How Hong Kong Can Unlock the Real Value of Its Asean Trade Boom

Hong Kong’s economy has been riding the wave of growing trade with its Southeast Asian neighbors. However, beneath the surface lies a sobering reality: most of the value remains elsewhere. The city plays a crucial role in facilitating cross-border transactions and corporate expansion but struggles to capture more than a thin slice of the transaction pie.

The Association of Southeast Asian Nations (Asean) has been Hong Kong’s second-largest trading partner since 2010, with merchandise trade reaching HK$1.67 trillion in 2025. This figure accounts for 15.3% of the city’s global goods trade, and Hong Kong’s direct investment stock in Asean exceeded HK$670 billion at the end of 2024. These numbers suggest a mature economic relationship but conceal an uncomfortable truth: enormous trade volumes do not necessarily translate to significant profits.

The problem lies in the nature of re-exports through Hong Kong. Goods can change hands multiple times before reaching their final destination, with most of the value remaining with the original seller or other intermediaries. The real money is made not in ports, freight forwarders, insurers, and banks but in services surrounding goods: trade finance, treasury management, insurance, intellectual property, legal contracts, arbitration, supply-chain data, and regional headquarters.

To capture more value from its Asean trade, Hong Kong needs to shift its focus from moving containers to attaching high-value services to each transaction. This requires a fundamental transformation in how businesses operate within the city’s economy. Companies must learn to add value beyond logistics and start providing sophisticated services that generate significant margins.

Hong Kong has been trying to upgrade its economic model for years with limited success. The city’s first five-year plan, announced by Chief Executive John Lee Ka-chiu in August, includes a nod to Asean as a key player in this effort. However, the central question remains: who will capture the value created by growing trade between Hong Kong and Asean?

To address this, policymakers must rethink their approach to economic development. Rather than relying on infrastructure investments and tax incentives, they should focus on creating an ecosystem that fosters innovation and entrepreneurship. This means investing in education and training programs that equip workers with skills needed for high-value services, as well as supporting startups and small-to-medium-sized enterprises (SMEs) that can provide these services.

The stakes are high, not just for Hong Kong’s economy but also for its position within the global trade landscape. As the city competes with other financial hubs like Singapore and Shanghai, it must demonstrate its ability to add value beyond logistics. The alternative is a continued reliance on re-exports, which will only serve to further erode Hong Kong’s economic competitiveness.

Unlocking the true value of Hong Kong’s Asean trade boom requires more than just numbers; it demands a fundamental shift in how businesses operate within the city’s economy. By focusing on high-value services and creating an ecosystem that supports innovation and entrepreneurship, Hong Kong can finally capture its share of the profits generated by growing trade with its Southeast Asian neighbors.

The journey will be long and arduous, requiring policymakers to challenge entrenched interests, businesses to adapt their models, and workers to acquire new skills. Yet, if Hong Kong succeeds in capturing more of the value created by its Asean trade boom, it will not only boost its economy but also cement its position as a major player in the global trade landscape.