Chairman of Hong Kong Shippers’ Council Willy Lin is on Straight Talk this week,

With his extensive experience in the textile and garment business, Lin gives us his perspective on the global trade environment and outlines for us some of the challenges and opportunities for Hong Kong.

Check out the full transcript of TVB’s Straight Talk host Dr Eugene Chan’s interview with Willy Lin:

Chan: Good evening and welcome to Straight Talk! I'm Eugene Chan, and our guest this evening is chairman of the Hong Kong Shippers’ Council, Willy Lin. Lin is a seasoned industrialist with extensive experience in the textile and garment business. He is chair of several of our textile exporters associations, where he has been a driving force in promoting Hong Kong's export and textile industries. He also plays a key role in our trade and logistics sectors. Being on the Trade and Industry Advisory Board, the Hong Kong Logistics Development Council and the Hong Kong Maritime and Port Board, we have asked Lin to share his perspectives on the global trade environment and to outline for us some of the challenges and opportunities for Hong Kong. Welcome, Willy!

Lin: Thank you very much, Eugene!

Chan: Lin, the world is undergoing very significant changes, from economic shifts to geopolitical tensions and what we … a new term called the technological disruptions. So in such a rapidly evolving environment, where do you see global trade today? And maybe you can give us a bird's eye view?

Lin: Well, I think the worldwide economy is going up to … it's a bit uncertain, faces a little bit headwinds, with a lot of geopolitics on the horizon. Trade and politics, unfortunately, will be merging into a new perspective in the global world, not just trade politics and even securities. So, Hong Kong definitely has been facing a lot of challenges. Historically, I think many Hong Kong companies have been a global player. We have been participating extensively in WTO, one of the founders, we're APAC member. So, WCO, World Custom Organization. We do have a lot of respect for promoting free trade in the world. Unfortunately, I think we all know that in the last 10 years or so, protectionism has been rising. Hong Kong companies are facing a lot more challenges in where we source, where we produce, and how we do our business. I think we should look back at … Hong Kong has always been a very good global player, as I mentioned earlier, trading, logistics and manufacturing have been a backbone of Hong Kong economy for finance, we have been doing this kind of global trade since the ’70s and ’80s, where we start to produce in Hong Kong, made in Hong Kong, made by Hong Kong in the 80s, and partner with Hong Kong in ’90s. So, this had been a gradual involvement of our industries, no matter it is in textile industries or the toys industries or now, of course, the high technologies, high-tech industries. There have been no changes, but with the competitive edge, Hong Kong, being a very small economy, with only seven and a half million people with limited resources. So, in order to enable our industry to grow, we have been outsourcing. We've been moving part of our industries from Hong Kong into literally to Shenzhen and Dongguan and Southeast Asia, and, of course, further into the African regions and Mexico. We see all our footprints everywhere that have been doing very well. That have been especially when we are in last 30 years of the global WTO General Agreement on Tariffs and Trade (GATT) negotiated. As per the WTO, global trade is every country's aspects of the future, broad economic scales, low inflation to all countries. That has been doing very well.

Chan: Willy, you have given us, I mean, a lot of kind of a bird's eye view of what's happening, and with the experience in trade, I'm sure you've seen it evolve over the last few decades. But one area I'm sure the viewers and I will sort of realise is Hong Kong has always been a sort of relying on trading, exporting things to what we so-called, the more advanced economies, like the US or the western countries. But we have seen them sort of experiencing lower growth now, and which is sort of creating weaker trading environment. We'll talk about the US market later. How can we adapt to this new reality? And are there any businesses or industries or actually markets which defy this trend and still offer growth opportunities?

Lin: Well, I think the traditional industries such as trade, logistics manufacturing, which we are producing bulk productions, put it in a container and shipped OEM manufacturing and producing whatever the customers want, be it car or garment or TV sets. That business model now is … have been revolving into more personalised interest, bypassing traditional retail shops per se, e-commerce, right? Everybody heard about e-commerce, but originally from very much in China, e-commerce with logistics together became a new trade for the whole global world trade. This actually created new demand. Digital trading to create individualism. People have more choice that … Oh, I can sit in my … or look at my iPad, or my phone. I can choose product, choose food, and is this borderless ... It becomes really borderless, nobody knows … actually consumers do not know whether a product is being produced in which country for them. It's not the most important point. Oh, I like it. I purchase it. If there's some defect, I return back to the e-commerce companies. So, in the US, they have been doing very well with Amazon, those company, and that of course in China we have … the last 10, 12 years ago, we have Alibaba, JingDong, they all come up as up. So, that's fulfilled a new directive, particularly in countries … before I'll say, I will take one step back: e-commerce is a new term, but in the old days, we call it a mail ordering.

Chan: Mail order business. Yes, we did that.

Lin: That was years ago. Yes. Because everybody buys a catalogue, “oh, I look at catalogue, I see it. Great!” I bought order, I pay check, the thing delivered to you. When gradually printing becomes more expensive, then the electronic system bill comes up. Then it’s the e-commerce. So, all this hard and border, bulk shipment, mail ordering, e-commerce now we have three platform simultaneously. Still working very well.

Chan: So, Willy, we have just talked about the change in the global landscape. Let's look at some global trends, what we call them, more certain things to happen, like the word we discussed is certainties. The four areas I want to ask you, are: firstly, we never had protectionism and trade barrier. And then you have seen the mainland actually have diversified their trade partners, and then you see the manufacturing shifts away from China, and, of course, the geopolitical and institutional changes. Let's look at the global trends in terms of protection and trade barriers. With rising protectionism, with all these western economies doing especially with Donald Trump coming on, how is it going to affect the Hong Kong trading environment?

Lin: Well, it's very unfortunate, as I said. With the WTO GATT … they started 30 years ago negotiation, you know, all these quotas, then they got opening up. Everybody was looking at really free-market economy. Then protectionism pops up again, unfortunately. You see trade diversions, manufacturers, importers are asking companies that one should not have their supply source only rely on China.

And then gradually, again, expanding other protectionism place, Southeast Asia, of course, the Indian subcontinent, Mexico, so very originally the supply chain of China took about 30 years for us to build a very secure, very strong supply chain so manufacturers be able to produce everything within five to seven days even, as strong as that. That have been providing a very, very efficient just in time of delivery for our customers overseas. Now, Hong Kong companies have been doing a great job of providing trust, a very, very strong partnership, and not only that, design capability to our trading partner. That's why that you can see that despite a lot of jargon saying politics and trade have to act together, companies do want to source through Hong Kong, source with Hong Kong companies. But unfortunately, they make it very clear, please do not produce in China.

Chan: Willy, so, if that's the case, well, how can Hong Kong maintain neutrality and resilience in this trading relationship with other countries? Because we used to be Hong Kong as Hong Kong. I never thought Hong Kong is part of China, but we talk about “one country, two systems” nowadays, even more than before. So, some people say Hong Kong is part of China. So, how can we maintain neutral and not be affected by this protectionism?

Lin: Hong Kong is very much part of China, but Hong Kong is also an individual member of the WTO, and that's a very important point.

Chan: OK.

Lin: We had a lot of free trade agreement with different countries that actually enable Hong Kong investors or overseas to come in, work with Hong Kong companies to work together for a better trade environment. Now, this did not change in the last 30 years. We continue to sign free trade agreement like Hong Kong-ASEAN Free Trade Agreement, we have free trade agreement with Australia, with New Zealand, with Switzerland, for example. So, we do have a lot of free trade agreement with some Middle Eastern countries that enable Hong Kong companies to work with them to export our product to them. And it's vice-versa. We can be a partner with them for their product to be exported into China. So, we do provide that platform. We have knowledge of international trade. We have knowledge of Chinese market. We know the rules and orders, real requirement of China import requirement. We know the foreigners requirement. So, Hong Kong is really a super melting pot and understanding and produce platform that is always, has always been a very important platform for Hong Kong companies.

Chan: Okay, Willy.  Let's take a short break now. But viewers, we will be right back.

Chan: Thank you for staying with us. Willy Lin has been sharing with us his insights into the current state of global trade. So, Willy, you have given us a very complex picture of what is happening with all those intertwining factors. Things that we have picked up as sort of from the community is that we see that the mainland is having diversified trading partners. From what I said earlier in the first part, from the majority western countries, to ASEAN, Africa, and South America, and that is why Hong Kong has gone on those trips. How does this impact Hong Kong? And do you think Hong Kong can benefit from this? Or can we actually tap into the market because over the last 150 years, we have been concentrating on the western countries?

Lin: Hong Kong, certainly, I think, our experience with working with our trading partners in the Western countries, actually enable us to understand what global trading means. Of course, every new market does have its own requirements. We do have to be on the ground running, on the ground understanding new trade rules, what kind of habit all these new countries do have. But with the global knowledge, Hong Kong is really an open platform, we have free trade, we don't have any import duties at all. So, we will be able to source raw materials and put into a production base and export to a country where we are working with now. Very important, particularly in the last 10 years or so, technology also built into our trading platform. We are not only doing, cutting everything by hand per se.

Chan: Right.

Lin: New technologies, just-in-time for production, industrial 4.0, sensors – all these new technologies enable us to produce products much more efficient, but at the same time more individualism. And we can produce a small batch production much faster than we could do in the old days.

Chan: Right. Willy, another thing that we have noticed is we have seen people who are manufacturing away from China. China, they used to always have “Made in China”. For example, they go to Vietnam and India. And how does that create Hong Kong's opportunities, in terms of trade and logistics?

Lin: Actually that is great, in a way it has enabled us to open the market more now. I think in our business model, factories do not leave China, but we establish new, we call it “China +1”, “China +2” policy. Those production bases in China will continue to serve two purposes: one, to serve domestic market, China's new domestic market; number two, very, very important, is testing new product efficiency. We test, we use new production method, new materials, and test it. Oh, it works. Then we go to our factories in, as I say, Vietnam, in India, Sri Lanka, Bangladesh, Indonesia. All this will enable us to utilize the knowledge we build from our testing ground in China or in Hong Kong production bases, and move offshore.

Chan: Right.

Lin: Everybody thought when we move offshore, it must be low cost. Not at all; ow tech, not at all. Actually we are putting the most advanced technologies, machineries, in our offshore manufacturing because that will ensure that there is compatibility with what we are doing in China and what we do offshores.

Chan: Right. Willy, you also mentioned earlier about the WTO that Hong Kong is a member of. But we know that from the news that we are reading, we feel that it is losing its effectiveness of, what we call, the control because of the political volatility.

Lin: Yes.

Chan: So, how will Hong Kong prepare for, what we call, less predictable global trade environment?

Lin: I think you have to be looking at it two ways. Number one, a multilateral trading system is only beneficial to all of earth’s mankind. Our motherland, China, and a lot of European countries also strongly support the WTO, but maybe with a new, modified platform. At the same time, we also have to accept the new reality that trade and politics go hand in hand. This is something that the companies in Hong Kong now have to face. But with our “China +1” or “China+2” platform, Hong Kong being the big brain, we will still be Hong Kong. We provide the finances, we have the international knowledge, we have the ChatGPT easily operating in Hong Kong, we have the free trade system that will enable Hong Kong to absorb all the talent to come in. And at the same time, we diversify, we move our production bases to different places.

Chan: Right.

Lin: That is actually … a lot of companies actually, because of that, not only get stuck with one market, but we suddenly say, oh, the world is a lot greater …

Chan: Okay.

Lin: With new opportunities, that maybe a new business model, new business partner, that you might have never thought of. And the Middle East is really a good example.

Chan: Right.

Lin: Yeah.

Chan: Willy, so we have been talking about all these sort of more certain things that we have seen that has happened, what we are going to call the global trend. But there are also something more uncertain. I am sure everybody will know what I am going to talk about, it is about the new president, the US president, Trump coming to office. And he has been unpredictable and nobody knows exactly what will happen. Some say he is going to be even stricter or more unfair to China. But some say he is going to apply the same rules to everybody.

Lin: Right.

Chan: So, would you say this is an opportunity for Hong Kong?

Lin: Oh, yes. I think, first of all, we have got to have a very good … I mean, buckle up, put the safety belt on, it is going to be a pretty rocky road from now on for a couple of years. But at the same time, the more uncertainty, actually Hong Kong becomes actually more certain. I always tell everybody that during COVID time, all US customers are partnering with Hong Kong because they know they come to Hong Kong, they get the product, they get certainty because we know the quality, we know the trust and the knowledge of the product. So, when the wheels go up and down, yes, we have to ride the tide – that is normal. But at the same time, partner with your customer. They also know that whom they should work with will ensure that the product will be delivered to them. Now, you rightly pointed out, it may not be China anymore, is it on-shoring, is it off-shoring, or is it near-shoring? Okay, those three terms actually will be a future in the coming five years, will be happening, but everybody will be more uncertain.

Chan: So, you are saying that we must have our seatbelts on and enjoy the roller coaster?

Lin: Exactly.

Chan: Right, another area that is sort of always uncertain is about the global conflicts. The Russia-Ukraine conflict is still on, unfortunately, and the conflicts in the Middle East doesn't seem to have a clear solution as yet. So, what are the long-term implications for Hong Kong's trade and logistics? Because you have been through that in the last few decades, we have seen wars, we have seen tensions. What will happen?

Lin: Unfortunately, inflation is pipping in. I think we all see that despite a very positive view of US Federal Reserve. Is the interest rate coming down? If the interest rate is not coming down as fast as everybody hoped for, companies will have to look at how their finances are going to plan for their own futures? How would that affect the currency? How would that affect their individual business opportunities? Where are you going to start up? Where are you going to get new manufacturing place? Where are you going to find the finances? So, I think we just can only hope for that, the Middle East seems to be a little bit more controlled now. We have obviously not heard much about container boats being attacked anymore, so that is good news. But the cost of transport is still very expensive.

Chan: Right.

Lin: But we have to look at it as a global context, as I mentioned earlier, the on-shoring, the off-shoring, the near-shoring, plus the Europeans starting this year, the coming five years, the carbon taxation. All these are trading barriers or trading opportunities that Hong Kong companies will have to be aware of.

Chan: Right. So, Willy, one more area I want to touch on is actually the mainland economy hasn't been good, we all know that.

Lin: Right.

Chan: We are trying to stimulate that. It used to be by exports, but exports is now being curbed by what we have seen in the world. So, how can we, Hong Kong, support this because as intermediary we have our financial services and can we be sort of an intermediate party to help our mainland in picking up the growth again? Or am I thinking too much?

Lin: Well, it is a very big question. I think the confidence, I think central government has been looking at it since the last 15 years already, always telling manufacturers that you should try to do more local sales in terms of trade. But then you look at China GDP now is about 60 odd percent is domestic sales.

Chan:  Right.

Lin: Only about down to about 30 something is export.

Chan: Right.

Lin: So, I think the central government are already preparing that they should not be relying so much so on export driven. Now Hong Kong companies, what Hong Kong companies can bring to the table is really international product, our knowledge of the Chinese import system, bring in new, better quality consumer product from offshores into China. This is our traditional strength of trading and supporting.

Chan: Right. Willy, I am going to ask you in the last part of the show. You know Hong Kong's role has always been a financial hub and I am sure our country wants us to maintain that, to help us and help the nation. With technology and business having to merge together, as you said, our chief executive, John Lee Ka-chiu, has a reform in the way for the people. So, can Hong Kong do that? And also with e-commerce coming through, how is Hong Kong going to benefit from this? Because one day we are going to lose a lot of jobs for the local Hong Kong people. So, what do you say to that?

Lin: Well, I think we will only … I only see back positive on this point of view. I think as I said, we have been a very strong trading mindset, Hong Kong people. We know we can smell opportunities. And with the e-commerce coming in or other new future trading platforms coming in, we see traditional demand actually did not decrease, but it has just moved offshore.

Chan: Right.

Lin: The new demand of e-commerce or e-commerce related business opportunities, be it logistics, be it last mile delivery, be it KPI, all these young spokespersons introducing products and so forth and so on, all this actually are creating new opportunities for Hong Kong people to bring, to be a super-connector. We are connecting brands, no matter Chinese brand, overseas, or foreign brands, bring into China. We are the super-connector that understand the two cultures, I think that is the uniqueness of Hong Kong.

Chan: Right. Willy, you have given us a lot to think about and thank you for your insights into this complex issue. Indeed, Hong Kong must embrace her critical role as a super-connector, as Willy had just said, maximizing our strategic advantages, and driving reform to advance innovation and technology. This will reinforce our position as a key hub in global trade. Thank you for joining us and have a good evening!