Over 90% of GBA manufacturers in supply chain transformation in advanced stages

Mainland stands as the top choice for GBA companies to build supply chain resilience.

Over 90% of manufacturing companies in the Greater Bay Area (GBA) have either completed their supply chain transformation or are in the process of transformation, according to a joint report by the Hong Kong Trade Development Council (HKTDC) and UOB Hong Kong.

The report also found that 72% of GBA-based manufacturing companies have already committed to actively bolstering the resilience of their supply chains, with the remainder expected to follow suit within two years.

For most GBA-based businesses, the mainland remained their preferred choice when it came to both diversifying their supply chain arrangements and broadening their range of production options.

ASEAN was the top choice for companies aiming to diversify their supply chains by adding international locations, with 84% of surveyed enterprises indicating they had plans in place to maintain or expand their production/sourcing activities within the bloc.

The primary reason for this preference, as cited by 39% of respondents, was the positive nature of China-ASEAN trade relations, with the benefits accruing from both the Regional Comprehensive Economic Partnership (RCEP) agreement and the Belt and Road Initiative (BRI) also widely acknowledged.

Of the individual ASEAN markets, Singapore, Malaysia, and Indonesia were the preferred choices for both current and future business activities. The rising level of business interest in the Philippines, Cambodia, Laos, and Brunei, however, was also notable.

The key challenges to successfully entering the various ASEAN markets, meanwhile, were seen as finding suitable and capable local service providers (32%), followed by maintaining data security (25%), and finding talent with the required expertise (25%).

In addition, a proportion of survey respondents saw Hong Kong as an indispensable link between the GBA and the ASEAN bloc, whilst also having a high regard for the city’s expertise in the green finance and professional services sectors.

This was evident in the score of GBA-based businesses of eight out of 10, reflecting a one-point year-on-year (YoY) increase.

In further endorsement, 80% of respondents in 2024 indicated a desire to learn more about Hong Kong’s green professional services and to use such services more frequently, a notable increase from the 70% reported in 2023.

Moreover, many GBA businesses remained committed to accelerating their ESG initiatives, with 81% of survey respondents having active green and sustainable development programmes in place, marking a 16 percentage point increase from the 65% reported in 2023.

Respondents also indicated a greater willingness to increase their level of ESG investment, with an average increase of about 25% planned over the next two years. This will see the relevant budget allocations average $462,535, well above the 2023 figure of $371,333.

“GBA companies are now demonstrating a real commitment to sustainability, as shown by the planned 25% increase in ESG investment over the next two years,” said Irina Fan, director of research at HKTDC. “As there are about three million enterprises in the GBA, this could equate to total ESG-related investment of some $1.3t.”