Fintech, lifestyle products can help Korea grow trade ties with Hong Kong: city's trade promotion chief in Korea

The Korea Times

The Korea Times

National

Tue, September 26, 2023 | 07:36

Politics

Fintech, lifestyle products can help Korea grow trade ties with Hong Kong: city's trade promotion chief in Korea

Posted : 2023-03-29 08:23

Updated : 2023-03-29 14:31

People sit next to Hong Kong's Victoria Harbour across Central, the city's central business district on Oct. 28, 2022. Reuters- Yonhap

By Jack Lau

Korea could expand trade ties with Hong Kong through fintech and lifestyle product exports, according to the director of the city's trade promotion body.

Christopher Lai, the Korea director at the Hong Kong Trade Development Council (HKTDC), said that despite the pandemic and supply chain disruptions from the Ukraine war, trade between the markets has grown, spearheaded by traditional products such as food, agricultural goods and beauty products.

Korea and Hong Kong are seeking to capitalize on the rapid growth of technologies used to improve financial services from banking to blockchain, wealth management, insurance and investment.

"During the pandemic ― especially in the first year or so, when traveling was impossible ― businesses relied on established partners. Negotiating new areas of cooperation was also not easy," he said.

Christopher Lai, Korea director of the Hong Kong Trade Development Council, poses at his office in Seoul. Korea Times photo by Jack Lau

Trade between Korea and Hong Kong reached $29.5 billion (38.4 trillion Korean won) in 2022, making the city Korea's 10th-biggest trading partner, data from the Korean government shows. Korean exports to Hong Kong made up most of the bilateral trade. Hong Kong also re-exports goods into mainland China and Southeast Asian markets.

Lai said beyond being a redistribution hub for goods from Korea, the city, being an international market, could allow Korean firms to find new partners and raise capital, given Hong Kong's highly liquid market, where trading is active.

"Korean startups might also want to test whether they can align their operations with regulations in an international market," he said, adding that Hong Kong could help Korean firms access preferential policies in mainland China.

Seoul's Yeouido financial district in December 2022 / Yonhap

But for Korean digital asset companies seeking to expand to Hong Kong, they might have to wait.

Lai said such firms have been contacting the HKTDC for information about expanding into Hong Kong over the past several years, but the financial watchdog in the city has yet to confirm the regulations for such businesses.

The Hong Kong government has been more aggressive since last year in promoting the city as a virtual asset financial hub. The city has been traditionally cautious with its financial regulatory environment. While it creates a stable market, it could lag behind innovation and new financial products, such as non-fungible tokens (NFTs).

The Hong Kong government had proposed to limit virtual asset trading to people with at least 8 million Hong Kong dollars in their portfolio, likely professional investors. However, last October, it announced what amounted to a policy U-turn, allowing retail investors to trade such assets.

A light show is held over Hong Kong's Victoria Harbour on New Year's Day this year after pandemic measures were eased in Hong Kong. The show had been canceled for four years because of the COVID-19 pandemic and citywide protests. Both events have dealt a blow to Hong Kong's economy. AP-Yonhap

Even with a settled regulatory regime, Lai said Korean firms eyeing to expand beyond the country still have to face "bottlenecks" that dampen market sentiment around the world, such as supply chain disruptions and rising interest rates. Rising rates make businesses more cautious when borrowing money for expansion.

However, the depreciation of the Korean won and concerns over a falling population in Korea ― which translates to a shrinking market ― might incentivize Korean entrepreneurs to look to foreign markets, he said.

"Although market sentiment now might not be very good, Korean startups might want to look to the international market for growth, new opportunities and even fundraising. Hong Kong, as a financial hub, can help with that."

Jack Lau is a reporter with the South China Morning Post.

Jack.Lau@ktimes.com