With Hong Kong’s abolishment of import duties on beer and wine, distributors are hoping to use the port-city as a logistics center for penetrating the vast China market. By Manik Mehta, AJOTInternational shippers are closely monitoring developments in Hong Kong whose administration is intensifying its efforts to create a wine hub, prospects for which have considerably increased following the abolition of import duties on wines and liquors. Given its well-developed logistics infrastructure, with a wide distribution network extending into the huge mainland China market, Hong Kong has all the “positive attributes” that make qualify it as a hub for the wine trade. Indeed, the transport and distribution of wine could also lead to the establishment of specialized logistics companies and infrastructure dedicated to the mass transportation of wine bottles. These views were voiced by a leading Hong Kong based logistics expert who was recently in New York with a delegation of the Better Hong Kong Foundation, which was created to bolster public confidence in Hong Kong’s economy and social character. “Ever since the Hong Kong government abolished import duties on wine and beer on February 27, there has been a flurry of activities amongst importers and distributors to work out transportation to the mainland market,” James E. Thompson, the Hong Kong based founder and chairman of the Crown Worldwide Group, said in an interview with the American Journal of Transportation in New York. Hong Kong slashed its import duties on wines to 40% by March 2007 and now to zero. Thompson envisages that with the elimination of import duties, more foreign wine businesses will open offices or expand their existing activities in Hong Kong. “There will also be pressure on prices of fine wines and Hong Kong’s wine storage facilities will boom resulting from the need to create special wine cellars,” he predicted. Thompson said that by removing import duties, Hong Kong had positioned itself to become the world hub of fine and rare-wine sales. Historically, a large part of wines purchased by Hong Kong’s collectors had been kept overseas. With the abolition of duties, these wines may now be brought back to Hong Kong without penalty. Hong Kong’s wine industry predicts that Asia, excluding Japan, will spend around US$ 7 billion on table wine; this will be account for about 7% of the global wine market. “Hong Kong will play a key role in the global wine shipping in the future as a result of its import liberalization,” Thompson said. The forecast for growth in wine imports into Asia is about 10%-20% in the next five years. While announcing the abolition of import duties on wines, Hong Kong’s Financial Secretary John Tsang, had explained that his government had been studying proposals from the strong wine lobby to abolish duties and related administrative costs, which a Hong Kong wine lobby claimed were among the highest in the world. The government said that it stands to lose revenue of about US$72 million a year with the removal of the import duties on wines; Hong Kong Wines and Spirits Industry Coalition, has been pointing to the direct benefits to the local and international wine businesses, as well as to the indirect spillover effects to the economy through industries such as transportation, logistics, etc. According to the coalition, Hong Kong is set to be a US$5 billion market place for wines and liquors. These include sales, auctions, storage and cellaring of fine wines. Although London and New York are the world’s top wine centers, 40% of the demand for wines originates from buyers with strong ties to Hong Kong and mainland China. China is the biggest importer in terms of volume, and is set to import US$ 870 million worth of wines by 2017, with Hong Kong facilitating the shipments. Hong Kong’s shippers tell the story of the wine boom by citing the instance of Crown Wine Cellars, a leading wine-cellaring facility in Hong Kong. The zero tax announcement, accor