– Findings of a supply chain study commissioned by the HKTDC point out that even amid tense US-China relations, many US companies remain deeply engaged in the Chinese market, particularly in the Guangdong-Hong Kong-Macao Greater Bay Area due to its unique and highly concentrated supplier network that is difficult to replace
– Mainland enterprises are actively diversifying their supply chains and using Hong Kong as a supply chain management centre, with the city playing a key role in regional supply chain transformation
– Hong Kong is a “superconnector” that serves as a crucial gateway for mainland enterprises to expand overseas and for global companies to access the Chinese Mainland market and regional supply chains
Hong Kong’s status as the preeminent supply chain “superconnector” has been reaffirmed by a major new US-Hong Kong research initiative. This was one of the key findings of “Strategically Leveraging Supply Chains to Access the Asian Market”, a major new research initiative commissioned by the Hong Kong Trade Development Council (HKTDC) and conducted by the Bay Area Council Economic Institute of the United States.
At the heart of the study is a timely analysis of the ways in which the shift in US trade policy has triggered the accelerated reconfiguration of global supply chains, creating a raft of new challenges and opportunities along the way.
While full details of the analysis will be published in December, preliminary findings introduced in the run-up to the 15th Asian Logistics, Maritime and Aviation Conference (ALMAC) indicate heightened geopolitical tensions, evolving trade policies, environmental pressures and technological advancements as becoming the collective catalyst for a supply chain revolution that is impacting every aspect of the global economy. In the wake of this mass recalibration, companies are reassessing their operations and looking to manage hitherto unencountered risks, ensuring that resilience is now prioritised alongside cost management and consistent competitiveness. This will inevitably impact the primacy of Asia’s role within this transformed landscape.
The US research team was headed by Sean Randolph, Senior Director of the Bay Area Council Economic Institute, an acknowledged authority on economic and policy issues. Detailing the transformation underway, Mr Randolph said that the adoption of strategies such as reshoring, nearshoring and developing redundant supply routes by many global businesses is accelerating the regionalisation of supply chains. This shift, he said, has been partly driven by the regional trade agreements in place, but also by the need for greater supply chain security and a desire for proximity.
Expanding on this, Mr Randolph said: “Companies are diversifying their manufacturing bases, while relocating certain activities from China to other countries in Southeast Asia, India and Mexico – adopting the so-called ‘China+1’ strategy in order to ensure resilience and reduce risk exposure.
“At the same time, despite the ongoing bilateral friction, it is notable that many US companies remain deeply engaged with China. This is largely on account of the country’s unique concentration of suppliers – especially in the case of such regions as the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) – which cannot be easily replaced or replicated elsewhere. Indeed, a number of recent surveys and announcements – including major Chinese Mainland investment commitments by businesses of the stature of Nvidia and Apple – have clearly demonstrated that, for many US businesses, China remains a key locale, with their engagement at least partly due to the indispensability of the broader regional supply chains.”
Hong Kong can benefit as mainland enterprises look to diversify supply chains
Noting that the new tariffs and President Trump’s changed trade priorities have given some countries comparative advantages when exporting to the US, HKTDC Director of Research Irina Fan said: “In a development likely to bolster China’s stature as a production base, following early November’s US-China trade agreement, Chinese imports to the United States will be subject to a 20% tariff rate (10% reciprocal tariff + 10% fentanyl related) for the period 10 November 2025 to 10 November 2026. This comparatively low tariff level puts China-based suppliers on a par with many of their Southeast Asia counterparts, while providing them with a significant competitive advantage over countries with a higher tariff rate.”
Maintaining that this does not suggest that Chinese Mainland businesses are complacent about their status, Ms Fan added: “Currently, many mainland enterprises are proactively taking steps to diversify and strengthen their supply chains, with a significant number of them leveraging Hong Kong as their supply chain management centre. Overall, Hong Kong is clearly set to play an increasingly important role in the ongoing supply chain transformation process, a change that is being driven by the region’s deeper economic integration and the new generation of supply chain networks.”
The report cited the electric vehicle (EV) sector as one example where Hong Kong is already playing a pivotal role in the regional supply chain transformation process. As mainland-based automotive manufacturers, as well as their global counterparts, prioritise the expansion of EV and battery production in Southeast Asia, Hong Kong has more than proved its worth as a crucial investment and financial hub, acting as an effective conduit for significant capital to be channelled into countries such as Indonesia, Thailand and Malaysia. More generally, recent investment data also clearly indicated that Chinese Mainland companies are increasingly utilising Hong Kong as the support platform for many of their regional projects.
This outcome is likely to be bolstered by Hong Kong’s wide-ranging financial and professional services sectors, as well as the city’s agility in adapting to technological transformation and the evolving regulatory landscape – attributes that collectively position it as an indispensable nexus for international businesses.
Summing up the report’s assessment of Hong Kong, Ms Fan said: “Essentially, this new research highlights Hong Kong’s vital roles as both a superconnector and a super-value-adder, while confirming the city’s status as the key enabler for any mainland enterprise looking to expand overseas, and simultaneously serving as a gateway for any global company looking to access the revitalised regional supply chains and the China market. This ubiquity is reflected within Hong Kong itself, with the city now home to an ever-higher number of overseas businesses, including 1,390 US companies, as of June 2024.”
Flagship logistics event set to address regional supply chain developments
The rise of regional supply chains and the implications for global trade will be among the many key issues addressed at the upcoming ALMAC, which will be held at the Hong Kong Convention and Exhibition Centre on 17 and 18 November. Organised by the Hong Kong SAR Government and the HKTDC, the event will bring together some 80 distinguished speakers and is expected to attract 2,300 participants from more than 40 countries and regions. In line with the policies outlined in the Fourth Plenary Session of the 20th Communist Party of China Central Committee and the 2025 Policy Address, the event will focus on many of the recent moves to further enhance Hong Kong’s status as an international shipping centre and global logistics hub.
As the annual flagship event for the logistics, maritime and aviation sectors, ALMAC 2025 is running under the theme “Collaboration and Growth in the New Trade Landscape”, reflecting the event’s commitment to exploring trends and opportunities in the fields of logistics, shipping and air freight. Ultimately, the aims of the event are to foster the high-quality development of logistics and supply chain management, deepen international engagement, and facilitate practical cooperation throughout the logistics industry.
Report and photo download: https://bit.ly/49Q8aFI
Introduction to Sean Randolph, Senior Director, Bay Area Council Economic Institute
Sean Randolph served as President and Chief Executive of the Bay Area Council Economic Institute from 1998 to 2015. The Economic Institute is a business-supported public policy research and strategy organisation that focuses on the economy of the San Francisco/Silicon Valley Bay Area and California. He previously served as Director of International Trade for the State of California, and, before that, as International Director General of the Pacific Basin Economic Council (PBEC), a 1,000-member Asia-Pacific business organisation. His professional career includes service in the US Government on Congressional staffs, the White House staff, and in senior positions at the Departments of State and Energy, including as Deputy/Ambassador-at-Large for Pacific Basin Affairs and Deputy Assistant Secretary of Energy for International Affairs. Based in San Francisco, he writes for regional, US and global media and frequently speaks to Bay Area and international audiences on technology, innovation and global economic issues.
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About HKTDC
The Hong Kong Trade Development Council (HKTDC) is a statutory body established in 1966 to promote, assist and develop Hong Kong’s trade. With over 50 offices globally, including 13 in the Chinese Mainland, the HKTDC promotes Hong Kong as a two-way global investment and business hub. The HKTDC organises international exhibitions, conferences and business missions to create business opportunities for companies, particularly small and medium-sized enterprises (SMEs), in the mainland and international markets. The HKTDC also provides up-to-date market insights and product information via research reports and digital news channels. For more information, please visit: www.hktdc.com/aboutus.
