Hong Kong to a tea
March 21st 2010 05:57
Talk about full circle. For years Hong Kong was the world's greatest example of laissez-faire economics, a big component of which was its duty free status. Who needs high taxes and who needs import duties when you can just fill in your harbour, foot by foot, and create the world's most expensive real estate? Not for nothing has Hong Kong been voted number one on the Index of Economic Freedom ever since the index was created in 1995.
It still sits atop the index, but it is no longer a duty free port. Once the British handed back their borrowed place, the reinstalled owners decided such a wealthy community without duty on alcohol and tobacco was just too much of a wasted opportunity. They started small, but you know what bureaucratic bean counters are like. From zero in the 1990s, the duty on wine had leapt to 80 per cent in 2006.
Then something strange happened. The duty was cut to 40 percent in 2007. And in February 2008, it was abolished. Back to zero.
There was method in this madness — late last year Hong Kong was named the world’s third-biggest trading hub for wine. It's an industry worth about US$130 million and the now-regular Christie’s International auctions in Hong Kong are where the great wine snobs of the world gather.
How do you beat that? The Hong Kong Trade Development Council has plans to beat the wine success story with a commodity closer to the Chinese heart, tea. It is talking with tea sellers and buyers to use the city as a hub, citing its port facilities and proximity to China. The global tea industry is worth US$6 billion a year. China is the world’s biggest tea producer, Russia is the largest importer and Sri Lanka is the top exporter.
“We have the infrastructure and cultural sophistication to become a tea hub,” said Raymond Yip, assistant executive director of the Trade Development Council. The Hong Kong plan means a competitive battle with the likes of Dubai, which opened a tea trading hub in 2004, and targets the Indian, Sri Lankan and East African markets.
Tea is central to the Hong Kong diet. The city’s seven million people consumed 1.36 kilograms per head in 2004, almost triple the world average. Across the border, the mainlanders are only drinking 420 grams a year, but this is expected to rise quickly in line with consumer wealth, spelling opportunity for Hong Kong.
Can it rival wine for elitism, snobbery and prestige? The Sun Sing Tea company in Hong Kong charges US$1,000 for 10 grams of a rare 1900 Pu’er, and such teas are prized both by collectors and as traditional gifts to important business clients. A good tea even mellows with age and rises in value.
Hong Kong may remain top of the Index of Economic Freedom for a while yet.
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Comment by Janet Collins
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It's all aout marketing!
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Singapore charges import duties. I don't know how much they charge on alcohol, but I shouldn't think it would account for that price hike. Probably some Orchard Road boutique wine shop for the chic set.
As you say it's all in the marketing.