Last year was a challenging one for Hong Kong exporters. The city's total exports increased only 2.9 percent last year, compared to 10.1 percent growth recorded a year ago, which was mainly due to the economic weakness in Hong Kong's major export markets, according to Edward Leung, director of research at the Hong Kong Trade Development Council (HKTDC).

According to the HKTDC Export Index, which is designed to monitor exporter performances and gauge their near-term prospects, it recorded 43 and 47.2 for the first two quarters; but the readings declined to 35.3 and 31.6 for the third and fourth quarter, respectively.

During difficult times like last year, small- and medium-sized exporters usually face more challenges than larger ones, as their US and European customers will shorten the window between order placement to delivery time, weighing on weaker corporations.

Smaller exporters are urged to broaden their horizons and to look at emerging markets as potential export targets. Leung said aside from the mainland market, Hong Kong exporters should also consider some Southeast Asian countries, such as the emerging middle-class in Indonesia and Vietnam, as well as exploring the vast African market for opportunities.

Aside from developing new markets, Hong Kong exporters should also consider modifying their development model in order to adapt to current market conditions, Leung suggests.

Willy Lin Sun-mo, Managing Director of Milo's Knitwear (International) Ltd, warns that relocation could be tougher than people assume, and suggests that factory owners who want to relocate their factory should be better prepared for the realities, especially for those wanting to move outside of the country.

"China has the best supply chain," said Lin, explaining that raw material suppliers as well as the logistics system are all top-notch in the country.

"Factory owners may want to consider how they plan to get the raw material to the factory and how to deliver their products before they move their factories outside of the country."

As for the labor shortage in China, Lin believes the problem could be fixed if China's educational system changes a little.

"Nowadays, it is easy to hire a college graduate student for 2,000 yuan per month, but it is hard to hire a skillful worker for 3,000 yuan," said Lin.

He said that schools in China need to be more practical, need to increase communication with the outside world, and nurture students in accordance with the real needs of the society.

(China Daily 04/05/2013 page4)