31 Dec 2018
Policyholder Survey – Policyholders Remained Cautious amid Concerns on Trade Protectionism
Against the backdrop of rising trade protectionism, global trade and investment climates has changed, creating more uncertainties to the outlook of Hong Kong export trade. HKECIC’s recent survey showed that some policyholders identifying the trade protectionism as the major challenge. Their business outlook was conservative, with concerns on the increase in credit risks and decrease in orders.
Between September to November 2018, the HKECIC interviewed 423 policyholders on the challenges ahead and their business outlook. All these policyholders are from industries including clothing, electronics, toys, jewellery, plastics and electrical appliances. The proportion of policyholders identifying the increase in credit risks and decrease in orders as the major challenges were 26.2% and 25.8% respectively, increased 1.3 and 4.1 percentage points when compared to previous three months (June to August 2018). Meanwhile, 6.9% policyholders identified trade protectionism as the major challenge, while proportion of increase in raw material cost down by 3.4 percentage points to 17.5% when compared to previous three months.
Regarding the business forecast for the coming year, the survey revealed that 74.7% of respondents anticipating their business to remain stable. Policyholders expecting their business to increase or decrease accounted for 1.7% and 4.7% respectively. The statistics indicated that policyholders’ attitude towards their business development remained cautious.
For respondents expecting an increase in business, the proportion placing hope on improving global economy continued to increase by 7.2 percentage points to 53.1% when compared to the previous three months (45.9%) while increasing orders accounted for 40.8%, lower than that of previous three months (43.2%).
The trade conflicts between the US and Mainland China created uncertainties to the global trade. If such conflicts are to continue, the global economy and Hong Kong's exports would face more notable downward pressures.
Policyholders are advised to:
- Maintain close contact with the buyers and confirm whether the products are affected if contracts have been signed;
- Clarify the Incoterms adopted in connection with the delivery of goods, as well as the obligation of buyers and sellers so as to define the tariff payment obligation if the products are included in the list of goods that are subjected to tariff; and
- Incorporate terms in the contracts stating the obligation of buyers and sellers to safeguard their interest if contracts have not been signed.