Hong Kong remains key to mainland's bright future

Opinion / Liang Hongfu

 Hong Kong remains key to mainland's bright future
By Liang Hongfu (China Daily)
Updated: 2006-02-21 06:10

The publishing of the latest report by the Commission on Strategic
Development has raised the curtain for the great debate on Hong Kong's
role in China's future progress after 25 years of rapid economic growth.

In those past 25 years, Hong Kong was a major driving force behind the
industrialization of the Pearl River Delta region, as it provided the
much-needed capital and expertise. In addition, the Hong Kong stock
market has been the single most important source of capital to thousands
of enterprises and banks from around the nation.

Other than manufacturing, many Hong Kong companies have invested heavily
in mainland ports, property developments and other infrastructure
facilities. In recent years, Hong Kong retailers of personal health care
products, garments and cosmetics have made significant inroads into the
mainland market.

Meanwhile, more and more mainland enterprises are opening branches and
offices in Hong Kong to explore opportunities for overseas expansion.
Thousands of mainland business executives have been dispatched to Hong
Kong to learn first-hand about Western management styles and market
practices.

As the mainland is entering a new phase of development, many business
leaders are pondering what role Hong Kong can play so that it can remain
relevant in the fast changing economic landscape. Hong Kong has thrived
in recent years largely by meeting the needs for economic development on
the mainland.

Those needs, arising from industrialization, were relatively simple and
straightforward. Thanks to its geographical location and cultural links,
Hong Kong was well positioned to take advantage of the mainland's
phenomenal growth.

But the needs of the mainland have changed in line with the new emphasis
on the development of the services sector. Last year, the central
government made it known that the focus has been shifted to attracting
direct foreign investment in the services sector rather than the
manufacturing sector.

This policy should be a boon to Hong Kong service providers, especially
those in such areas as logistics, transportation, real estate management
and a range of professional services, including accounting, management
consultancy, architecture and civil engineering. Another area where Hong
Kong can make a great contribution is in trade servicing.

There are no shortage of Hong Kong companies that have accumulated a
wealth of experience and expertise in the higher value added front end,
design, finance, branding and marketing, and the back end, packaging and
logistics, of the manufacturing process. This is the expertise that is
sorely needed by many mainland enterprises that are keen to move up the
value added chain from the production segment of the process.

More important, Hong Kong companies must look beyond the neighbouring
Pearl River Delta region for new opportunities. They should keep in mind
that the biggest demand for services will come from the large State-owned
enterprises in the Yangtze River Delta area and further north.

These industrial behemoths follow a corporate culture that is largely
alien to Hong Kong companies, which have been dealing mainly with the
many smaller and nimbler private enterprises and co-operatives that
dominate the south. But it is worth the effort to overcome the steep
learning curve in forging a business relationship with these enterprises.

The Hong Kong government has done a credible job in winning the trust of
and assistance from the central government. In future, the Hong Kong
government should direct its Beijing office to put additional efforts
into establishing closer relationships not only with the bureaucrats in
the government but also those managing the large State-owned enterprises.
The objective is to introduce to the mainland executives what Hong Kong
can offer in design, packaging, branding and marketing to help boost
overseas sales of made-in-China products under Chinese brand names.

Email: jamesleung@chindaily.com.cn

(China Daily 02/21/2006 page4)

Hot Talks

 President's List of Do's and Don'ts for China

 How important is 'Face' (Mian Zi) to everyone?

 The Woeful Health of the Nation

 China, USA should be natural allies

 Beijing's leverage over Taiwan

Most Commented/Read Stories in 48 Hours

20071124 http://www.hellomandarin.net