In 2001, the earnings from offshore trade, in terms of gross margin or commission earned, grew by 8.7% over 2000, to $92 billion.

Within this total, the gross margin from merchanting rose by 12.4% to $79.4 billion, while the commission from merchandising services for offshore transactions fell by 9.9% to $12.5 billion.

On the value of goods involved in offshore trade, there was also further growth in 2001, and this fared considerably better than the decline in the value of re-exports in that year.

While this was a clear indication of the ongoing structural shift in export composition, it also reflected the increasing significance of offshore trade in engendering growth of the Hong Kong economy.

In terms of the sales value of goods involved in merchanting, it totalled $885.5 billion in 2001. By comparison, the value of re-exports totalled $1,327.5 billion in the same year. 

Over the level in 2000, the sales value of goods involved in merchanting rose by 7.2% in 2001 whereas re-exports fell by 4.6% over the same period.

Analysed by market, the Mainland was the largest destination for goods sold under the merchanting arrangement, accounting for 40.3% of the total value of goods sold under such arrangement in 2001.

This was followed by the United States (18.6%), Japan (7%), South Korea (4.5%) and the United Kingdom (3.3%).

As to the gross margin earned from merchanting, the mainland of China also contributed the most, accounting for 37.8% of the total gross margin earned in 2001, followed by the US (23.7%) and Japan (7.2%).

Merchanting is defined as services associated with the trading of goods which are purchased from and then sold to parties outside Hong Kong without the goods ever entering and leaving Hong Kong, while the Hong Kong entity engaged in merchanting takes ownership of the goods involved.

Merchandising services for offshore transactions are defined as the services of arranging on behalf of buyers/sellers outside Hong Kong the purchases/sales of goods according to their specifications (including multiple sourcing, marketing, contract and price negotiation, volume and sample procurement, shipment, inspection and arrangement of follow-up order).

The goods involved are purchased from and then sold to parties outside Hong Kong without the goods ever entering and leaving Hong Kong.