The Mid-Autumn Festival, which falls on September 18 this year, is traditionally a time for family reunions. It's a happy occasion where people feast on scrumptious mooncakes. It is also a time when mooncake manufacturers in Hong Kong scramble for market share on the mainland. According to a Hong Kong Commercial Daily report on Tuesday, marketing tactics include opening more sales outlets on the mainland, updating and jazzing up recipes, and novel packaging. Anything to drive up sales.

This year, mooncake makers have a bit of a leg up thanks to the implementation of the second phase of the Closer Economic Partnership Arrangement (CEPA). Phase Two of CEPA, which came into force on January 1, removes all tariffs on Hong Kong goods entering the mainland.

The zero-tariff deal will help drive mooncake prices down on the mainland, according to the public relations department of Maxim's Group, the largest catering company in Hong Kong. A 1999-2004 report by marketing information company AC Nielson ranked Maxim’s first among Hong Kong's mooncake makers in terms of sales volume for seven successive years.

Before the CEPA kicked in, tariffs for mooncakes were as high as 30 percent. Without the tariff now, prices can be cut down to about 100-200 yuan (US$12.35-24.7) per package, or down by a third, which will help stimulate sales.

However, transportation costs and the 17 percent value-added tax charged by the mainland mean that mainland prices will still be higher than in Hong Kong, Maxim's said.

Undeterred, Maxim's is upping the ante in the mooncake race. It has developed new cartoon packaging to cash in on the Disney fever. It has also introduced new flavors to its range of mooncakes, including tiramisu and wasabi.

Moreover, Maxim's will be providing a delivery service, even for mainland customers. The company expects an enormous jump in sales this year.

Sharing a different view is Li Yingquan, manager of Wing Wah Cake Company, one of Hong Kong's mooncake stalwarts. Li said the CEPA has a limited effect on the company as Wing Wah has production facilities on the mainland. Wing Wah entered the mainland market as early as 1996 and to date has a chain of 15 shops.

Wing Wah said its Hong Kong workshops serve the local and overseas market while the mainland workshops cater to mainland customers.

That's not to say that Wing Wah isn't jumping on the marketing bandwagon. To attract mainland travelers to Hong Kong and to encourage Hong Kong clients to send gifts of mooncakes to friends and family on the mainland, Wing Wah will be selling gift vouchers at HK$208 (US$26.76) each.

Li predicts a double-digit increase in sales volume for Wing Wah this year.

CEPA is an ongoing trade agreement between the mainland and Hong Kong, and between the mainland and Macao. It adopts a building-block approach that provides a mechanism for further liberalization measures.

Enhanced trade liberalization as part of the second phase of CEPA was agreed upon on August 27, 2004. The first phase of CEPA was implemented on January 1, 2004.

To date, 1,087 Hong Kong goods enjoy tariff-free preference under CEPA's second phase.

(China.org.cn by Guo Xiaohong August 17, 2005)