Trenton, Hong Kong look to strengthen business ties
TRENTON - As a manufacturing hub for many decades, the city's numerous exports are touted on the famed "Trenton Makes, The World Takes" bridge.
Despite a dip in production and lackluster exports since the early part of the 2000's, Mercer County based companies which produce their products locally can hope to increase their export opportunities by using Hong Kong as a gateway to the world.
"In 2011, foreign direct investment into Hong Kong rose by 17 percent to US$83 billion, making Hong Kong the fourth largest recipient in terms of FDI inflows globally, said Donald Tong, The Hong Kong Commissioner for U.S. Economic and Trade Affairs.
The Hong Kong Trade Development Council and Hong Kong Economic and Trade Office of New York hosted a luncheon at the Trenton Marriott on Tuesday in an attempt to promote new business partnerships between New Jersey and Hong Kong.
"An increase in exports from here to there will probably help both economies," said Michael Van Wagner, Executive Director of the New Jersey Business Action Center. "We already have 15 New Jersey based fortune 500 companies with offices in Hong Kong, like Johnson and Johnson, Campbell's and Toys R Us."
Wagner did not see losing manufacturing jobs to the Far East as a threat, stating that an increase in higher intellectual, and value-added careers could be a side effect of increased exports to Hong Kong. "If companies increase their sales, they will have to increase the number of jobs here in order to handle the larger volume."
Hong Kong runs a "one country, two system," economy after the 150 years of British administration ended in 1997, turning Hong Kong into a Special Administrative Region of the People's Republic of China. The cluster of islands that makes up the city maintains a separate set of laws, economics, monetary policies, taxation system, customs and immigration authorities separate and distinct from mainland China. This distinction offers international companies an opportunity to use the city as a port of trade with minimal governmental "red tape."
"Hong Kong offers a competitive edge because it offers a simple and low tax regime, a clean and efficient government and we adhere to free market principles," said Tong.
The open market Hong Kong offers is a huge draw for many domestic companies, including some which manufacture in Mercer County. "It is relatively easy to export to Hong Kong because there is very little paperwork required," said Scott Mele, President of Tektite Industries. The Trenton based company manufactures and sells technologically advanced battery operated lighting products designed for extreme environments.
"Export represents about 25 percent of our business, and we ship to the U.K., Australia, Indonesia and we also sell to the Hong Kong government, we supply their police with our products."
The business, which admits to importing a very small percentage of materials from Hong Kong, generates approximately $1 million dollars in revenue annually. Their niche product is primarily sold to United State governmental agencies such as the Department of Defense and the Transportation Security Administration. The company adheres to the Buy America Act, mandating all items be made in the U.S. "I would like to see an increase in distribution (to Hong Kong), and will target that in the near future," said Mele.
During the luncheon, Tong highlighted Hong Kong's unique financial ties with the mainland's monetary sector. Although the financially rich island maintained its own currency, the Hong Kong Dollar, after the split from the U.K.'s authority in 1997, Hong Kong plays a key role in extending the distribution of the mainland's currency, the Renminbi (RMB), through Hong Kong banking centers.
"RMB deposits of over $88 billion U.S. dollars are currently in HK making it the largest liquidity of RMB outside Mainland."
The close ties between Hong Kong and mainland China does give local company's cause for concern.
"I do export to China but there is always a fear that they will knock off our products because there is nothing you can do legally," said Roman Kuzyk, owner Cytotherm. The Hamilton Township based company manufactures plasma thawing systems and has been exporting their product for over eight years to China.
Kuzyk admits his proprietary machine has been mimicked into a less expensive version made in China, and continues to worry about the theft of intellectual property. However, he suggests his success and sustainability is a by-product of using high quality materials and an exceptional labor force; keeping competitors who may be able to manufacture cheaper and faster, at bay.
"We supply to hospitals in Hong Kong and because they rather have a quality product, they prefer to buy from us than buy one that is made cheaply and breaks easily," said Kuzyk.