Local businesses targeting the rapidly expanding Chinese market would do well to look at Hong Kong, according to Hong Kong Economic and Trade office director Jenny Wallis.
Business urged to take a closer look at Hong Kong
Local businesses targeting the rapidly expanding Chinese market would do well to look at Hong Kong, according to Hong Kong Economic and Trade office director Jenny Wallis.
Mrs Wallis, who addressed the WA Hong Kong Australia Business Association in Perth last week, said Hong Kong had bounced back from recent economic and political problems and was increasingly being seen as an important link to mainland China.
“Many see China as the great economic story of this century. There is no doubt in my mind that Hong Kong is an integral part of that story,” Mrs Wallis said.
Hong Kong has suffered from a range of problems in recent years, among them the Asian financial crisis, the avian flu, and some controversial political issues, while only a year ago it was reeling from the devastating effects of Sars.
Since then, however, the economic and financial picture in Hong Kong has been remarkably transformed, Mrs Wallis said.
“Hong Kong has experienced a V-shaped recovery, with a resurgence of GDP growth, strong trade numbers, a powerful comeback by the tourism sector, a decline in deflation and unemployment, a robust stock market performance, a reinvigorated property market and, above all, a revival of consumer confidence and spending,” she said.
As well as Hong Kong’s return to prosperity, Mrs Wallis said there had been two recent developments that that were a signs of the strengthening ties between Hong Kong and China.
Two weeks ago, nine southern Chinese provinces, as well as Hong Kong and neighbouring Macau, met for the Pan-Pearl River Delta Regional Co-operation and Development Forum.
Ms Wallis said the forum, which had become known as the ‘9 plus 2’ – nine mainland provinces and the two special administrative regions of Hong Kong and Macau – was a good example of the growing integration of the economy at the southern end of China.
The grouping has a combined GDP of $US630 billion and a population of more than 450 million.
At the forum local authorities said they envisaged Hong Kong, already an international services hub for logistics and finances, acting as a link for a region that was fast becoming one of the world’s key manufacturing bases.
Almost 90 per cent of Hong Kong’s economy is service driven.
The economic revival and regional integration was bound to be accelerated by a free-trade agreement between Hong Kong and the mainland, which came into force on January 1 this year, Mrs Wallis said.
This deal is better known as the Mainland China/Hong Kong Closer Economic Partnership Arrangement (CEPA).
So what is in this for Australian business or Australian businesses already in Hong Kong?
Mrs Wallis said CEPA now meant that 90 per cent of Hong Kong’s domestic exports to the mainland were tariff free.
This included manufactured goods and service industries including advertising, accountancy, legal and financial services and telecoms.
Mrs Wallis said CEPA gave Hong Kong-registered firms a two-year head start on overseas competitors, which, under China’s WTO commitments, will not gain the same opportunities until 2006.
With the signing of this deal, many commentators and analysts see CEPA strengthening Hong Kong’s traditional role as the window to China.
“The good news for Australian firms based in Hong Kong is that we have a very liberal interpretation of what constitutes a ‘local’ or ‘foreign’ firm, and this is reflected in the new Arrangement,” Mrs Wallis told WA Business News.
“Whether a company is foreign-owned or local, it can take advantage of CEPA, provided it’s incorporated in Hong Kong and does substantive business there.”
