TY  - JOUR
AU  - Hanson,Gordon H.
AU  - Feenstra,Robert C.
TI  - Intermediaries in Entrepot Trade: Hong Kong Re-Exports of Chinese Goods
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8088
PY  - 2001
Y2  - January 2001
UR  - http://www.nber.org/papers/w8088
L1  - http://www.nber.org/papers/w8088.pdf
N1  - Author contact info:
Gordon H. Hanson
IR/PS 0519
University of California, San Diego
9500 Gilman Drive
La Jolla, CA  92093-0519
Tel: 858/822-5087
Fax: 858/534-3939
E-Mail: gohanson@ucsd.edu

Robert C. Feenstra
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA  95616
Tel: 530/752-7022
Fax: 530/752-9382
E-Mail: rcfeenstra@ucdavis.edu
AB  - In this paper, we examine Hong Kong's role in intermediating trade between China and the rest of the world.  Hong Kong distributes a large fraction of China's exports.  Net of customs, insurance, and freight charges, re-exports of Chinese goods are much more expensive when they leave Hong Kong than when they enter. Hong Kong markups on re-exports of Chinese goods are higher for differentiated products, products with higher variance in export prices, products sent to China for further processing, and products shipped to countries which have less trade with China.  These results are consistent with quality-sorting models of intermediation and with the outsourcing of production tasks from Hong Kong to China.  Additional results suggest that Hong Kong traders price discriminate across destination markets and use transfer pricing to shift income from high-tax countries to Hong Kong.
ER  -