Hong Kong Soars

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Hong Kong's trading companies have moved beyond consumer goods. Noble Group, founded in 1987 in Hong Kong by a former steel trader named Richard Elman, sources commodities ranging from soybeans to petrochemicals to aluminum. A Chinese steel mill searching for a reliable supply of iron ore can hire Noble to find it, deliver the ore and then market the steel made from it. For some products, Noble controls the entire supply chain--for example, it grows oilseeds in Argentina, stores them in Noble-owned warehouses, ships them to China from Noble-controlled Argentine ports, processes and refines them in Noble factories on the mainland and delivers the oil to customers. With 72 offices in 42 countries, Noble is the second largest coal merchant in the world and a major exporter of Asian-grown coffee. One of its latest lines is ethanol, an alternative fuel made from agricultural products that is becoming more attractive as oil prices rise. Noble is a large investor in ethanol factories in the U.S. "We have to constantly reinvent ourselves since markets are always changing," says Elman.

Similarly opportunistic, some Hong Kong--based manufacturers are now remaking themselves by providing supply-chain-management to big customers. TAL Apparel, which makes 1 out of every 7 dress shirts sold in the U.S. at its factories in Asia and North America, nimbly adjusts production for major customers like JCPenney based on weekly sales results. In a practice linked to the "fast fashion" trend, retailers can send orders to TAL each week. TAL then ships out the product in four days or less--emergency orders can be rushed through in a mere four hours. TAL sorts the goods into boxes for shipment to each individual retail store, rather than to a warehouse. "We don't call ourselves a manufacturing company," says TAL managing director Harry Lee. "We call ourselves a service provider."

Nimble isn't cheap. Firms such as Li & Fung and Noble have invested millions in computer systems that make it possible to micromanage logistics as never before. Noble has a ship-management division that oversees the operations of 150 vessels from the comfort of a Hong Kong office. Software tracks the fleet on an onscreen map, with the position of each vessel marked by an icon. Click on one, and the computer calls up every scrap of data you can imagine--the ship's current route and historic movements, its cargo, entire crew roster and maintenance schedule. One ship, the program tells you, is dropping off 6,000 tons of fruit in Rotterdam, another is discharging steel products in Tanzania, while yet another is loading methanol in Malaysia. Port operator Hutchison Whampoa has an equally impressive system to help run its Hong Kong port. Incoming ships send data on their cargoes to Hutchison's operations center onshore. That information then gets fed through computers that optimize the loading and unloading. Hutchison has spread the technology. With 44 ports in 22 countries, including Panama, Germany and Egypt, it is now the world's largest port operator. Hong Kong outfits "are exporting expertise and management to other countries," says John Meredith, group managing director of Hutchison's port business. As Hong Kong's economy becomes increasingly knowledge-based, transferring know-how globally is "Hong Kong's fastest-growing occupation," he says.