SOFT RETAIL MARKET IN THE US CONCERNS HONG KONG TRADERS

SOFT RETAIL MARKET IN THE US CONCERNS HONG KONG TRADERS

As he makes his annual whirlwind tour of the United States this week, Jack So, executive director of the Hong Kong Trade Development Council, will meet with some of the men and women who make the United States the largest importer of made-in-Hong Kong goods.

U.S. importers are talking about the softness of the U.S. retail market, and that worries manufacturers back home, he told reporters over lunch.Although many in Hong Kong say U.S. consumers are spending more cautiously since last October's collapse in stock prices, it is difficult to point to a single reason for the soft buying, he said.

He will take particular care to meet with folks in the U.S. toy industry.

When Worlds of Wonder Inc., the Hawthorne, Calif.-based toy giant, said recently it could not pay its bills, Sourcing International, one of its Hong Kong suppliers, went bankrupt.

Worlds of Wonder, now in Chapter 11 bankruptcy protection, was Sourcing International's sole client.

Hong Kong's overall domestic exports to the United States fell 7 percent last March from February, reflecting the second straight monthly decline. That figure also represented a 16 percent drop from March 1987.

March re-exports to the United States also fell, by 10 percent from February.

For all the talk in Hong Kong about soft U.S. retail sales, Mr. So said, the drop in exports to the United States is a deliberate move because of fear of a protectionist trade bill, pressure from Washington for a higher Hong Kong

dollar and President Reagan's decision to remove duty-free privileges from certain Hong Kong exports.

Hong Kong is looking more to sell its products in the chopstick belt (from Japan to Thailand), Mr. So said. While there is some push into Western European markets, we see Asia as our best bet, Mr. So said.

Already, Japan has picked up most of the sales diverted from the United States, he said.

Hong Kong also wants to avoid heavy reliance on European Community buyers, who may find themselves under new import obligations once the Community becomes an integrated market in 1992, Mr. So said.

We are concerned about such agreements and bilateral arrangements, he said, adding that they interfere with free trade.

In the United States, if the pending trade bill doesn't become law, he said, we may get something worse.

We can live with this bill. We are not in a position for punishment, he said, citing Hong Kong as a bastion of free trade in Asia.

Singled out for punishment in the 1,000-page bill that's expected to reach President Reagan's desk today are trading partners that play dirty by U.S. standards. These partners, for instance, dump or sell their goods in the United States cheaper than they do at home; pirate U.S. intellectual property; violate trade agreements; freeze U.S. goods out of their markets; or sell certain high-technology goods to communist countries.

The bill is almost certain to be vetoed by President Reagan, mainly

because it includes a provision requiring plants to give workers 60 days' notice prior to closing or making massive layoffs.

For Hong Kong, the proposed Textile and Apparel Act of 1987 that would restrict imports into the United States of textiles and apparel is worse than a trade bill with the plant closing provision, Mr. So said.

Hong Kong is one of the world's largest exporters of apparel, most of it coming to the United States.

Another concern, though we just don't want to make a fuss about it, is the loss of duty-free treatment for many Hong Kong exports to the United States under the Generalized System of Preferences, Mr. So said.