Hong Kong firms prioritize Mainland China, South Asia for expansion amid US, Europe trade barriers: Report

The survey, conducted from April 30 to May 12, 2025, encompassed 5,750 global firms across 13 markets.The survey highlights a strategic pivot towards markets closer to home and within Southeast Asia. This redirection is supported by initiatives from Hong Kong and Beijing aimed at strengthening ties with Southeast Asia and the Middle East, amidst ongoing US-China trade tensions.

These tensions have been intensified by reciprocal tariffs imposed by former US President Donald Trump and punitive tariffs from the EU on Chinese electric vehicle exports.The shift is driven by rising shipping and air transport costs, coupled with high tariff barriers in the US and Europe, prompting Hong Kong firms to prioritize markets with fewer trade obstacles.

Efforts by Financial Secretary Paul Chan Mo-po to boost bilateral trade and investment with Southeast Asia and the Middle East are also facilitating this shift.

These efforts include meetings with top Chinese officials in Southeast Asia and delegations to the Middle East to foster stronger financial market linkages.

EzyGreenPak, an environmentally friendly packaging start-up, exemplifies this trend by focusing on Taiwan, Singapore, and Malaysia. The company has already participated in an exhibition in Bangkok to evaluate market conditions.

Key findings from the HSBC survey, as of June 1, 2025, include:

• Mainland China: Half of the Hong Kong respondents identified mainland China as their primary target market for expansion.
• South Asia: One in four Hong Kong companies are considering expanding into South Asia.
• Europe: 23% of Hong Kong respondents chose Europe as their top pick.
• Confidence in Global Growth: Nearly three-quarters of Hong Kong businesses expressed confidence in their global growth prospects over the next two years, despite increased tariffs on Hong Kong exports to the US.