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Policyholder Survey - Cost Pressure Concern Raised while Export Outlook Remained Uncertain

ECIC’s recent survey showed that policyholders remained prudent about the export outlook as the export trade has not fully pulled out of the effects of slow-growing global economy. Decreasing orders and rising credit risks are the main challenges. The proportion of those worrying about raw material cost increase also continued to rise.

Chart: Business outlook for next 12 months
Chart: Business outlook for next 12 months

Between December 2016 and February 2017, the ECIC interviewed 603 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 increase in cost of raw materials as the major challenge increased significantly to 15.5% from 9.5% when compared to previous three months (September to November 2016). However, the decrease in orders decreased by 8.1 percentage points to 29.9%.

Regarding the business forecast for the coming year, the survey showed that the number of respondents anticipating their business to decrease dropped from 8.7% to 6.6% when compared to the previous three months. Policyholders expecting their business to remain stable decreased by 3.8 percentage points to 75.8%, while policyholders expecting their business to increase rose by 3.2 percentage points to 8.6%. The statistics indicated that policyholders’ attitude towards their business development was improving compared to the previous three months.

For the respondents expecting an increase in business, the proportion placing hope on increasing orders rose sharply by 8.8 percentage points to 72.3% but the overall number of policyholders remained low. The proportion of placing hope on developing emerging markets fell from 17.5% to 7.7% when compared to the previous three months.

Chart: Challenges faced by the Hong Kong exporters
Chart: Challenges faced by the Hong Kong exporters

Strengthen Protection for SMEs amid Uncertain External Trade Outlook

Rising political risks and divergent monetary policies have made economic recovery more uncertain. Exporters should pay more attention to country and buyer risks.

ECIC’s “Small Business Policy” offers permanent waiver of $1,000 annual policy fee and premium discount of 20%, helping SMEs reduce operating costs and enhance their competitiveness in the industry. More information is available on the ECIC Website www.hkecic.com.

Content provided by Picture: Hong Kong Export Credit Insurance Corporation
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