Implementation of the New Statistical Standards for
Goods for Processing and Merchanting
in Hong Kong, China:
First Results of the New Trade in Services Survey
Lilian FUNG Yuk-chi
Census and Statistics Department
The Hong Kong Special Administrative Region, China
9 November 2011
Census and Statistics Department
Hong Kong, China
1
Introduction
• New international statistical standards for recording
goods for processing and merchanting based on
“change of ownership” principle
 Introduction of “Manufacturing services on physical
inputs owned by others”
 Removal of “Goods for processing” from merchandise
trade
 Removal of “Merchanting” from trade in services
• Major recommendations will be implemented in Hong Kong
for the compilation of GDP and BoP statistics in the latter part
of 2012
Census and Statistics Department
Hong Kong, China
2
Overview of Hong Kong’s External Trade
Census and Statistics Department
Hong Kong, China
3
Overview of Hong Kong’s External Trade
Ratio of Trade in Services to GDP (%) :
Year
Exports of services
Imports of services
Total TIS
1990
23.8
16.8
40.6
2000
23.9
14.6
38.5
2010
47.4
22.7
70.1
Ratio of Trade in goods to GDP (%) :
Year
Exports of goods
Imports of goods
Total trade in goods
1990
106.8
105.2
212.0
2000
119.4
124.2
243.6
2010
175.5
194.7
370.2
Census and Statistics Department
Hong Kong, China
4
Hong Kong plays an important role
as the regional and world hub
According to World Trade Organization statistics released, ranking of
Hong Kong’s trade in goods and trade in services in 2010：
World:
Exports of goods：
Exports of services:
Asia Pacific region:
Exports of goods：
Exports of services:
Census and Statistics Department
Hong Kong, China
11th
11th
4th
5th
5
Development of Hong Kong’s Outward Processing
Trade and Merchanting
• Increasing degree of globalisation of the world economy in
past decades and opening policy of the mainland of China
(the Mainland) in 1980s
 Relocation of production processes to the Mainland
 Substantial amount of merchanting activities because of
extensive network of buyers and sellers in the global
market
 Diversified exporting channels of processed goods
manufactured in the Mainland by directly exporting to
overseas markets
Census and Statistics Department
Hong Kong, China
6
Hong Kong’s Outward Processing Trade
• Predominantly carried out in the Mainland
• Exportation of raw materials/ semi-manufactures
from Hong Kong with contractual arrangement for
subsequent re-importation of processed goods into
Hong Kong or exported to directly to overseas
markets after processing
• Two types of processing arrangement:
“processing and assembling”
– not involving change of ownership
“processing with imported materials”
– involving change of ownership
Census and Statistics Department
Hong Kong, China
7
Proportion of goods involving outward processing in the
mainland of China to total imports and total exports of
goods of Hong Kong and offshore trade involving
outward processing, 2009
Exports of Services
Merchanting
26%
Imports of Goods
Exports of Goods
Involving Goods for
Processing
23%
Census and Statistics Department
Hong Kong, China
Involving Goods for
Processing
17%
8
Outward processing trade of Hong Kong with
the mainland of China, 1991-2010
US$Bn
120
Exports of Hong Kong to the Mainland of China Involving Outward Processing
Imports of Hong Kong from the Mainland of China after Outward Processing
98.1
100
66.8
80
60
40
14.7
25.4
20
0
1991
1993
1995
Census and Statistics Department
Hong Kong, China
1997
1999
2001
2003
2005
2007
2009
9
Exports of Merchanting Services from Hong Kong,
1999-2009
US$Bn
25
22.1
20
15
10
6.9
5
0
1999
2000
2001
Census and Statistics Department
Hong Kong, China
2002
2003
2004
2005
2006
2007
2008
2009
10
Existing Surveys
Census and Statistics Department
Hong Kong, China
11
Existing Surveys
Outward processing
 Monthly Survey on Trade Involving Outward
Processing in the Mainland of China (OP Survey)
 Annual Survey of Imports and Exports of Services
(ASIES) – for offshore trade involving outward
processing
Merchanting
 Annual Survey of Imports and Exports of Services
(ASIES)
Census and Statistics Department
Hong Kong, China
12
Survey on Trade Involving Outward Processing in
the Mainland of China (OP Survey)
•
•
•
•
•
Establishment survey conducted on a monthly basis
since third quarter of 1988
Delineate OP activities in the Mainland from the
regular trade
Estimate the value and proportion of Hong Kong’s
trade involving OP in the Mainland
Sampling units: import/export declarations in respect of
Hong Kong’s trade with the Mainland
Survey method: Computer-Assisted Telephone
Interviews
Census and Statistics Department
Hong Kong, China
13
Survey on Trade Involving Outward Processing in
the Mainland of China (OP Survey)
Coverage
 OP activities with exportation of raw
materials/semi-manufactures from Hong Kong with
contractual arrangement for subsequent
re-importation of processed goods into Hong Kong
 OP activities under the arrangement of “processing
with imported materials” or “processing and
assembling”
Census and Statistics Department
Hong Kong, China
14
Annual Survey of Imports and Exports of Services
(ASIES)
•
•
•
•
•
Establishment survey conducted since 1980 to collect
detailed TIS data from establishments having significant
amount of TIS transactions
Collect data related to offshore trade activities since 1999
Sampling frame: Central Register of Establishments
(CRE)
Questionnaire: Industry-specific questionnaires
Survey method: Postal enumeration, Telephone
interview, Face-to-face interview
Census and Statistics Department
Hong Kong, China
15
Annual Survey of Imports and Exports of Services
(ASIES)
Coverage
 ASIES covers all industries
 Offshore trade involving outward processing
 Data on sales of goods and the cost of goods sold for
merchanting largely collected on an annual basis from
establishments in imports and exports trade sector
 Only trade margins derived from merchanting
(i.e. net data) collected on a quarterly basis via an
existing sub-annual economic survey
Census and Statistics Department
Hong Kong, China
16
New International Standards
Census and Statistics Department
Hong Kong, China
17
New International Standards on
Goods for processing
• Change of ownership principle
• Exclude imports and exports of goods involved in processing under
the arrangement of processing and assembling (i.e.without “change of
ownership”) from trade in goods
• Record payments of processing fees to the processing economy as
imports of “manufacturing services on physical inputs owned by
others” by the goods hosting country/economy
• Record procurements of raw materials/ semi-manufactures as imports
of goods of Hong Kong if procured by Hong Kong owners
• Record procurements of raw materials/ semi-manufactures as imports
of services of Hong Kong if procured by Mainland processing units
Census and Statistics Department
Hong Kong, China
18
New International Standards on
Goods for processing
• Apply to the goods sent to the Mainland for processing
under the arrangement of “processing and assembling”
only as no change of ownership is involved for both
inputs and finished goods
• Processing under the arrangement of “processing with
imported materials” should be recorded under general
merchandise as there involves a change of ownership for
both inputs and finished goods
Census and Statistics Department
Hong Kong, China
19
New International Standards on Merchanting
• Change of ownership principle
• Reclassify merchanting of goods (i.e. net value of sales of
goods less the cost of purchasing these same goods) from
exports of services to exports of goods
• Record separately gross values of purchases and sales of
goods under merchanting
 Goods acquired under merchanting
(shown as a negative export)
 Goods sold under merchanting
Census and Statistics Department
Hong Kong, China
20
Implementation of New Standards
Census and Statistics Department
Hong Kong, China
21
Implementation of the New Standards
Outward processing in the Mainland
• Data models are constructed to produce preliminary estimates of
trade aggregates to support timely compilation of GDP and BoP
statistics
• Enhanced the Survey on Trade Involving Outward Processing in
the Mainland of China
 To collect additional information pertaining to imports from
the Mainland related to OP which involve processing under the
arrangement of “processing and assembling”
 To revise the preliminary estimates at aggregate level and
provide parameters for updating the data models
Census and Statistics Department
Hong Kong, China
22
Implementation of the New Standards
Enhanced OP survey
• Since Q2 2008, the quarterly sample size has been increased from 7 000 to
over 25 000 imports/exports declarations
• Response rate:
around 85%
• To collect additional information for goods imported from the Mainland
involving processing under the arrangement of “processing and assembling”:
 processing fee paid by Hong Kong;
 raw materials/semi-manufactures provided through Hong Kong;
 raw materials/semi-manufactures procured from sources other than Hong
Kong and delivered directly to the Mainland without going through
Hong Kong; and
 raw materials/semi-manufactures procured directly by the Mainland
processing units
Census and Statistics Department
Hong Kong, China
23
Implementation of the New Standards
Merchanting & Offshore trade involving outward processing
• Conducted a feasibility study in 2008 and 2009 to assess the
practicability of collecting quarterly data from, and the additional
reporting burden on, respondents via establishment survey
• Launched a new “Quarterly Survey of Merchanting and Other
Trading Activities” (QSMTA) since the reference period of the first
quarter of 2010 :
 To collect quarterly data on the sales and the cost of goods sold
for merchanting
 To collect data related to offshore trade activities involving
outward processing
Census and Statistics Department
Hong Kong, China
24
Implementation of the New Standards
QSMTA
 Designed with reference to previous rounds of ASIES and
feasibility study to cover those industry strata with
significant merchanting or trade in services transactions
 Prominent establishments (in terms of TIS or merchanting
receipts) in respective sectors are included as certainty
cases
 Other establishments are enumerated on a sample basis
 Sample size: 4 000 establishments each quarter
(in which around 1 000 certainty cases)
 Questionnaire: industry-specific questionnaires
 Response rate: approached 90% each quarter
Census and Statistics Department
Hong Kong, China
25
Implementation of the New Standards
QSMTA
• Collect quarterly data on the sales and the cost of goods sold for merchanting
• Also collect additional information for offshore trade of goods involving
processing under the arrangement of “processing and assembling”:
 value of goods sold offshore after processing ;
 cost of goods sold offshore after processing, with further breakdown into:
(a) processing fees paid by Hong Kong;
(b) raw materials/ semi-manufactures procured by Hong Kong traders
and delivered to processing units through Hong Kong;
(c) raw materials/ semi-manufactures procured by Hong Kong traders
but delivered to processing units without passing through Hong
Kong; and
(d) raw materials/ semi-manufactures procured by the processing units.
Census and Statistics Department
Hong Kong, China
26
Preliminary results
Census and Statistics Department
Hong Kong, China
27
Preliminary results
Outward processing in the Mainland
Import value from the Mainland involving outward processing
under the arrangement of processing and assembling :
(a) around 20% was processing fees;
(b) around 70% was raw-materials/semi-manufactures
procured by Hong Kong traders and exported from/
through Hong Kong to the Mainland;
(c) around 10% was raw-materials/semi-manufactures
procured by Hong Kong traders and delivered directly
from sources other than Hong Kong to the Mainland; and
(d) around 2-3% was raw-materials/semi-manufactures
procured by Mainland processing units.
Census and Statistics Department
Hong Kong, China
28
Chart 1 Import value from the Mainland involving outward processing
under the arrangement of processing and assembling by
component (based on survey results for 2008-2010)
Processing fees
Raw-materials/
semi-manufactures
procured by Hong
Kong traders and
exported from/
through Hong
Kong to the
mainland of China
Raw-materials/ semimanufactures procured by
Hong Kong traders and
delivered directly from
sources other than Hong
Kong to the mainland of
China
Raw-materials/ semimanufactures procured by
Mainland processing units
Census and Statistics Department
Hong Kong, China
29
Preliminary results
Merchanting & Offshore trade involving OP
 Around 10% of goods sold offshore involve
outward processing under the arrangement of
“processing and assembling”.
Census and Statistics Department
Hong Kong, China
30
Preliminary results
Merchanting
Out of the cost of goods sold offshore under the arrangement of
processing and assembling for 2010 :
(a) around 20% was processing fees;
(b) around 20% was raw-materials/semi-manufactures procured
by Hong Kong traders and exported from/ through Hong
Kong to the processing units;
(c) around 40% was raw-materials/semi-manufactures procured
by Hong Kong traders and delivered directly from sources
other than Hong Kong to the processing units; and
(d) around 20% was raw-materials/ semi-manufactures
procured by the processing units.
Census and Statistics Department
Hong Kong, China
31
Chart 2 Cost of goods sold offshore under the arrangement of processing
and assembling by component
Raw-materials/ semimanufactures procured
by Hong Kong traders
and exported from/
through Hong Kong to
the processing units
Raw-materials/ semimanufactures procured
by the processing units
Census and Statistics Department
Hong Kong, China
Processing fees
Raw-materials/ semimanufactures procured
by Hong Kong traders
and delivered directly
from sources other than
Hong Kong to the
processing units
32
Impact
Census and Statistics Department
Hong Kong, China
33
Table 1 Impact of implementation of the 2008 SNA and the
BPM6 on goods
for processing
and offshore
merchanting
Processed
goods
imported
from
mainland
Sale of
goods
(+25)
(US$ billion)
External Trade of
Hong Kong in 2008
Under
BPM5
Raw-materials/
semi-manufactures
procured by
China
to Hong Kong (-85)
Hong Kong traders and exported from/
Raw-materials/
semi-manufactures
procured
by
Raw-materials/
semi-manufactures
procured
by
through
Hong
Kong
to
mainland
China
(-57)
Goods
sold
under
merchanting
(+330)
Raw-materials/
semi-manufactures
procured
by
Hong
Kong
traders
and
exported
from/
Hongtraders
KongOffshore
traders
and delivered
directly
Hong through
Kong
and
delivered
directly
Hong
Kong
to
mainland
China
(-7)
from
sources
other
than
Hong
Kong
to
Outwardfrom sources
Trade
with
Under
Percentage
Goodsother
acquired
(-311)
thanunder
Hong merchanting
Kong to
Merchanting
Processing
Outward China
BPM6(+8) Change
mainland
mainland
China
(+8)
Processing
Exports of goods
365
-57
+19andfee
+18raw-materials/
345
-5%
Processing
Processing
fee
raw-materials/
and
semisemi“Gross
margin”
(-19)
“Gross
margin”
(-3)
-77manufactures
+8
319
-18%
manufactures
procured
procured
by mainland
by mainland
processing
processing
unit (+20)
unit (+7)
27
Imports of goods
388
Balance of trade in
goods
-23
Exports of services
92
Imports of services
47
Balance of trade in
services
45
-5
Balance of trade in
goods and services
22
22
-19
+20
-3
69
-25%
+7
74
+58%
Figures may not add up to the respective totals due to rounding.
Census and Statistics Department
Hong Kong, China
34
Way Forward
•
Focus on further strengthening the quality of data,
especially for preliminary estimates
•
Continue to engage major data users to ensure correct
understanding of the statistics
•
Implement the change of ownership principle planned
for 2012
Census and Statistics Department
Hong Kong, China
35
Thank You
Census and Statistics Department
Hong Kong, China
36