SPECIAL REVIEW A REVIEW ON THE PERFORMANCE OF THE STORAGE, COMMUNICATIONS, FINANCING, INSURANCE AND BUSINESS SERVICES SECTORS

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1 A REVIEW ON THE PERFORMANCE OF THE STORAGE, COMMUNICATIONS, FINANCING, INSURANCE AND BUSINESS SERVICES SECTORS This article analyses the performance and operating characteristics of the economic sectors covered by the Annual Surveys of Storage, Communications, Financing, Insurance and Business Services conducted by the Census and Statistics Department for the years to. Hong Kong Monthly Digest o/statistics July

2 1. Introduction 1.1 The Census and Statistics Department conducted surveys for 1980 and annually for to, whereby information were collected on the performance and operating characteristics of Hong Kong's storage, communications, financing, insurance and business services sectors. The types of business covered by the various sectors in the survey are given in the Appendix. 1.2 The results of the 1980 round of the survey have been published in the October issue of the Hong Kong Monthly Digest of Statistics. This article depicts the performance and operating characteristics of the sectors from to, based on statistics obtained from the Annual Survey of Storage, Communications, Financing, Insurance and Business Services for these years. 1.3 Paragraph 2 of this article presents the results of the surveys on the storage, communications, financing and business services sectors. Paragraph 3 deals with the insurance sector. 2. Performance of the storage, communications, financing and business services sectors 2.1 In terms of number of establishments, the communications and the business services sectors recorded the largest growth of 116 and 115 respectively from to. On the same basis of comparison, the financing sector rose by 8 while the storage sector decreased slightly by I. Consequently, the number of establishments in the business services and the financing sectors still dominated among the sectors in. However, the number of establishments in the communications sector exceeded those in the storage sector. The number of establishments and persons engaged, business receipts and other income together with the value added of these sectors in and are shown in Table 1. TABLE 1: NUMBER OF ESTABLISHMENTS AND OF PERSONS ENGAGED, BUSINESS RECEIPTS AND OTHER INCOME, AND VALUE ADDED ANALYSED BY SECTOR, AND Storage Communica- Business tions Financing Services No. of establishments increase -I No. of persons engaged increase Business receipts and other income 824 1,388 4,514 12,142 6,966 9,955 41,077 19,026 increase Value added 408 2,770 2,693 2, ,834 5,831 9,470 increase As compared with, the number of persons engaged in the business services sector in went up by 84. This was followed by the financing and the communications sectors at 42 and 14 respectively. The number of persons engaged in the storage sector dropped by II during to. As a result, the business services and the storage sectors remained having, respectively, the largest and the smallest number of persons engaged among the sectors in. On the other hand, the number of persons engaged in the financing sector surpassed that in the communications sector in. 2.3 Comparing with, business receipts and other income of the financing sector increased by 238. This was followed by the business services (173 ), communications (121 ) and storage (68 ) sectors. The different growth rates, however, did not alter the order in magnitude of business receipts and other income generated by the financing, business services, communications and storage sectors in and. In terms of value added, the business services sector went up by 216 during to. The financing and the communications sectors grew by 117 and 111 respectively. The storage sector recorded the smallest growth at 65. The contributions of the different sectors to the total value added of the sectors as a whole remained in the same order in and. The business services sector accounted for the largest share, the communications sector and the financing sector contributed almost the same, while the storage sector contributed least to the total value added of the sectors. 100 Hong Kong Monthly Digest oj Statistics July 1989

3 2.4 Business receipts and other income as well as value added of the sectors from to and their average percentage increases per annum during the period are shown in Table 2 and Table 3. TABLE 2: BUSINESS RECEIPTS AND OTHER INCOME ANALYSED BY SECTOR, to Year Storage Communications Financing Business Services 824 4, ,142 6, ,253 13,982 7, ,226 16,956 9, ,548 18, , ,097 8,024 26,766 14,585 1,388 9,955 41,077 19,026 Average percentage increase per annum * The "Average percentage increase per annum" figures in this and other tables in this article are calculated in terms of geometric means and the formula used for computation is: [ 5.Ji 987 figure/ figure - I] x 100 TABLE 3: VALUE ADDED ANALYSED BY SECTOR, TO Year Storage Communica tions Financing Business Services 408 2,770 2,693 2, ,056 2,269 3, ,479 3, 144 4, ,225 3,147 5, ,895 5, 120 7, ,834 5,831 9,470 Average percentage increase per annum Table 4 shows the average annual compensation per employee of the four economic sectors in and and their corresponding growth during the period. TABLE 4: AVERAGE ANNUAL COMPENSATION PER EMPLOYEE ANALYSED BY SECTOR, AND Storage Communica- Business tions Financing Services No. of employees Compensation of employees , 118 1, 185 1, ,970 3,687 5,255 A verage compensation per employee $ $ 36,000 62,000 58,000 68,000 52,000 89, ,000 88,000 Total percentage increase from to Average percentage increase per annum l Hong Kong Monthly Digest of Statistics July

4 2.6 From to, average compensation per employee for the financing sector went up by 113 and was the highest among the four sectors in both and, at $68,000 and $145,000 respectively. During the same period, average compensation per employee for the storage sector rose by 72 from $36,000 to $62,000. This was followed by the business services sector (69) and the communications sector (53), which increased from $52,000 to $88,000 for the former and from $58,000 to $89,000 for the latter. 2.7 The expenditure pattern of the various sectors in and is presented in Table 5. TABLE 5: BUSINESS RECEIPTS AND OTHER INCOME, EXPENSES AND GROSS SURPLUS ANALYSED BY SECTOR, AND Storage Communications Financing Business Services Operating expenses ,727 4, , ,133 11, , Compensation of employees ,118 1, , ,970 3, , Costs of goods for sale N.A. N.A. 45 N.A. 1 N.A N.A. N.A N.A. 6 N.A Gross Surplus ,623 6, , ,302 26, , Business receipts and other income 0/ ,514 12, , , ,955 41, , Note: The figures are to express the various statistics as a proportion of "business receipts and other income" in the respective sectors for a given year. N.A.-Not Applicable 2.8 Among the four economic sectors, the financing sector expended the smallest proportion of business receipts and other income in both and. Its operating expenses accounted for 34 in and declined to 28 in, and its compensation of employees dropped slightly from 10 in to 9 in. As a result, the proportion of business receipts and other income as gross surplus increased from 56 to 63 from to. 2.9 For the communications sector, its operating expenses and compensation of employees as proportions of the business receipts and other income decreased during to. Though the cost of goods for sale rose from 1 to 6, gross surplus increased from 36 to 43 of business receipts and other income from to For the business services sector, compensation of employees as a proportion of business receipts and other income went up from 24 in to 28 in. However, the proportions for operating expenses and cost of goods for sale both dropped from to. Thus the proportion for gross surplus increased slightly from 19 to 22 during the same period. 2. li The storage sector, on the other hand, showed a decline in the proportion of business receipts and other income as gross surplus from 23 in to 20 in. This was mainly attributable to the increase in the proportion for operating expenses which accounted for 59 and 63 of business receipts and other income in and respectively. 102 Hong Kong Monthly Digest of Statistics July 1989

5 3. Peformance of the insurance sector 3. 1 The number of establishments and persons engaged, net premiums received as well as income and receipts of each trade group in the insurance sector in and, together with the corresponding growth during the period are shown in Table 6. TABLE 6: NUMBER OF ESTABLISHMENTS AND OF PERSONS ENGAGED, NET PREMIUMS AND INCOME AND RECEIPTS ANALYSED BY TRADE GROUP IN THE INSURANCE SECTOR, AND Trade Group Insurance Agents, General Life Brokers and Other Insurers Insurers Insurance Services No. of establishments increase No. of persons engaged increase Net premiums N.A. 2,189 3,448 N.A. increase N.A. Income and receipts 3,589 1, ,47 1 4,549 1,058 increase N.A.-Not Applicable 3.2 As compared with, the number of insurance agents, brokers and establishments engaged in other insurance services grew by 83 to in. Over the same period, the number of life insurers rose by 27 to 38 while that of general insurers dropped by 5 to 145 in. 3.3 In terms of number of persons engaged, life insurers increased by 300 from to. With persons engaged in, life insurers had the largest workforce in the sector though its number of establishments was the smallest, indicating a much larger number of persons engaged per establishment than the other two trade groups. Compared with, persons engaged in the trade group of insurance agents, brokers and other insurance services rose by 71 to in, while those in general insurers dropped by 9 to Regarding net premiums received, which was defined as gross premiums received less premiums ceded as well as commissions and brokerages paid, life insurers outstripped the performance of general insurers from to. Increased by 318 during the period, net premiums received by life insurers amounted in to $3,448 million which exceeded those received by general insurers. 3.5 Income and receipts generated by life insurers grew by 280 from to. This was followed by insurance agents, brokers and other insurance services (130) and general insurers (80). Nevertheless, general insurers still accounted for the largest proportion of total income and receipts of the sector in. 3.6 Income and receipts generated by each trade group from to and their average percentage increases per annum during the period are shown in Table 7. Hong Kong Monthly Digest oj Statistics July

6 TABLE 7: INCOME AND RECEIPTS ANALYSED BY TRADE GROUP IN THE INSURANCE SECTOR, TO Trade Group Year General Insurers Life Insurers 3,589 1, ,970 1, ,496 1,874 Insurance Agents, Brokers and Other Insurance Services ,393 2, ,631 5,128 6,471 4,549 Average percentage increase per annum +l , Table 8 presents the net premiums received and net claims incurred of general and life insurers from to and their corresponding growth during the period. TABLE 8: NET PREMIUMS AND NET CLAIMS ANALYSED BY TRADE GROUP IN THE INSURANCE SECTOR, TO Trade Group General Insurers Life Insurers Year Net Premiums Net Claims Net Premiums ,192 1,279 1, ,073 1,35 1 1, ,678 1,679 1, ,786 1,746 3,052 2,189 2,167 3,448 Total percentage increase from to Average percentage increase per annum Net Claims , Net claims was defined as gross claims incurred less recoveries from salvage, subrogation and reinsurers. 3.9 During to, the net premiums of general insurers on average rose at 18 per annum, which was close to the average annual growth of its net claims incurred at 17. The corresponding increases for life insurers during the period were 33 and The average annual compensation per employee in and analysed by various trade group in the insurance sector is given in Table Hong Kong Monthly Digest of Statistics July 1989

7 TABLE 9: AVERAGE ANNUAL COMPENSATION PER EMPLOYEE ANALYSED BY TRADE GROUP IN THE INSURANCE SECTOR, AND Trade Group Insurance Agents, General Life Brokers and Other Year Insurers Insurers Insurance Services No. of employees Compensation of employees Average Compensation $ 56,000 56,000 60,000 per employee $ 96, ,000 91,000 Total percentage increase from to Average percentage increase per annum In, life insurers had the highest average compensation per employee, at $112,000, which was doubled that in. This was followed by general insurers ($96,000) and insurance agents, brokers and other insurance services ($91,000). Their growth rates between and were 71 and 52 respectively. Hong Kong Monthly Digest of Statistics July

8 Appendix SECTOR STORAGE COMMUNICATIONS TYPES OF BUSINESS COVERED Storage and warehousing Radio paging services Telephone, telegraph, courier and other communications services FINANCING Loans, mortgages, instalment credit, finance leasing, bill discounting companies and pawnshops Investment and holding companies* Stock and share, commodity futures and gold bullion brokers and dealers Money changers, foreign exchange brokers and dealers and other miscellaneous financial institutions INSURANCE General insurers Life insurers Insurance agents, brokers and other insurance services BUSINESS SERVICES Legal services Accounting, auditing and bookkeeping services Data processing and tabulating services Advertising, public relations and market research companies Management and consulting, employment, secretarial, security, designing, technical and other miscellaneous business services Rental of machinery and equipment * In the financing sector, value added was not compiled for investment and holding companies due to the special features of their business operation. Hence, total value added for the sector in this article did not include that of investment and holding companies. Caution should therefore be taken when interpreting value added figures for this sector. 106 Hong Kong Monthly Digest of Statistics July 1989