rebounding

1
HONG KONG
rebounding
2
Current developments, issues and opportunities in
Hong Kong

• Sars recovery
• Cepa opportunities
• BL23 and July 1 march
• Strong fundamentals
• Greater PRD

3
Vital statistics for Hong Kong

• June compared with May
• Business travel fully recovered
• Tourists 70 recovered
• Stock market reached six-month high
• Jan June 2003 v Jan June 2002
• Sea cargo up 7
• Air cargo up 14
• China exports up 34 China imports up 44.5

Rebounding faster than expected!
4
1. Sars recovery
5
Sars the facts

• WHO travel advisory lifted 23 May
• Off Sars list 23 June
• Fewer than 0.03 of total population affected
• Business never stopped
• Mild impact on trade

6
Sars continued vigilance

• Hong Kong scientists at forefront of prevention
  and cure research
• Entry/exit screening in place for a year
• Public hygiene initiatives to continue
• Disease surveillance strengthened
• Closer cooperation with the mainland

Wiser and more alert!
7
Hong Kongs ups and downs! But theres no
stopping trade
Jan May 2003 Exports up 14
8
2. Cepa opportunities
9
What is CEPA?

• A free trade deal under WTO rules
• Preferential access to China from Hong Kong
• Significant step by China to open and liberalise
  to Hong Kong good and services
• Exceeds Chinas WTO entry commitments
• Effective from 1 January 2004

10
What does CEPA offer?

• Zero tariffs on 90 of Hong Kong exports to China
• Faster/easier market access for 17 service
  sectors
• Lower entry thresholds for smaller players
• An added Hong Kong advantage

A new era of opportunity in/with Hong Kong
11
Who qualifies?

• Must be incorporated in Hong Kong
• Doing business in Hong Kong for 3-5 years
• Liable for profits tax (which is low, at 17.5)
• Employing 50 of staff locally

Any nationality, any size!
12
What does it mean?

• Hong Kong is the fastest, most profitable route
  to China
• More business with the fast growing Pearl River
  Delta region
• More reasons to invest in Hong Kong operations
• More opportunities to meet mainland partners

Strengthens Hong Kongs position as a global
platform for China business
13
How can your firm take advantage?

• Partner with a CEPA-qualified firm in HK
• Invest in a CEPA-qualified company
• Buy a CEPA-qualified company
• Join your local Hong Kong Business Association

Click on www.tdctrade.com for Cepa information
and events
14
3. BL23 and July 1 march
15
BL23 and July 1 march

• Adjustments needed to pre-1997 law
• HK empowered by Beijing to legislate
• Public concerned over some draft provisions
• Discontent with consultation process
• Govt. responded with major amendments
• Passage deferred for more consultation
• International chambers reassured

16
July 1 march

• Peaceful, orderly demonstration
• About 500,000 participants
• Citizens from all walks of life
• Minimum disruption to business
• Affirmed HKs political stability
• Affirmed investors confidence

17
4. Strong fundamentals
18
Why choose Hong Kong?

• The best place to
• Source products and services
• Manufacture products
• Sell your products into China/Asia
• Manage your China business

Worlds 10th largest economy Worlds freest
economy, Cato Institute, 2003
19
Hong Kongs core advantages

• Small government level playing field
• Personal freedoms and rule of law
• International finance/logistics centre
• Worlds busiest sea/air cargo hub
• Anti-corruption culture and IPR protection
• Currency convertibility
• Low tax system
• Free flow of information free press
• English spoken widely

20
Hong Kongs core advantages
Location Location Location
2.5 hrs flight to all key China markets and
production bases
Source HKTDC
21
Hong Kongs role in China business
Chinas trade conducted through Hong Kong
More open more business for Hong Kong
22
Hong Kongs core advantages

• Our unique relationship with mainland China
• 25 years experience
• Largest investor in China
• Your risk manager for China business
• Minimum risk Maximum profit!

23
Hong Kong is now better value than ever

• Commercial property prices down
• Residential rents down
• Businesses more streamlined/competitive
• Deflation bringing cost of living down
• Great deals to be had

24
5. The Greater Pearl River Delta
25
Dynamic neighbours!
Over 30 of Mainland exports pass through Pearl
River Delta and Hong Kong
26
PRDs competitive advantage

• Chinas top manufacturing region (light and
  heavy goods)
• Rapid pace of development
• Pro-business government
• World standard factories
• Exporting to the world

27
PRDs competitive advantage

• Stable and skilled workforce
• Low labour costs
• Nationwide distribution
• Growing consumer market
• Wealthiest region

28
PRDs competitive advantage
Population and GDP
Source Statistical yearbook 2002 for Guangdong,
Jiangsu, Zhejiang and Shanghai
29
PRDs competitive advantage
Chinas wealthiest region (GDP per capita US)
including Hong Kong and Macau

Includes Hong Kong and the PRD
Source Statistical yearbook 2002 for Guangdong,
Jiangsu, Zhejiang and Shanghai
30
PRDs competitive advantage
Chinas biggest spenders (US spent on consumer
goods)

Includes Hong Kong and the PRD
Source Statistical Yearbooks 2002 for Guangdong,
Jiangsu, Zhejiang and Shanghai
31
Hong Kongs competitive advantage
Chinas 1 for international sea cargo
Source Ports of China, 2003, Issue 1
32
Hong Kong PRD business model

• Step one
• Service/logistics office in Hong Kong
• Factory/distribution centre in PRD
• Step two
• Manufacture or source in PRD
• Export through Hong Kong
• or
• Import through Hong Kong
• Sell through Hong Kong

33
A winning business partnership
Hong Kong Pearl River Delta Business
lifestyle
A great place to work and play
34
How can TDC help you?

• We know Hong Kong and China
• 11 offices in Chinese mainland
• 17 international trade fairs each year
• Arrange Business Matching
• Online market intelligence www.tdctrade.com
• Online sourcing guide www.hkenterprise.com
• E-newsletter for overseas www.hktrader.net

35
HONG KONG
We cant wait to do business
www.tdctrade.com