Optimism among HK firms in Pearl River Delta

Fifty-four percent of respondents in a recent survey of Hong Kong businesses running factories in the Pearl River Delta in Guangdong province are optimistic about the prospects for their business, an increase compared with the annual survey last year, although those polled continued to book an increase in production costs.

About 45 percent of the respondents had a positive outlook, according to the annual survey by the Federation of Hong Kong Industries last year. Only 10 percent of the respondents are negative or very negative in this year's survey conducted last month.

About 20 percent of the enterprises in the survey received more orders, the total value of which rose by 16 percent year-on-year on average, although 60 percent of the enterprises received orders similar in value to those last year, said Stanley Lau, chairman of the federation, in a statement on Monday.

The polled enterprises predicted exports would increase by 10 percent year-on-year, with those to traditional markets such as the United States and the European Union expected to increase by 12 percent and 5 percent respectively and those to Asian markets to grow by 5 percent.

The survey indicated the operating environment in the delta remains difficult, with labor problems and labor shortages being the major challenges faced by the majority of the Hong Kong manufacturers, Lau said.

The responding enterprises said production costs had risen by 12 percent year-on-year on average so far this year, with labor costs up by more than 10 percent.

About 80 percent of responding enterprises said their factories in the delta were short of labor, lacking on average 12 percent of general workers, 10 percent of technicians, 12 percent of salespeople and 7 percent of managerial and administrative staff.

Compared with the findings last year, the shortage of general workers and technicians was reduced by 1 to 2 percentage points, possibly because of factory automation. The shortage of salespeople, and managerial and administrative staff has become more serious.

"Because it is difficult to hire workers, enterprises have to increase wages, welfare spending and bonuses as well as expenses for training, thereby increasing total labor costs," Lau said.

Judging from the federation's surveys since 2012, the number of workers employed by Hong Kong manufacturers in the delta has fallen.

The survey in 2012 showed about 40 percent of the enterprises employed more than 1,000 people or more, while the figure for this year was 24 percent. Those employing more than 100 people but fewer than 500 jumped from 30 percent in 2012 to 40 percent this year.

Meanwhile, more than 20 percent of the businesses in traditional manufacturing industries in the delta had initiated or were considering a cut in production because of oversupply, according to research last month led by Li Youhuan from the Guangdong Academy of Social Sciences.

Those industries include the manufacture of shoes, garments, hardware, furniture and decoration materials.

In contrast, enterprises in equipment manufacturing and high-end electronics recorded more than 10 percent growth in revenue so far this year. Those in the industries of jewelry and jade, Internet financial services and e-commerce have booked a more than 15 percent increase in revenues, Li said.