinese culture and its business practices.” Hong Kong remains a resource for those kinds of individuals. “We hire local people that understand the cultural differences and the languages,” Pang said. Even within China, different languages are spoken and different cities have become hubs for manufacturing. “That’s why we set up different branches in China, and we use local people that provide our local service,” Pang explains. Smith also has offices in Shanghai and Shenzhen.
