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HONG KONG: At the Koon Chun sauce factory, workers struggle to cover hundreds of thousands of bottles with new “Made in China” labels as the popular Hong Kong brand falls victim to spiraling diplomatic tensions.
Founded nearly a century ago, the family-owned factory has survived a world war, multiple economic crises and the slow weakening of Hong Kong’s manufacturing base as companies sought cheaper labor in mainland China.
It remains one of the most durable brands in the financial center, producing culinary staples like soy, hoisin and oyster sauces found in Chinese restaurants and kitchens around the world.
But as of November it can no longer put the words “Made in Hong Kong” on any product exported to the United States, part of Washington’s response to Beijing imposing a strict new security law on the restless city.
The new rules, announced by US Customs in July, came just two days before a Koon Chun shipment of 1,300 boxes was about to set sail for Atlanta.
READ: Hong Kong Commerce Secretary Says Will Discuss ‘Made in China’ Labeling With US – Report
Suddenly, the factory had to re-label all shipment and all other cargo the company planned to ship to the United States this summer.
“It was an impossible mission,” Daniel Chan told AFP from the factory his great-grandfather founded in 1928.
Products made in Hong Kong must be re-labeled ‘Made in China’ if destined for the US AFP / Anthony WALLACE
China covered Hong Kong with a new security law to crack down on the huge and often violent pro-democracy protests that convulsed the city last year.
Both Beijing and local authorities said it would have no impact on businesses and restore stability.
IMPOSSIBLE SITUATION
But the economic fallout has rippled through the recession-stricken center as authorities use the new powers to hunt down political opponents.
Agitated tech companies have refused to share data with local law enforcement, while some companies and universities struggle to attract international talent.
Banks have been caught in an impossible situation.
The United States has sanctioned key officials in China and Hong Kong in response to the law. But that same security law also prohibits companies from complying with any foreign sanctions regime.
Another victim has been the “Made in Hong Kong” brand, a label that companies can place on products made exclusively in the city.
Donald Trump has become increasingly aggressive toward China as he seeks re-election, and the crackdown on democracy supporters in Hong Kong has given him new weapons.
This summer, his administration declared that Hong Kong was no longer autonomous enough to justify special trade status. Instead, it would be treated like any other Chinese city.
Chan, who studied at Harvard in the United States, said he expected the political landscape to change in Hong Kong. But he never thought it would come so fast.
“I envisioned something closer to 2047, when Hong Kong officially doesn’t have One Country Two Systems,” Chan said, referring to China’s promise to allow Hong Kong to maintain key freedoms and autonomy for 50 years after Britain’s handover. in 1997.
The last few weeks have been a blur of activity at the sauce factory as its 90 employees try to adjust to the new reality.
POLITICAL FIASCO
On top of the makeshift stickers, new labels are being drafted for US exports: the large letters “Made in Hong Kong” replaced by a much smaller statement “Made in China.”
A lot of time has been spent rearranging storage for now delayed freight shipments.
Businesses received a respite when Hong Kong Commerce Minister Edward Yau said Washington had postponed the etiquette rule until early November, after the presidential election.
“This gives us a little time,” Chan said.
But he described it as “a short-term solution to this whole politically inspired fiasco.”
Yau has criticized the labeling change and threatened to bring the United States to the World Trade Organization.
He also emphasized that shipments made in Hong Kong to the US were worth just HK $ 3.7 billion (US $ 480 million) in 2019, less than 0.1 percent of the city’s gross exports.
Hong Kong-made cargo for the US market has been delayed by new Washington rules AFP / Anthony WALLACE
But that’s little consolation for Chan, who says that about half of his products go to the United States, where the brand is especially popular with the large Chinese diaspora in North America.
“I would say that we are the only company that is only based in Hong Kong and still does this type of mass production and ships it to the United States,” he said.
Looking ahead, Chan fears more international markets will follow the United States.
“In 20 years, in 30 years, people will only have ‘Made in China’ and forget about Hong Kong,” Chan said. “That is very sad”.
