Hong Kong Air Freight Market Analysis

2419 words - 10 pages

On 1 July 1997, there was the transfer of sovereignty over Hong Kong from the United Kingdom to the Republic of China, which officially ended the 156 years of British colonial administration.1
The city-State is one of the two special administrative regions of the Republic of China along with Macau.
According to the principle of "one country, two systems", Hong Kong has a different political system from Mainland China, although its constitutive document, the Hong Kong Basic Law, states that the region enjoys a high degree of autonomy in all areas except for foreign relationships and military defense.
Today, Hong Kong continues to be a leader as a global financial center, but faces uncertainty over its future due to the growing economy of Mainland China, which may lead the latter to absorb Hong Kong when its independence should be discussed in 2047 (term of “one country, two system” policy).2

ECONOMIC ENVIRONMENT

Hong Kong’s economy is dynamic and deeply tied to international trade as well for the international banking sector.
Its economic system is one of the least regulated in the world and is, in fact, considered a tax haven.
The city-State has limited quantities of natural resources, both agricultural products and raw materials. Hence, the importance of air freight activities as they supply all sorts of goods in order to meet the national demand for commodities.

Hong Kong has excellent economic and trade ties with the Republic of China, especially since both signed the Closer Economic Partnership Arrangement (CEPA) in 2003, a free trade agreement that enhanced the collaboration between the two Countries and that facilitates the release of further liberalization measures. A perfect incentive that attracted many foreign investors.3
One of the downsides of the economic system of Hong Kong is its high susceptibility when the international markets and\or the Asian ones face tough times (i.e. the Asian financial crisis in 1997 and the world economic crisis in 2007).4

In recent years, the tourism industry experienced a period of strong growth thanks to the new Chinese individual visas that allow the citizens of the Republic of China to visit Hong Kong without the requirement of a group trip.
The next picture shows that tourism accounts for 4.5% of H.K. GDP thanks exclusively to the operations at HKIA, thus excluding other means of transport like trains, cars and cruise boats.
In the same table, there are listed the other three main sectors which, along with the tourism industry, form the four pillar industries on which the overall H.K. economic system most relies on.
As it is shown, each one of them found the aviation sector of vital importance for the overall country’s economy, in fact, on the right hand side there is expressed the contribution of HKIA to the GDP, in percentage, while in the middle column the figures represent the number of people employed within the respective business industries.5

SOCIAL ENVIRONMENT

Hong Kong...

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