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‘Make in India’ roars: Hong Kong shifts industrial base from China to India

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India
Image source: mediaroom.hktdc.com

Hong Kong: Even as it promotes Hong Kong as the gateway for Indian companies to the Chinese markets, the Hong Kong Trade Development Council (HKTDC) is promoting India as an alternative manufacturing base for its industries based in China, states a research report.

“In recent years, the sustained rise in production costs on the Chinese mainland has eroded the profit margins of many Hong Kong companies with labour-intensive factories located on the Chinese mainland, prompting them to seek alternative production bases elsewhere,” the report states.

“In a nutshell, India offers many advantages as an alternative production base, along with the added advantage of having a domestic market of great potential,” notes the report.

Most of the manufacturing units in Hong Kong migrated to China to take advantage of the low costs after the region was handed over to the latter by the British in 1997.

Some of the multi-storeyed buildings that once housed garment units are now used as offices or are lying vacant.

With manufacturing units shifting base, Hong Kong has turned into a business services hub.

According to HKTDC’s report, India was the world’s second biggest exporter of textile and garment products in 2014, shipping goods worth $36 billion, behind China’s exports worth a whopping $399 billion.

The report also cites the lower import tariff levied on Indian goods by the US and the European Union (EU).

India has been an active player in Asia, securing free trade agreements (FTAs) inside and outside the region. India has also been in talks on an FTA with the EU.

Further, US import tariff rates for Indian yarn-related products range between zero percent and 2.7 percent. The weighted average import tariff rates of the EU and US on non-agricultural products from India are 4.5 percent and 2.5 percent, respectively.

On the demographic profile, the report states that the Indian median age of 27 is way below China’s 37, ensuring a good supply of young workers for many years to come.

“As an aside, China recently announced the abandonment of its one-child policy in response to the country’s ageing population, though the effect would not be appreciable over the short-to-medium term,” the report added.

According to HKTDC, the Indian wage levels are comparatively lower than what is paid in China. Furthermore, labour productivity in India is going up while that in China has been declining.

The report also cites the presence of industrial estates with plug and play facilities in India for Hong Kong manufacturers to relocate their factories rather than getting bogged down in land acquisition and other issues.

The HKTDC report cites the huge domestic market available in India for Hong Kong manufacturers apart from the country being an alternative production site for overseas markets.

Meanwhile, businessmen in Hong Kong said that the region is the best route to do business with the Chinese.

“We know the people who have shifted operations out of Hong Kong to China. It is better for Indian companies to set up an office here than landing directly in China,” Noordin A Ebrahim, director of Masterful Ltd, told reporters.

Referring to credit rating agency Moody’s Investors Service to cut Hong Kong’s long-term debt outlook due to its close link to China, Ebrahim said: “I feel it is a political judgement rather than financial.”

Ebrahim is of the view that China would not do anything to shake the confidence of the Hong Kong business community and would like to see that peace continued to prevail in the former British colony.

Hong Kong has transparent and rules-based systems, very low taxes and knowledgeable work force, he added.

“Knowledge of the local market is important while branding products for China and other markets. Hong Kong-based brand consultants would provide the same for Indian companies,” David Lo, chairman, Hong Kong Designers Association, told agencies.

“The Closer Economic Partnership Arrangement (CEPA) between the mainland (China) and Hong Kong would result in the liberalisation of trade in service between the two regions from June 2016,” Yvonne So, director, corporate communication and marketing at HKTDC, told reporters.

“Overseas companies can take advantage of CEPA by outsourcing to, or partnering with, a CEPA-qualified manufacturer or services provider in Hong Kong,” she added.

As for the human resources available, she cited Hong Kong’s nine major universities having more than 75,000 full-time undergraduate students and 8,000 taught and researched full-time postgraduates. (Venkatachari Jagannathan, IANS)

Next Story

British Lawmakers Rejects Brexit Deal, May Faces Vote Of No-Confidence

The defeat also opens the way for parliament itself to take more control of any future negotiations with the EU.

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Theresa May
Prime Minister Theresa May leaves 10 Downing Street in London, Jan. 16, 2019. VOA

British Prime Minister Theresa May is facing a no-confidence vote Wednesday after members of parliament voted overwhelmingly against her plan to divorce Britain from the European Union.

Jeremy Corbyn, leader of the main opposition Labor Party, announced he had filed a motion of no confidence in the government immediately after the result Tuesday.

If May loses, Britain would hold a general election. But most analysts say they expect May will survive the vote, and the minority Northern Ireland party she relies on to keep her minority government in office has said it would back the government.

Tuesday’s vote was the biggest parliamentary reversal ever handed a sitting government, with lawmakers — including more than 100 rebels from her own ruling Conservative party — refusing to endorse a highly contentious Brexit deal.

The government’s defeat plunges into greater disarray Britain’s scheduled March 29 divorce from the European Union.

Britain, European Union, May
Anti-Brexit supporters hold European Union flags as they demonstrate outside the Houses of Parliament on Jan. 14, 2019. VOA

EU Brexit negotiator Michel Barnier said Wednesday that after the British parliament’s rejection, the risk of reaching the deadline with no deal in place is higher than ever.

The much anticipated historic vote by the House of Commons of a draft deal, which took two years of ill-tempered haggling with European leaders to conclude, now throws up in the air the whole Brexit project, with major questions remaining unanswered about when Britain will exit the EU, how it will do so and even whether it still will.

Just 202 lawmakers backed May’s deal with 432 voting against her deal. The defeat dwarfed the previous 1924 record when then-Labor Prime Minister Ramsay MacDonald lost a vote by 166, triggering the collapse of his government and a general election, which he lost.

After the vote, May complained “the vote tells us nothing” about what the Commons would agree to when it comes to Brexit.

Theresa May
Prime Minister Theresa May sits down in Parliament after the vote on May’s Brexit deal, in London, Britain, Jan. 15, 2019 in this image taken from video. VOA

Vote delayed in December

The defeat of May’s Brexit plan will give further momentum to a burgeoning campaign in the House of Commons, and among Remainers in the country for a second referendum, according to analysts. Remainers hope a replayed referendum would reverse the Brexit plebiscite of 2016, which Leavers narrowly won.

The vote on the deal, which was due in December but was delayed by the government when it became clear there was insufficient backing for it to pass, also leaves hanging in the balance May’s own future as prime minister. Her aides insisted at the end of a day of high political drama that she won’t resign.

“She is the person who has to deliver Brexit,” said British business minister Claire Perry, who said May doesn’t need to resign.

“There will be other attempts at this. There will be strenuous efforts to improve on the deal,” Perry said.

Earlier on Tuesday, May discussed post-defeat options and indicated she would plow on. Her officials say she will try to buy more time and return to Brussels to try to cajole EU leaders into a renegotiation.

But the sheer scale of the defeat throws into doubt whether even a reshaped Brexit Withdrawal Agreement would secure parliamentary approval in the future — that is, if the EU is prepared to reopen negotiations.

EU, May
European Commission President Jean-Claude Juncker holds a news conference at the European Union leaders summit in Brussels, Belgium Oct. 18, 2018. VOA

“Her Plan B, more of the same, is hopelessly optimistic,” said commentator Isabel Oakeshott.

EU chief Jean-Claude Juncker canceled an event planned in Strasbourg, France, Wednesday so he can remain in Brussels for possible emergency talks with May. May’s RAF jet was put on standby, readied for her to travel to the Belgian capital.

Juncker tweeted when news of the historic vote broke: “I take note with regret of the outcome of the vote in the House of Commons this evening. I urge the UK to clarify its intentions as soon as possible. Time is almost up.”

EU president Donald Tusk reflected the frustration of many in Brussels, tweeting: “If a deal is impossible, and no one wants no deal, then who will finally have the courage to say what the only positive solution is?”

As the vote neared, May’s aides made several last-ditch efforts to minimize the scale of the crushing defeat by offering amendments to the main motion on the deal that they hoped would peel away some of the Conservative rebels. But to their fury, Commons Speaker John Bercow, blocked their moves.

Labor’s Tulip Siddiq, who is pregnant, was pushed through the voting lobbies in a wheelchair after postponing a planned Caesarean section so she could vote against the Brexit deal.

Britain, May
Anti-Brexit demonstrators react after the results of the vote on British Prime Minister Theresa May’s Brexit deal were announced in Parliament square in London, Jan. 15, 2019.VOA

Noisy crowd awaits word

While the drama played out in the House of Commons, outside the parliament, noisy, placard-waving crowds of Brexiters and Remainers mounted protests urging the draft plan be approved or cast aside. There was a hush among the protesters in the minutes before the result was announced.

May has until next Monday to offer a new proposal to the House of Commons, but it isn’t clear what she will propose. EU leaders have flatly rejected the possibility of renegotiations several times since the deal was concluded in November. But with Tuesday’s defeat, which followed five days of intense debate, British officials hope Brussels now may offer enough concessions to secure parliamentary backing on a replayed vote on an amended deal.

In the run-up to the vote, which the government was bracing itself to lose, May offered a series of carrots and sticks, pleas and warnings, to try to persuade unenthusiastic lawmakers to back her deal. To Brexiters, she warned it could result in Britain never exiting the EU. To Remainers, she cautioned it might lead to Britain leaving without a deal.

Britain, May
Leavers hold up signs next to pro-European demonstrators protesting opposite the Houses of Parliament in London, Jan. 15, 2019. VOA

Final plea from May

Minutes before the vote, May told a packed and feisty House of Commons that they should “honor the democratic decision of the British people.” She said a vote against her deal would be a vote for “uncertainty, division and the very real risk of no deal.”

Corbyn countered that the “government’s own economic assessment clearly tells us it is a bad deal.” To accompanying jeers and cheers, he added, “This deal is the product of two years of botched negotiations in which the government spent more time arguing with itself than it did negotiating with the EU.

“We need to keep in mind that the vast majority of people in our country don’t think of themselves as Remainers or Leavers,” Corbyn said. “Whether they voted leave or remain two and a half years ago, they are concerned about their future. So, Mr. Speaker, I hope tonight that this House votes down this deal, and then we move to a general election.”

Britain , May
British Labor party leader Jeremy Corbyn talks to journalists outside the European Commission headquarters in Brussels, Belgium, Sept. 27, 2018. VOA

With the draft deal, May tried to square the circle between Britons who want to remain in the EU, or closely tied to it, and Brexiters. The withdrawal agreement would have seen Britain locked in a customs union with the EU for several years, while a more permanent, but vaguely defined, free trade settlement could be negotiated with its largest trading partner.

In the temporary customs union, Britain would have been unable to influence EU laws, regulations and product standards it would have to observe. And it would not have been able to implement free trade deals with non-EU countries.

Customs checks

The transition deal was agreed to avoid customs checks on the border separating Northern Ireland and the Irish Republic. But British lawmakers who voted against the deal feared Britain would be shackled indefinitely to the bloc, even if a final free trade deal couldn’t be agreed upon.

Both Brexiters and Remainers claimed the Brexit agreement May negotiated would turn Britain into a vassal state, a rule-taker and not a rule-maker. Brexiters maintained the deal would keep Britain too closely aligned with the EU.

Brexit
French noted that investment in UK assets and stocks is “waiting in the wings” to find out what those barriers will be. Pixabay

A huge range of possible Brexit outcomes has been opened up by Tuesday’s defeat. These include leaving the EU with no deal; a more managed no-deal exit — a pivot to Britain adopting a Norway-style relationship with the EU that would see Britain being half-in and half-out of the bloc; a second referendum; or a second vote after a renegotiation with Europe.

But with British politics in an uproar, with normally disciplined political parties fractured, it is hard to forecast what will happen next. While there are majorities in the House of Commons against leaving the EU without any deal, there are no clear majorities for any alternatives.

Also Read: British Parliament To Vote On Withdrawal Agreement Negotiated With The EU

Constitutional clash

The defeat also opens the way for parliament itself to take more control of any future negotiations with the EU, setting the stage for an unprecedented constitutional clash between the House of Commons and No. 10 Downing Street.

A cross-party group of senior lawmakers headed by former Conservative ministers is conspiring now to sideline the embattled May by reducing the power of the government to control legislative business in parliament and giving the responsibility of future negotiations with Brussels to a parliamentary committee.

The group also wants to force May to ask the EU to delay the scheduled departure date of March 29 to avoid Britain crashing out of the bloc without any kind of deal. Another group of powerful lawmakers is drafting legislation for a second referendum. (VOA)