Enhancing Hong Kong's Role as a Regional Aviation Hub through the Establishment of a Cross-Border E-commerce Supply Chain Service Center

To develop into a global Cross-border E-commerce (CBE) supply chain service center, Hong Kong needs to adopt a comprehensive vision of CBE development. This will enable the formulation of a coherent public policy strategy to strengthen its crucial role as a global trading and logistics hub, benefiting enterprises of all sizes. We believe that CBE should receive the same level of attention as traditional trade from a government policy perspective, necessitating a higher degree of policy focus on CBE. This is essential for directing targeted public policy development, including logistics infrastructure, education, information technology, support for small to medium-sized enterprises (SMEs), and more. It also involves aligning public resources and support from industry associations and enterprises.

Unlike the two main CBE development models in Mainland China, Hong Kong lacks the ecosystem driven by sophisticated e-commerce platforms (Zhejiang model) or a large production capacity (Pearl River Delta model). Therefore, leveraging Hong Kong's premier professional services, we recommend building a new CBE development model that capitalizes on the added value of its internationally recognized professional services. This approach not only upgrades Hong Kong's trading and logistics sector but also creates new growth opportunities for other industries such as financial services and professional services. It also generates attractive job prospects for the younger generation. Developing an independent global e-commerce platform is the best way to harness Hong Kong's collective strengths.

As CBE is a catalyst for maintaining Hong Kong's competitiveness, we strongly recommend the establishment of a new statutory body called the "Hong Kong Cross-border e-commerce Development Council" by the HKSAR Government. This body's primary focus would be to develop CBE business in Hong Kong and improve the business environment for exports, imports, and transit services. With the support of this organization and its committees, the government can collaborate closely with key stakeholders to create a conducive business environment that fosters the growth of CBE participants. The experiences of Mainland China and Singapore highlight the extraordinary roles played by government agencies and public bodies in expanding the CBE market. While a prescriptive approach may not align with Hong Kong's governance style as a free port, we believe that relevant government and statutory bodies should take a proactive role in creatively fulfilling future market demands under the Hong Kong CBE Development Council. For example, Hong Kong Post should be restructured to be more flexible, creative, and responsive to the rapidly evolving CBE market. Additionally, the Hong Kong Trade Development Council can leverage its international network and database resources to promote CBE business beyond the Mainland China market, provided it receives increased resources.

Given that CBE is an internet-based trade model, accelerating digitalization should be a priority. This includes establishing a data sharing platform for the CBE supply chain, expediting the construction of data empowerment and personal data protection frameworks, and promoting the digitalization of SMEs. Furthermore, the government should address the issue of high logistics costs, which is largely attributed to a lack of required talent and affordable logistics space. Overcoming this obstacle is crucial for transforming Hong Kong into the largest overseas warehouse of Mainland China and a regional distribution center for multinationals. To alleviate the problem of high rent, the government should expedite high-level policy planning for logistics space and introduce more logistics parks in the catchment area of Hong Kong Airport, thereby optimizing resource allocation in the city.

The talent issue also underscores the need for a comprehensive talent-building policy for the trading and logistics industry, including curriculum planning in universities and vocational training. As government support, including subsidies, for the capital-intensive logistics industry and CBE players, particularly SMEs and start-ups, is common worldwide and among Hong Kong's major competitors, the government should review its current supportive policies and measures. These are generally perceived as relatively ineffective and insufficient by the local industry. Specifically, providing support in terms of space, manpower, and digitalization to SMEs is strategically significant for market enhancement, as the logistics industry landscape in Hong Kong is currently skewed in favor of multinationals and large corporations, making it excessively challenging for SMEs to enter the CBE market.

Lastly, it is recommended to institutionalize a government-to-government coordination arrangement between jurisdictions on related issues. This would enhance mutual understanding of respective policies and measures. Establishing a coordination framework and system between the HKSAR Government and counterparts in Mainland China, popular overseas markets, or emerging markets (such as Belt-and-Road countries) is crucial for resolving major bottlenecks in the CBE supply chain, particularly customs clearance. It can also create new business opportunities, such as obtaining approval from Mainland authorities for specific products tested and certified by Hong Kong's accredited certification and inspection establishments to enter the Mainland market.