August 23 2021

Import and Export Trade Industry in Hong Kong

Source: HKTDC


  • Hong Kong’s total merchandise trade in 2020 decreased by 2.5% to US$1,051 billion (HK$8,197 billion) after dropping by 5.4% in 2019.
  • Hong Kong handles a large amount of offshore trade, estimated by the Hong Kong government to have a value of US$604 billion (HK$4,709 billion) in 2019, an decrease of 2.5% over 2018. In comparison, re-exports amounted to US$505 billion (HK$3,941 billion) in 2019, down 4.2% over 2018.
  • As of December 2020, 438,964 people were employed in the import and export sector, which had 105,675 establishments. In 2019, the sector accounted for 16.8% of Hong Kong’s GDP.
  • Hong Kong handles a good portion of mainland China's external trade. In 2020, about 10.1% of the mainland's exports (valued at US$263 billion) and 14.3% of imports (US$295 billion) were handled via Hong Kong and 53% of Hong Kong's re-exports originated from the mainland.

Industry Data

Import and Export Trade

December 2020

Number of Establishments




Source: Quarterly Report of Employment and Vacancies Statistics, Census and Statistics Department

Exports of Merchanting and Trade-related Services (US$ billion)






Exports of Merchanting and Trade-related Services






Year-on-year growth






Contribution to Services Exports






Sources: Gross Domestic Product (Quarterly), Census and Statistics Department

Range of Services

Hong Kong's import and export trading firms are active in sourcing various industrial goods, including raw materials, machinery and parts, and a wide range of consumer goods. There are three main types of sourcing activities: (1) sourcing goods produced in Hong Kong; (2) sourcing goods from around the region for re-export; and (3) sourcing goods from one country to be shipped directly to a third country without touching Hong Kong territory.

The import business of Hong Kong trading firms is mainly managed by distribution through agents or dealers. These trading firms usually specialise in one product area and represent one or more foreign brands. Their trading map usually encompasses Hong Kong, mainland China (or certain parts of it) and/or other Asian countries.

With the development of trade support services in mainland China, trading firms increasingly source goods offshore for sale to international markets. Some of these goods are either transhipped via Hong Kong or shipped directly without touching Hong Kong territory. Such offshore trade is not reflected in Hong Kong's trade statistics. According to official statistics, Hong Kong's offshore trade in 2019 (including both “merchanting” and “merchandising for offshore transactions”) was estimated to be US$604 billion (HK$4,709 billion), an decrease of 2.5% over 2018. In comparison, re-exports totalled US$505 billion (HK$3,941 billion) in 2018, down 4.2% over 2018, representing 83.7% of total offshore trade.

Service Providers

Hong Kong's import and export trading firms are typically small, employing less than 10 persons on average. There were 105,675 import and export trading firms in Hong Kong as of December 2020, with the majority of them being SMEs. There are three broad categories of import and export trading firms:

  • Left hand-right hand traders: these refer to trading firms which match sellers and buyers without adding any significant value to the process. These firms conduct a straight-forward sourcing operation, usually identifying goods produced on the mainland or Hong Kong and shipping them to overseas markets. They rely on their specialist knowledge of the sources of products in the region and the low costs of their supplies as their main competitive advantages.
  • Traders with some value-added services: many firms now source raw materials for their suppliers and provide finance for these materials. They often use letters of credit from their customers as a guarantee for raising finance for their purchase orders. Other firms develop a sub-contractor relationship with a number of factories in which they exert significant control over the management of production, including quality control.
  • Traders with sophisticated value-added services: in certain cases exporting firms have added value to their traditional activity to such an extent that it may be difficult to retain the label of being exporters. For example, some firms design and manufacture components for their supplier factories to produce finished goods, which the firms subsequently export. These firms add value mostly from their design team, and their competitive edge comes from their ability to design products which sell well in the target markets. In 2019, the rate of gross margin1 of merchanting fell slightly to 6.3% from 6.4% in 2018. This means that the export market is relatively stable, though margins remain below the 6.9% recorded in 2009. In the same year, the commission rate of merchandising2 for offshore transactions stood at 6.2% (2018:6.7%; 2017: 6.9%).
  • The business environment for Hong Kong's trading firms is becoming more challenging amid the growing trend toward direct dealing between customers and manufacturers, known as “trade disintermediation”. In response to this, Hong Kong traders are adapting to provide more value-added services, in addition to finding more competitive sources of supplies. For example, Hong Kong traders help their overseas clients to inspect the goods produced by the manufacturers to ensure they meet the procurement standard, and monitor production schedules to meet delivery. Hong Kong traders can also help overseas buyers co-ordinate production when the buyers have a sudden surge in orders and quick turnaround is needed.

The operations of small and big trading firms are quite different. Smaller firms are usually strong in introducing foreign products to the mainland market. In most cases, they specialise in one area, such as medical equipment, and represent some foreign brands as their agents or distributors. Bigger trading firms are usually strong in sourcing products from the region. They usually have regional or even global sourcing networks and do not specialise in just one type of product.


Hong Kong's import and export trading sector provides services mainly in the form of offshore buying and selling of goods. Given Hong Kong's location and the relocation of Hong Kong's manufacturing bases to the mainland, particularly the Pearl River Delta, mainland China is a major source of offshore trading activities. Hong Kong manufacturers are diversifying their production activities to other low-cost countries, and the offshore trading pattern is expected to reflect this move. In 2019, Hong Kong earned US$39.7 billion from exporting merchanting and trade-related services, accounting for 29.3% of total services exports.

Industry Development and Market Outlook

  • Impacted by the Covid-19 pandemic and the softening of global demand, Hong Kong’s total merchandise trade decreased by 2.5% to US$1,051 billion (HK$8,197 billion) in 2020, after dropping by 5.4% in 2019. In the same period, Hong Kong’s merchandise exports saw a year-on-year decrease of 1.5%, after a fall of 4.1% in the previous year. In 2020, Hong Kong's major export markets were mainland China (59.2% of total), the ASEAN (7.2%) and the EU (7.1%).
  • In recent years, Asia has become a more integrated market, thanks to the various free trade agreements (FTAs) signed in the region. In particular, the product trade arrangements under the China-ASEAN Free Trade Area (CAFTA) pact, which commenced in 2005 with scheduled tariff elimination completed in 2010, have contributed to higher intra-Asian trade. In November 2015, China and ASEAN concluded an upgraded FTA that covers further liberalisation of trade as well as economic, investment and regulatory co-operation. The upgraded protocol of the CAFTA took effect on 22 October 2019.
  • Over the past few years, there has been an increase in companies in developed economies treating Asia as a market instead of a pure production base. During 2015-2020, North America’s exports to Asia expanded by a CAGR of 1.1%, surpassing the CAGR of 1.0% in respect of its exports to Europe in the same period.
  • ASEAN as a group is the second largest export market and second largest trading partner of Hong Kong, with Singapore, Vietnam and Thailand being the top three markets for Hong Kong products in 2020. To foster stronger economic ties between Hong Kong and ASEAN, the two sides signed the Hong Kong-ASEAN Free Trade Agreement (HAFTA) in November 2017. In addition to the reduction and/or elimination of import tariffs, other key elements covered by the HAFTA include rules of origin, liberalisation of trade in services, promotion and protection of investment, and intellectual property co-operation. Part of the HAFTA entered into force in June 2019.
  • The 14th FiveYear Plan was announced in March 2021, with an emphasis on expanding domestic demand, accelerating the domestic circulation and “dual circulation” development strategy, improving the business environment, and promoting further economic growth. As an international trade center, Hong Kong companies can actively expand the mainland domestic market under the internal circulation, while playing an important role in the cross-border trade under the external circulation, bringing new business opportunities for Hong Kong’s trade sector.

CEPA Provisions

The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) is a free trade agreement concluded by the mainland and Hong Kong. Under CEPA, all products of Hong Kong origin, except for a few prohibited articles, can be imported into the mainland tariff-free. In the services sector, Hong Kong service suppliers (HKSS) can provide, in the form of wholly owned operations, commission agents' services and wholesale trade services, and can set up wholly owned external trading companies in mainland China.

After 10 annual supplements signed between 2004 and 2013 to keep widening and broadening the liberalisation measures in favour of HKSS, Hong Kong and the mainland entered into a subsidiary agreement under CEPA in 2014 to achieve basic liberalisation of trade in services in Guangdong (Guangdong Agreement). This was followed by the Agreement on Trade in Services (ATIS) to extend the coverage of the 2014 agreement from Guangdong to the rest of the mainland from June 2016. Unlike the previous supplements which adopted a positive-list approach to introducing liberalisation measures, the two latest CEPA agreements adopt a hybrid approach to granting preferential access to Hong Kong using both positive and negative lists. From June 2020 onwards, the Agreement Concerning Amendment to the CEPA Agreement on Trade in Services (Amendment Agreement) signed in November 2019 takes effect. The Amendment Agreement introduces more liberalisation measures, including the removal of a minimum capital input ratio requirement and the relaxation of qualification requirements in a number of important services sectors. With this enhanced liberalisation of trade in services between mainland China and Hong Kong, the territory’s status as an international trade hub as well as the gateway to the mainland is set to strengthen. Please click to view further information on the latest CEPA agreements.


1 “Rate of gross margin” refers to the gross margin from merchanting expressed as a percentage of the sales value of goods involved, while “commission rate” is the commission from merchandising for offshore transactions expressed as a percentage of the sales value of goods involved. “Rate of re-export margin” is defined as the re-export margin expressed as a percentage of the value of re-exports.

2 The difference between “merchanting” and “merchandising” is that an establishment engaged in “merchanting” takes ownership of the goods involved, whereas one engaged in merchandising transactions does not take ownership of the goods involved.

Source: HKTDC