"Hong Kong: Platform for Partnership"

Introduction

Mr Leu, Mr Woo, distinguished guests, ladies and gentlemen.

It is always a great pleasure to be back in LA. I like the weather, I like the golf. I also like the Oscars.

A lot of talented Hong Kong people have done alright in Hollywood. John Woo, Jackie Chan and Chow Yun-Fat are household names here. Ang Lee's Crouching Tiger, Hidden Dragon, with its enormous Hong Kong involvement, is deservedly the most successful Chinese film ever.

I'd like to see us replicate in trade the inspired partnership Hong Kong and Hollywood have created in film. People from different places working and succeeding together: that is what Hong Kong is all about. I'm here because, as far as trade is concerned, I believe there is a blockbuster in the making.

China: a major opportunity

China's impending entry to the World Trade Organisation is today's most exciting trade opportunity. For Hong Kong it is another new dawn. For the first time, companies in Hong Kong can look seriously upon the mainland as a domestic market. Even without a domestic market to leverage, we have risen from 23rd to 10th rank in world trade since 1978. Imagine the possibilities now.

In the first five years after WTO entry, China's trade with the world is expected to double. This rapid expansion will need strong service support. With 85 per cent of Hong Kong's economy in services, compared with less than 40 per cent in the Chinese mainland, Hong Kong is a key external provider of services to China. The biggest problem I foresee is not having enough people to handle such an explosion in trade volume. We need more partners, more ideas, more products and more technology. That is a principal reason I am here.

A "triple" play

China's WTO entry makes possible a "triple play" opportunity for Hong Kong: manufacture on the mainland where costs are lower, sell to the world and, soon, sell to the mainland. Companies can concentrate their higher value-added work in Hong Kong where trade finance, management, logistics, transportation and support services are integrated with super efficiency.

This is the Hong Kong business model. It is comparable to the Michael Dell model because we deal only with the areas where we have a competitive edge. Everything else is outsourced or subcontracted out.

Entrepreneurs' haven

As a proven business model which, employing only 30-80 people, is low risk and has high value-creation upside, Hong Kong is a haven for the world's SMEs. With our super trade service platform and low taxes, Hong Kong is particularly appealing for US entrepreneurs. Let me explain.

First, Hong Kong is a super trade service platform, with our own customs regime as a critical link in the logistics chain. An excellent transportation and telecommunications infrastructure, along with our air and sea ports, provide seamless and dependable movement of goods. It is further supported by trade finance expertise from our banks. For US companies, Hong Kong's platform provides a complete infrastructure away from home, including free flows of information, transparency and the rule of law to underpin sound business practices.

Hong Kong also provides world-class, rigorously enforced protection of intellectual property. With a highly advanced legal regime, companies in Hong Kong can be assured of IPR protection. China, too, is growing acutely aware of IPR's importance. The Chinese leadership is committed to improving IPR protection and the enforcement of laws in the mainland.

Second, not only are Hong Kong's flat taxes reckoned to be the lowest in the Asia-Pacific, there is no sales tax, no capital gains tax, no dividend tax, no tax on overseas income and no estate duty tax on non-Hong Kong assets. Come to Hong Kong and you benefit from it. It is tailor made for business. Hong Kong is the place where you work hard, work smart and keep the profit you earn. It is the ultimate sanctuary for preserving capital and multiplying that endangered species, the individual entrepreneur. If you think carefully about it, no true entrepreneur can afford not to be there.

Three "ts"

These three "ts" – triple play (ie. opportunity), trade service platform (ie. machinery), and tax advantage (ie. incentive) – give Hong Kong a leading edge. We are a trading marketplace, a platform for international business transactions where Hong Kong entrepreneurs work with global partners to reach new customers.

This is not an empty claim. Hong Kong exists because we create wealth by creating value for our partners. In nine categories of consumer exports, Hong Kong is number one in the world. In a further seven we rank second or third. We have the world's busiest container port and busiest airport in terms of international cargo. Last year we did US$414 billion worth of total trade, which placed us 10th in the world.

Hong Kong's dynamic business environment

For Hong Kong, the past three-and-a-half years since reunification with China have been of crucial importance. The record shows that our way of life under "One Country, Two Systems" remains unchanged. Our freedoms, institutions, legal system and pro-business beliefs are strong. We have our own separate trade and customs territory.

Hong Kong's rebound from Asia's financial crisis has been remarkable. Our GDP grew by an estimated 10 per cent last year. Trade grew by nearly 18 per cent. Our banks, reserves and corporations are in good shape. Our international credit ratings are more or less at pre-crisis highs. Operating costs are down. Productivity is up and we are more competitive. In short, we are experiencing a new dynamism.

Already, international business partners are responding tangibly. A leading moving and logistics company in Hong Kong reports moving 60 per cent more executives to Hong Kong in 2000 than the year before -- and a further 50 per cent more in the first three months of this year. Hong Kong's leading English-language paper regularly has more than 100 pages of job listings on Saturdays.

On average at least one new regional headquarters per week was set up in Hong Kong in the last seven months of 2000. This brings the total of regional headquarters and offices to over 3,000 companies, more than any other city in the Asia-Pacific.

Among US companies using Hong Kong as their platform are California- based Charles Schwab, 3Com, and Oracle. They each have located their regional headquarters in Hong Kong because they see real opportunities for IT and the new economy, especially in the Chinese mainland.

Technology and trade

For Hong Kong, technology plays an important value-adding role as an accelerator and facilitator for trade and trade alliances. Technology will propel Hong Kong services to a new level.

Through the Internet, our companies are connecting more closely with their customers, as well as their suppliers. Technology is making the links of the supply chain almost invisible. It facilitates tighter co-ordination and brings products to market faster with reduced costs.

Besides using technology to add value, we can add value to technology.

Hong Kong, located at the nerve centre of regional networks, also offers the physical support of cyber fulfilment centres and an extensive distribution network. Together with marketing experience, packaging know-how and China savvy, Hong Kong can assist American IT companies with the development and application of technology-leveraged business models on the mainland and throughout Asia.

TDC: An international organisation

Earlier, I spoke of three "t's". I cannot not mention a fourth "T", the Trade Development Council – a critical component of Hong Kong's trade services platform. Think of TDC as an international organisation working for you. When you engage in Hong Kong, you are one of us, with full access to our services. With 48 offices throughout the world, including 11 in the mainland – which, by the way, is more than any other overseas trade promotion entity -- and five offices in the US, the TDC provides comprehensive trade services to its stakeholders. We have been doing this for nearly 35 years.

In e-commerce, TDC extends its services on the Internet through its trade portal tdctrade.com. Now at your doorstep, tdctrade.com gives entrepreneurs, world-wide, access to valuable trade connections, sourcing and exporting opportunities, market intelligence and business services. We are a non-profit organisation. This cyber marketplace now receives as many as 1.8 million hits a day, nearly treble the rate when I joined the Council six months ago. We would like to see all the chambers and trade associations in Southern California linked to us.

I am very excited by what is happening with the Hong Kong Association of Southern California. You are key players in a new global network of more than 7,000 SMEs with connections to Hong Kong. The TDC attended the birth of this network, the Federation of Hong Kong Associations Worldwide, at a meeting in Hong Kong last November. Soon, it will be an online platform, with links to tdctrade.com.

Conclusion: A platform for partnership

Not only does TDC work to expand the trade volume of existing players, we also aim to seriously multiply the number of players signing on to Hong Kong's platform.

Since I took on this role with the Trade Development Council last October, I have been to 14 cities in the US, Canada, Europe and Japan talking with SMEs. The response has been overwhelming. It is apparent from the dynamics and speed of change that, over the next decade, mid-sized companies will be the driving force of global business.

Hong Kong's SMEs are a case in point. They advance into new markets such as China by partnering with indigenous manufactures and distributors. In the future, entrepreneurs everywhere need to actively go city to city, region to region and sector to sector -- forging strategic partnerships and capturing opportunities by leveraging their strengths.

Hong Kong's SME are keen to work with multinationals and medium-sized companies on sourcing and export opportunities. They are equally keen to partner with American companies that have excellent products, brand names or proprietary expertise to bring to global markets. They are prepared to share their first mover advantage with China, which they earned over about 20 years from successes and failures.

The stage is set. The platform is ready. We invite you to sign on to Hong Kong's dynamic platform and partner with our entrepreneurs. TDC has an office here to help you. In trade, I believe Hong Kong and Southern California can be even bigger than Crouching Tiger, Hidden Dragon. I leave to your imagination how the tiger will spring and the dragon will be revealed. Thank you.

More News