Mr Kwan added that the impact of the ongoing Sino-US trade friction is becoming ever more apparent. "More than one-third of respondents surveyed (36.1%) reported that their export performance had been negatively affected, a substantial increase from 21.3% in the second quarter," he said. Of exporters who reported a negative impact from the trade friction, more than half (53%) had seen buyers making smaller orders, while a quarter (25%) said they had to bear the cost of the extra tariffs imposed.

"We have revised our 2018 export growth forecast for Hong Kong from 6% to 3% as trade friction between the Chinese mainland and the US creates additional uncertainty," said Mr Kwan.

"Local exporters are advised to diversify their business into emerging markets such as the ASEAN [Association of Southeast Asian Nations] region, which has become an economic powerhouse with its rapid growth over the past decade", said Mr Kwan. "The region had a GDP [gross domestic product] of US$2.76 trillion in 2017, making it the world's sixth-largest economy. With an annual growth forecast at around 5%, ASEAN is expected to become the fourth-largest economy by 2030."

Electronics Most Affected

HKTDC Economist Doris Fung said concerns over a slowdown in export growth were reflected across all major industries. Electronics posted the biggest fall, with its reading dropping from 55.2 in 2Q18 to 35.4 in 3Q18. Clothing was another sector to suffer a sizable decline, with a reading of 32.8, the lowest among key industries. "Toys, at 43.6, was the most resilient sector, followed closely by timepieces at 43.5, and machinery at 42.5. Jewellery continued the downward slide it exhibited over previous quarters, with a reading of 38.5."

Ms Fung added that key markets were unlikely to remain unaffected. "The US does not appear to be very promising, posting a reading of 39.8," she said. Japan (48.9) and the European Union (43.3) also fell back into contractionary territory. "The Chinese mainland scored 50.2, the highest among major export markets."

The HKTDC Export Index monitors the current export performance of Hong Kong traders and gauges their near-term prospects. Readings above and below 50 indicate positive and negative sentiment respectively.

Urbanisation Fuels ASEAN Demand

HKTDC Economist Jacqueline Yuen said along with ongoing urbanisation, the rising number of residential property developments have boosted demand for housewares and small home appliances in major ASEAN cities.

"Rising health consciousness and urban lifestyles are also expected to stimulate spending on modern small home appliances. From 2012 to 2017, the combined retail sales volume of household appliances in Indonesia, Malaysia and Thailand expanded by a compound annual growth rate (CAGR) of 6.7% to 94.3 million units last year. The volume is expected to reach 121.4 million units in 2022," she said.

Young Consumers go after Fashion and Lifestyle Items

Meanwhile, ASEAN consumers are also inclined to allocate a substantial amount of discretionary spending to fashion.

In an ASEAN Middle-income Consumer Survey conducted by the HKTDC, more than half of respondents in Jakarta, Kuala Lumpur and Bangkok indicated that they will spend more on fashion items in the next two years, including business attire (28% of total fashion spending), casual wear (26%), shoes (22%) accessories (12%), travel goods and handbags (8%), and spectacles (4%).

The millennial generation is the largest demographic group in ASEAN and the most powerful consumers, according to Ms Yuen. She noted that millennials are seeking authentic, honest brands and products that resonate with their aspirations. "Engaging them is about adapting to the evolving media landscape and reaching out through relevant content and storytelling," she added.

Social Commerce Emerging

Apart from traditional distribution channels, Ms Yuen advised Hong Kong exporters to consider selling through online platforms and social media. "Countries with more developed infrastructure, such as Malaysia and Thailand, are better positioned to benefit from the development of online shopping. Indonesia's e-commerce sector has strong long-term potential given the nation's large and rapidly growing middle class and young consumer markets," she noted.

Ms Yuen added that social commerce presents a good opportunity for small suppliers or less-known brands to test consumer markets in the ASEAN region. "It is important to make sure that the social media content is timely and engaging, and resonates with the target market. For instance, sellers can make use of videos or live streaming to better engage target audiences."

She concluded: "Today, omnichannel shopping is common among consumers in major ASEAN cities. To succeed in the competitive market, Hong Kong suppliers should emphasise building trust with local buyers and consumers, through enhancing cross-border logistics and after-sales services."

ReferenceHKTDC Research website: http://research.hktdc.com/^[1] Hong Kong Export Index 3Q18: Mounting Concerns over China-US Trade Friction: https://bit.ly/2xdDfz7^[2]Accessing the ASEAN Consumer Market: Fashion and Accessories: https://bit.ly/2QjxWHp^[3]Accessing the ASEAN Consumer Market: Houseware and Small Home Appliances: https://bit.ly/2MfVmtR^[4]Photo Download: https://bit.ly/2xiuk07^[5]

About HKTDC

The Hong Kong Trade Development Council (HKTDC) is the dedicated to creating opportunities for Hong Kong's businesses. With more than 40 offices globally, including 13 on the Chinese mainland, HKTDC promotes Hong Kong as a platform for doing business with China, Asia and the world. HKTDC organises international exhibitions, conferences and business missions to provide companies, particularly SMEs, with business opportunities on the mainland and in international markets, while providing business insights and information via trade publications, research reports and digital channels including the media room. Please visit www.hktdc.com/aboutus^[6] or follow us on Google+, [email protected]^[7], LinkedIn.

Contact:

HKTDC's Communication and Public Affairs Department
Angel Tang, Tel: +852 2584 4544, Email: [email protected]

Copyright © 2018 ACN Newswire. All rights reserved. A division of Asia Corporate News Network.

References

1. ^{^} http://research.hktdc.com/ (research.hktdc.com)
2. ^{^} https://bit.ly/2xdDfz7 (bit.ly)
3. ^{^} https://bit.ly/2QjxWHp (bit.ly)
4. ^{^} https://bit.ly/2MfVmtR (bit.ly)
5. ^{^} https://bit.ly/2xiuk07 (bit.ly)
6. ^{^} www.hktdc.com/aboutus (www.hktdc.com)
7. ^{^} [email protected] (www.acnnewswire.com)
8. ^{^} [email protected] (www.acnnewswire.com)
9. ^{^} [email protected] (www.acnnewswire.com)
10. ^{^} HKTDC (www.hktdc.com)
11. ^{^} Daily Finance (www.acnnewswire.com)
12. ^{^} Watches/Jewelry (www.acnnewswire.com)
13. ^{^} Local Business (www.acnnewswire.com)