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Cooperation Results in Prosperity

"The economic cooperation between Beijing and Hong Kong has passed the period of courtship, and enter the stage of marriage," said Chen Gang, assistant director of the Beijing Foreign Trade and Economic Cooperation Committee at the closing ceremony of the Fifth Beijing-Hong Kong Symposium in 2001.

The marriage contract, an agreement called the Closer Economic Partnership Arrangement (CEPA), went into effect on January 1, 2004. Now, nearly two years have passed, and people cannot help but wonder how the marriage has been working.

Roger Chu, the director of Hong Kong Trade Development Council (HKTDC), Chinese Mainland, gave us his opinions.

Invest in North;Work in South

The approaching 2008 Olympic Games and the implementation of the CEPA did not go unnoticed by Hong Kong businessmen. Abundant benefits are seen in the services industries sector, such as in finance, capital construction, supply chain management and operations and others, which are much needed in Beijing.

On the other hand, CEPA has provided many new opportunities for Beijing enterprises, especially small- and mediated-sized firms, which can now have access to international markets.

"As China's capital, Beijing is the mainland's most influential city. This means, that if Hong Kong doesn't develop the Beijing market, it will be difficult to develop the overall mainland's market," Chu said. "Beijing can fully use the superiority of Hong Kong, to promote its famous brands to the world."

Nevertheless, there are still some hitches in the level of cooperation between Beijing and Hong Kong. Over the past 20 years, Hong Kong has made massive investments in Beijing. Last year, the number of Hong Kong's investment project in Beijing rose to 373, ranking first among non-mainland investors, while the contracted and actual investment amounts ranked second and third.

On the other hand, Beijing's investments in Hong Kong are obviously insufficient, Chu asserted, and added that the HKTDC will hold a series of activities to promote investment in Hong Kong by Beijing enterprises.

"Hong Kong will hold an International Small- and Medium-sized Enterprises Exhibition in November. I think this will be a great opportunity for Beijing enterprises."

According to the first government work report delivered by Donald Tsang Yam-kuen, the new chief executive of the Hong Kong Special Administrative Region, Chu said Hong Kong has a shortage of high-tech talents.

"The steady prosperity of Hong Kong's economy depends on the contribution of groups of qualified talents. Hong Kong welcomes talented people in the fields of science and technology from the mainland."

He also appealed to the government entities involved to offer as much convenience as possible, including fiscal subsidies and assistance with housing. Chu believes that importing talents, especially those from Beijing, is a good way to solve Hong Kong's trained-personnel shortage, especially in the area of high-technology.

Having a Date with CEPA

CEPA has been the main work focus of the Hong Kong Trade Development Council in recent years. To help enterprises in Hong Kong and Beijing to make the best use of trade and investing opportunities, the Hong Kong Development Council does what it can to add to the convenience of those engaged in trade.

In addition to advising Hong Kong businessman to timely act to seize opportunities arising from the CEPA, and apart from advising them to build up their own Web sites and to make arrangements to improve their partnerships, the HKTDC has held a forum for business circles to exchange opinions. Its Economic and Trade Information Center provides a lot of information about CEPA, including policy texts, research reports, professional publications, which provide strong support for both Hong Kong and mainland investors. What's more, the HKTDC supplies Hong Kong enterprises with "Chinese Commerce Counsellor Service." A series of seminars, training classes are also held.

The implementation of CEPA means a lot for Hong Kong. It allows Hong Kong's products and services to come onto the mainland much more easily and quicker. The framework of CEPA is based on WTO regulations and promises China made upon accession to the WTO. However, CEPA allows Hong Kong businesses even more favourable treatment than that given to other WTO members.

Chu said, "Hong Kong's product and service providers now approach the mainland as a domestic market instead of foreign market for the first time."

Mainland enterprises can now also use Hong Kong's resources to strengthen their own financial, management, material circulation, business and other services.

Though CEPA is designed with the businesses of mainland and Hong Kong in mind, businesses around the world also benefit from it. Chu said CEPA will be Hong Kong's new selling point abroad. Overseas enterprises will preferentially select Hong Kong as a base to extend their operations on the mainland. Thus, they can make use of the closer economic and trade relationship between Hong Kong and the mainland.

Hong Kong companies have benefited a lot in the first two phases of CEPA implementation. Results of third-phase consultations on CEPA will be announced soon. A total of 8,296 Hong Kong products had gained certificates of origin (based on their production site) by the end of September 30, 2005. And 861 have been approved to engage in services and/or trade. They are all taking advantage of the benefits arising from the CEPA.

2008 Beijing Provides "Gifts"

In addition the equestrian events of the upcoming Beijing 2008 Olympic Games, Beijing has brought Hong Kong new opportunities in the "gift" industry.

Hong Kong is world famous for its gifts and souvenir industries. Olympic chartered commodities offer Hong Kong companies a good chance to show what they can do.

During February and April this year, the HKTDC collected catalogues of Olympic products with good quality from tens of Hong Kong companies, and gave it directly to Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG).

The Hong Kong Trade Development Council had also held an exhibition of products and catalogues in the 39th Chinese Souvenirs and Craftworks Fair, which provided a platform for BOCOG and other buyers purchasing Olympic products to help Hong Kong companies seize a piece of the Olympic pie.

In 2004, BOCOG selected a Hong Kong company in a local gift exhibition to be involved in their business plan. Stimulated by this, the HKTDC also invited the marketing group of BOCOG to attend this year's exhibition so as to pick other partners. According to Chu, BOCOG has show an intention to cooperate with a number of Hong Kong companies.

Made in Hong Kong with Mainland Resources

Chu is also very much concerned about cooperation in cultural fields, which is one of the focuses of the Beijing-Hong Kong Symposium.

"Here, you can see many growing companies epitomizing thoughtfulness and intellect. But the local market can't feed them." He said, "Many mainland cities, however, can provide them with space for development." At present, Hong Kong is preparing to establish a professional committee to guide local companies as they attempt to enter the mainland market.

Hong Kong is a city renowned for films, with a high output. CEPA not only gives the Hong Kong film industry preferential treatment, but also provide favourable conditions for cooperation between Beijing and Hong Kong's film and television industries.

In March, most of the popular film and TV works graded in the Hong Kong International Film & TV Market reflected the idea of "made in Hong Kong with mainland resources." Since the Hong Kong film industry is familiar with both overseas and mainland markets, it helps them to overcome limitations in concepts and subjects in mainland films and on TV. On the other hand, there are more abundant resources for actors and other skilled personnel on the mainland than in Hong Kong. This provides a basis for cooperation between Hong Kong and Beijing to go smoothly. In Chu's opinion, Beijing has more advantages than other cities in terms of film and TV cooperation. He thinks Beijing, as a cultural centre of China, has a more developed in film and TV industry. In addition, Beijing can provide Hong Kong enough space to get clout on the mainland.

 "I believe that CEPA, by providing the Hong Kong film-and-TV industry with such favourable terms, has a purpose to consolidate resources of both sides as well as to inherit and pass on the Chinese culture to future generations. From this point, CEPA is not simply a written agreement." said Chu.