Hong Kong – more relevant for your China business than ever
Misconceptions abound that Hong Kong is no longer relevant for a China business strategy – but more than ever Hong Kong offers Australian companies a viable platform for accessing sustainable business opportunities in the China market writes Phil Ingram.
Why waste your time in Hong Kong when you can go direct to Shanghai, Guangzhou or Beijing”, I hear people say.
“Hong Kong has lost its pivotal role for doing business in mainland China,” is also often repeated.
Well, in fact nothing could be further from the truth and today Hong Kong’s relevance to greater China’s economic development is more important than ever. Indeed, Hong Kong’s role is much more than just a platform for business in China. Its role has become more diverse and sophisticated, and Australians hoping to do business in mainland China would do well to leverage off the advantages that Hong Kong can deliver to their China strategies.
Let’s take a brief look at those advantages: First, Hong Kong business people have the perfect blend of knowing how to do business on the mainland and in the West. Hong Kong businesses were the first to do business in the mainland when the country opened up in 1978. They invested in the first export factories, the first international hotels, the first highways and so on. Hong Kong is still the largest foreign investor in the mainland, and not just in Shenzhen and the Pearl River Delta, but from the ski resorts of Heilongjiang to the wind farms of Yunnan, Hong Kong companies have their fingers in the growing Chinese pie.
They still own over 50,000 of the factories in the PRD churning out consumer products for the World. They have the confidence of the central government in Beijing and they have the financial clout, business acumen and experience to get things done on the mainland.
Choosing them as your trusted partners to navigate the mainland China market has to be a no brainer.
Second, Hong Kong’s British legacy of rule of law, free trade and free movement of capital and small government still form the basis of its enduring economic strengths. Needless to say the widespread use of English, the high standard of education and the business savviness of Hong Kong workers make it the best place to find good employees for international business in all of Asia. Moreover, while Hong Kong staff can travel freely in and out of mainland China, the same does not apply to mainland Chinese and foreigners. Not surprisingly, the Australian Chamber of Commerce in Hong Kong is the largest outside of Australia and the number of foreign companies using Hong Kong as their China and or Asian regional headquarters has almost doubled in the last decade.
Hong Kong is still the largest foreign investor in the mainland, and not just in Shenzhen and the Pearl River Delta, but from the ski resorts of Heilongjiang to the wind farms of Yunnan.
Thirdly, that Guangdong province continues to be the richest and most developed province in China and Shenzhen, a city of 12 million that didn’t exist 30 years ago, has the highest per capita income (yes, it’s higher than Shanghai and Beijing) did not come about by chance. Before 1978 South China was poorer and less industrialised than the rest of China and lacked coal, iron ore and other resources. It has been mostly due to Hong Kong’s influence and ever stronger involvement in the PRD region which continues apace – from new infrastructure links to funding for environmental clean-up. Most importantly, Hong Kong and Guangdong are at the forefront of the central government’s programs to shift the industrial structure of the country up the value added chain into high technology, research and development, advanced manufacturing and service industries.
Fourthly, the Closer Economic Partnership Agreement (CEPA) between Hong Kong and mainland China allows companies based in Hong Kong (including foreign owned companies) to have preferential access to the mainland and is being implemented sector by sector. The opportunities for foreign companies to carry on business in the mainland in areas that are normally restricted, such as some legal and professional services, are growing all the time. Finally, mainland Chinese businesses themselves are increasingly setting up in Hong Kong and using it as the centre for their overseas investments and international business operations which means they are requiring all kinds of services to support them.
This is creating many new opportunities for Australian financial, legal, accounting, training and other service providers.
Similarly, the 15 million plus mainland visitors who come to Hong Kong every year to shop and dine are noting what is trendy which makes Hong Kong a great window and test ground for products and services aimed at the China market.
There seems no doubt that Hong Kong will continue to play a pivotal role in China’s ongoing economic development which will continue to make the harbour city an important part for any Australian company developing a China business plan. ■
*Phil Ingram is the Senior Trade Commissioner, Austrade, and Deputy Consul-General (Commercial) at the Australian Consulate General in Hong Kong.