Hong Kong has been a key global exporter in many consumer electronics products including calculators, radios, telephone sets, A/V products, computer parts/accessories as well as related components such as PCBs and LCDs. For many years the electronics industry has been the largest export earner of Hong Kong. Traditionally, the US and Europe are the major markets of Hong Kong's electronics products. In recent years, the Mainland has become Hong Kong's largest export market and its importance is likely to grow in view of the expanding consumer market there.
Although Hong Kong has a strong base of electronics industry, many manufacturers are still in OEM business, taking advantage of the low production cost in the Mainland. However, in today's globalized economy, it is difficult for local manufacturers to compete solely on cost with competitors from the Mainland and other low cost economies. Technology upgrading, as the mission of ITC, can enhance the competitiveness of the industry. Information on electronic research projects funded by the ITF can be found in Internet-based Technology Information System.
Strengths and Opportunities
Hong Kong's advanced infrastructure, free flow of information and robust protect of IP rights are conducive to the development of the consumer electronics industry. Moreover, owing to the fast-changing consumer taste and rapid development of electronics and information technologies, consumer electronics products nowadays generally have very short product cycle. Hong Kong manufacturers have been well known for their adaptability and responsiveness to these changes.
Owing to its proximity to the Mainland, coupled with tariffs-free arrangement under CEPA, Hong Kong manufactures have gained a head-start in entering the Mainland market. Moreover, the Mainland is developing its own standards such as AVS, WAPI, TD-SCDMA, and HDTV standards. Hong Kong manufacturers' connection and knowledge of the developments in the Mainland could place them in a more favourable position than their overseas counterparts in designing new consumer products for the Mainland market.
Technological advancement and rising consumer expectations, combined with the convergence of computer, communication and consumer electronics, have brought about many new opportunities for product innovation. Digitalization, miniaturization and mobility (via wireless and interoperability) are the key elements for modern consumer products. User interface and product safety are the two other basic and crucial elements.
The demand for digital A/V products is expected to grow rapidly in the coming years. The introduction of digital broadcasting in Hong Kong, the Mainland and other countries would create a strong demand for digital AV products. Meanwhile, mass storage technologies have become sufficiently mature for the consumer market, as shown by the increasingly wide availability of flash memory chips and micro-drive hard disks. This has provided a great impetus to digitization of the A/V products.
Aging population has led to rising needs of electronic health-care products worldwide, including the Mainland, which is a potential niche market for Hong Kong. In addition, owing to the rapid economic developments in the Mainland, there is a huge demand for educational products.
Risks and Weaknesses
The Hong Kong electronics industry is facing severe competition from Mainland enterprises in the lower end market, and from the conglomerates in Japan, Korea and Taiwan in the higher end market. Most Hong Kong manufacturers are SMEs engaging in OEM business. They generally do not possess very strong technological capabilities in product innovation or manufacturing processes, and are cautious in investing in R&D of new technologies. They may be losing out to their competitors if they do not upgrade their technological capabilities quickly.