Stephen Liang, the assistant executive director of Hong Kong Trade Development Council (HKTDC). (JG Photo/Dion Bisara)

Stars Aligned for Hong Kong, Indonesia as Trade War Opens Up Opportunities for More Collaborations


DECEMBER 13, 2019

The trade war between China and the United States has put Indonesia and Hong Kong in a unique position teeming with opportunities for more collaborations between businesses in the two countries. 

Hong Kong needs to adjust its product offerings and find new markets in developing countries for its merchandise since the trade war restricts its access to the US market.

In the meantime, Indonesia is looking for new business partners to invest in the country and help improve export. 

Hong Kong and Indonesia have already developed deep roots in many Indonesian businesses that have made China's autonomy region a foothold for overseas expansion.

Last year Hong Kong exported $2.55 billion worth of merchandise to Indonesia, down 11 percent from a year earlier. The shipments mostly comprised smartphones, textile and yarns and electrical machinery. 

Indonesia in return sent coals, electric appliances and cigarettes and tobacco and other commodities, worth about $2.17 billion. 

"In the Asean region, Indonesia is one of the key markets for Hong Kong. Not just as a consumer market for our export but also a place for us to invest, particularly in the manufacturing sector," Stephen Liang, the assistant executive director of Hong Kong Trade Development Council (HKTDC), told the Jakarta Globe.

Indonesia's young and vibrant population has reached the low- to middle-income level, and with it comes the demand for a better variety of products. "Our products are traditionally of high quality and designed to cater to mature markets like the US and Europe. Now we've seen the same opportunities arriving in Indonesia," he said. 

Among companies looking for such opportunities is R-Guardian, a Hong Kong startup that builds smart luggage – thanks to a subscription-based app that allows tracking of the luggage anywhere in the world – and sells them at an affordable price.

R-Guardian is now available in Japan, South Korea and mainland China, vice president Isaac Ip said. "And we would like to be available in Indonesia very soon," he said. 

HKTDC's Liang said the US-China trade war has affected a lot of businesses in Hong Kong and China, prompting many of them to explore new markets. "We've diversified a lot, inviting buyers from developing markets in South America, Africa and Southeast Asia to trade fairs," Liang said.  

"For some Hong Kong companies, particularly those in the manufacturing business, if they want to keep costs under control or be more efficient when driving into the developing market, they would consider setting up factories or expanding their factories in that market," he said. 

There are a select few candidate countries for this purpose, and Liang said Indonesia was always "high on the list." HKTDC will hold a trade and investment mission for the manufacturing and infrastructure sectors next March. 

HKTDC held the third edition of the HKTDC SmartBiz Expo, the third Asian E-Tailing Summit and the fifth HKTDC Hong Kong International Franchising Show last week. (Photo courtesy of HKTDC)

Complete Platform for Indonesian Businesses

Liang also said China remains a stable and vibrant market, ripe for some shrewd Indonesian business to exploit. 

"We very much welcome Indonesian businesses to use our platform to come over here and access the mainland China market," Liang said. 

Hong Kong, he said, is an ideal base to penetrate the mainland China market, thanks to its status as the financial center of Asia, its mature infrastructure and its pool of legal, accounting and business professionals.   

The city continues to be the center for generating and trading intellectual properties, which include technology transfer, licensing, franchising and copyright trading, thanks to its sound legal system and intellectual property protection regime.

"Innovation and the use of technology will be key for Indonesian businesses seeking to enter the Hong Kong and China market, but finding the right partner is more important. That's why we hold hundreds of events every year to provide a platform for businesses to meet each other," Liang said. 

Margaret Fong, the HKTDC executive director, addresses participants of the third Asian E-Tailing Summit. (Photo courtesy of HKTDC)

The HKTDC held the third edition of its HKTDC SmartBiz Expo, the third Asian E-Tailing Summit and the fifth HKTDC Hong Kong International Franchising Show last week. More than 400 exhibitors from Hong Kong, mainland China and more than 30 other countries attended the events. 

The exhibitions, as well as adjacent events the Business of IP Asia Forum and DesignInspire, attracted thousands of visitors from faraway places like Russia, Pakistan and South Africa.  

Margaret Fong, HKTDC's executive director, said in her opening remarks that the events showed Hong Kong's adaptability and resilience amid heightened political tension in the city. 

"Hong Kong is undoubtedly going through a challenging time, but the city is characterized by adaptability and resilience. More importantly, its fundamentals remain strong. It has a free and open economy, sound legal system and a positive attitude to international business, and our functions – from the stock market, trade, legal and financial systems to our international transportation network – are operating without disruption," Fong said.