For many Hong Kong businesses, this year has become a roller-coaster ride. Fortunately, the first months' doom and gloom is being replaced by a more upbeat mood, as overseas orders pick up and retail sales start to surge again. And, with government initiatives to boost trade also about to kick in, major industries are set for renewed growth.
This view is endorsed by Carollio Chow, chairman of the Federation of Hong Kong Watch Trades and Industries Ltd., which represents up to 600 corporate members. Mr Chow explains that this industry comprises two distinct sectors - manufacturing and retail and distribution - both of which are already strong, ready to adapt and make the most of new opportunities.
"From the early 1980s, watch production started to move across the border to China," recalls Mr Chow. "Now there is a world-class manufacturing base, with around 2,500 factories employing close to 400,000 people mainly in Dongguan and the Pearl River Delta." This concentration of companies producing components, dials, cases and bands is largely financed and controlled by Hong Kong investors, who also supervise design and quality assurance so the products can still be retailed under a "made in Hong Kong" label.
"Our worldwide ranking in volume terms is number two, behind China" says Mr Chow. "But, don't forget, statistics may not show that an export direct from China is really controlled here. There's no doubt the world distinguishes and recognises the value of the Hong Kong brand."
The retail and distribution sector has also seen changes in recent years. No longer dependent on international names, the field is dominated by chain stores with products geared towards the younger generation. Specialist watch outlets have mushroomed to nearly 500 stores, bringing job opportunities and making Hong Kong a showcase for China. As Mr Chow advises, "the many brands and styles available are mostly aimed at different types of buyer. We'll continue to see a diversity of brands and even expect bigger brand-names to open their own outlets to strengthen their image and promote sales." It is forecast that this will not cut into the sales of third-party retailers but, in fact, boost their business.
Another positive sign is the early feedback on the recently-signed Closer Economic Partnership Arrangement (CEPA). Mr Chow believes that watch manufacturers will be able to obtain tax privileges and deductions and utilise these to penetrate the China market with superior-quality products. "Research shows that consumers in China prefer the design of Hong Kong products, trust them more and will pay a premium for them."
To comply with CEPA requirements, Hong Kong companies will be expected to invest locally in areas such as design and development, quality assurance and final assembly - all of which add value to products and will expand the industry talent-base. Proper training is essential and the government's Institute of Vocational Education (IVE) develops qualified technicians and craftspeople. Graduates of its three-year higher diploma course, catering to Form 5 school-leavers, are always in demand.
Close links are also maintained with the Hong Kong Productivity Council. It helps bring in new technology from around the world and teaches manufacturers how to upgrade and adapt current processes.
With newly-relaxed travel regulations encouraging Chinese visitors to come to Hong Kong, there is little doubt that the overall retail trade - including watches, jewellery and audio visual products - can anticipate immediate benefits. The watch industry already recorded a 10 percent upswing in August sales compared to the same period in 2002. Forecasts indicate sales in subsequent months should jump as much as 20 percent and that the SARS setback will have been erased by end 2003.
Looking ahead, Mr Chow is optimistic. "With CEPA and the increase in visitors from China, we will need new blood in the industry. There'll be demand for marketing people in Hong Kong and China and retail workers with good salesmanship who are able to train new recruits. We expect to see many more outlets and points of sale." Traditionally, such candidates have been found through referrals from retail management associations, which provide sound training.
Overall job prospects for 2003-4 appear good. A limited survey conducted by the Watch Federation indicates that at least 50 members are planning investment tied to CEPA. "If each company added 20 workers, that's already 1,000 new jobs on the production side. For retail, we could conservatively expect 200 new positions in Hong Kong. That's without knowing what foreign investment might bring."
With things looking bright, Mr Chow, who represents his family's third generation in the business, concludes, "Hong Kong people should be proud of the watch industry and the investments that have been made in it. It's wrongly perceived as a 'sunset' industry, but it is and will continue to be a 'sunrise' industry - with strong foundations and an excellent future."