Hong Kong enterprises have made a gorgeous turn in ten years

In the past ten years, we have witnessed great changes in the corporate world in mainland China. However, in the same ten years, what is the survival and development of Hong Kong enterprises after the handover? Are they facing unprecedented development opportunities or challenges brought about by fierce competition? How should they and mainland enterprises coexist? With all kinds of questions, "CEConline" interviewed Ms. Li Jiayin, director of the All-China Manufacturers' Association. Her answer gave us a more comprehensive understanding of Hong Kong enterprises before and after the return to China ten years ago.

CEConline: How has Hong Kong's economy changed and developed in the ten years since its return?

Li Jiayin: There are two turning points in the Hong Kong economy.

1998 was the first turning point. In the mid-1990s, the Internet and the "information superhighway" began to emerge in Western countries such as the United States. But Hong Kong realized this later and missed the opportunity to catch the first express train of the new economy. In 1998, the third post-war economic restructuring of Hong Kong began to be fully activated. This transformation focuses on innovative technology and high value-added industries. Information technology and biotechnology have become the leading industries in Hong Kong's new economic development.

China's entry into the WTO is the second turning point. After China's accession to the WTO, the space for economic and trade cooperation between Hong Kong and the Mainland has suddenly opened up, and economic and trade relations have continued to deepen. The drastic reduction of commodity tariffs and the removal of various trade barriers are conducive to the growth of import trade, and also help foreign businessmen operating in the Mainland to reduce the cost of imported raw materials. The rapid expansion of domestic and foreign trade has also strengthened Hong Kong's status as an international trade and shipping center.

In addition, after China's accession to the WTO, more and more foreign-funded enterprises have entered the mainland market through Hong Kong, and Hong Kong's role as a platform for economic and trade cooperation between the mainland and overseas has been further strengthened. In the past two years, the number of overseas companies opening regional headquarters and offices in Hong Kong has been increasing day by day. Many foreign companies take advantage of Hong Kong's business experience in the mainland market and Hong Kong's advantages in the service industry to set up branch offices in Hong Kong to manage operations in the mainland. There are also many foreign companies that are using Hong Kong's developed financial market to finance operations in the mainland, and use Hong Kong's well-established logistics facilities to sell mainland products overseas.

CEConline: After the return of Hong Kong, what opportunities will Hong Kong enterprises have?

Li Jiayin: The most important feature of Hong Kong enterprises is that there are a large number of small and medium-sized enterprises, more than 300,000, accounting for 98% of the total number of Hong Kong enterprises. Small and medium-sized enterprises (SMEs) have always been the main force for Hong Kong's business community to develop in the Mainland. They have established production and operation bases in the Mainland through the forms of "three foreign-funded enterprises" or "three to one subsidy". production costs, thereby improving the international competitiveness of products. According to a recent survey by the Chinese Manufacturers' Association of Hong Kong, more than 86% of its members have invested in the Mainland, of which more than 80% are small and medium-sized enterprises.

After China's accession to the WTO, Hong Kong SMEs engaged in trade, shipping, banking, insurance and other related service industries have benefited from it. The accelerated opening of the domestic market in China has also increased the share of Hong Kong products in the domestic market.

In addition, Hong Kong enterprises can also benefit from cooperation with mainland enterprises and foreign enterprises. Domestic enterprises facing competitive pressure, especially state-owned enterprises and enterprises in some traditional industries, can take advantage of the advantages of Hong Kong enterprises in capital, technology, management and market channels to speed up their adjustment and jointly explore the increasingly integrated domestic and international markets .

In the process of multinational enterprises and Taiwan-funded enterprises entering the mainland market, Hong Kong enterprises can play the role of bridges and strategic partners to create "China-Hong Kong-Taiwan" and "China-Hong Kong-foreign" tripartite cooperation model, especially to promote foreign venture capital funds to form alliances with Hong Kong enterprises and mainland scientific research institutions to develop high-tech.

CEConline: What other challenges are there?

Li Jiayin: China's entry into the WTO has attracted multinational companies from all over the world to compete in the Central Plains, triggering a fierce competition. Most of Hong Kong's small and medium-sized enterprises are engaged in export-oriented processing and production in the Mainland, and their products are highly labor-intensive. Many small and medium-sized Hong Kong businessmen are not capable of technological innovation and domestic market development. With the influx of multinational companies with strong strength and high technical level, and domestic enterprises are catching up, the development space of Hong Kong SMEs in the Mainland has been squeezed. Not only is it more difficult to expand domestic sales, but some operating resources also Tightening, and even lead to higher operating costs.

In addition, as the Mainland is speeding up the implementation of national treatment for foreign-invested enterprises, some of the preferential benefits that Hong Kong companies previously enjoyed, such as tax holidays, profits tax reduction and exemption, and import and export trading rights, may gradually decrease or be on par with domestic companies.

CEConline: How should Hong Kong companies face these opportunities and challenges?

Li Jiayin: In the process of overcoming challenges and taking advantage of opportunities, Hong Kong and the Mainland should complement each other's advantages and strengthen cooperation between the two places to achieve a win-win situation. For example, taking advantage of Hong Kong's advantages in professional services to enhance its own strength, optimize its corporate image, and strive to be in line with international standards as soon as possible, so as to increase opportunities for cooperation with foreign companies. Companies from the two places should jointly explore the market, reduce investment risks, and prepare for future challenges from companies from all over the world.

Over the years, Hong Kong companies have accumulated rich experience in doing business in the Mainland, coupled with Hong Kong's complete legal system, advanced information equipment and infrastructure, a low-intervention and efficient government, and a fully convertible currency, All ensure that Hong Kong companies can share the fruits of China's accession to the WTO.

Hong Kong enterprises should exert strong market development and marketing capabilities, as well as rigorous and efficient project management capabilities, and strive to become partners in the mainland, so as to effectively solve the problem of high costs for Hong Kong enterprises with the help of the abundant human resources in the mainland . Then, with low cost and high quality service, we will strive for overseas outsourcing orders.

The decade of handover shows that close cooperation with the mainland can boost Hong Kong's prosperity. Hong Kong needs to expand cooperation with the mainland in four major industries - trade and logistics, financial services, professional services and other business support services, and tourism - which are the backbone of Hong Kong's economy.

CEConline: What is Hong Kong's contribution to the economic development of the Mainland?

Li Jiayin: Hong Kong has promoted the development of the Mainland's export-oriented economy and increased employment opportunities for the Mainland. Hong Kong is an important bridge between the Mainland and the world economy. Hong Kong can be regarded as China's gateway. China's integration into the global industrial chain often starts from here. When foreign trade and foreign investment were introduced, it was through Hong Kong. Absorbing foreign investment, engaging in processing and manufacturing, and exporting industrial products, Hong Kong’s investment and entrepot trade are the path for China to integrate into the global industrial chain. In recent years, in addition to manufacturing, Hong Kong enterprises have also begun to participate in mainland service industries, including catering and hotels. , transportation and tourism, etc., the mainland has gradually developed extensive economic and trade relations with the world. Hong Kong has played a significant role in promoting the economic development of the Mainland.

After so many years of development and accumulation, China's advantageous resources are not only labor force, but also very abundant capital. Therefore, China's position in the global industrial chain must shift from exporting labor (in the form of processing trade) to exporting capital development. This is the requirement for the next development of China's economy. Therefore, mainland enterprises should "go out".

The path of exporting capital can also be like exporting labor, starting from Hong Kong and then expanding globally. The ways of exporting capital include direct investment and securities investment. At present, securities investment is the main method, and Hong Kong's financial market can play a major role. Mainland enterprises use Hong Kong's financial market for financing and strengthen their own strengths. Since 1993, Mainland H shares have been listed in Hong Kong. As of the end of March 2002, a total of 50 mainland enterprises were listed on the Hong Kong stock market and raised more than HK$123 billion through initial listings. In addition to the stock market, the Hong Kong market has a wide variety of financing instruments to choose from.