Consulate General of Canada, Hong Kong

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Presentation to HKCBA Forum in Toronto 23
April, 2007
Consulate General of Canada, Hong Kong
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HONG KONG - A MACRO LOOK

• 7 million population within 5 hours of half of
  the worlds population
• GDP of US 189 billion in 2006 (up 6.8)
• 91 of GDP is generated by services (40 by
  comparison in China)
• Per capita GDP US 27,500 in 2006 (Canada US
  38,757)
• In 2007, HK will raise more by IPOs than London
  or New York

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HONG KONG IS THE WORLDS

• 8th largest banking centre
• 2nd largest source of outward foreign direct
  investment (FDI) in Asia
• Largest investor in every Province of China
• 2nd largest FDI recipient in Asia
• 2nd largest stock market in Asia (Tokyo 1)

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HONG KONG A GATEWAY TO CHINA AND ASIA

• Rule of law, solid regulatory regime
• Ranked as the worlds freest economy every year
  since 1970 (Fraser Institute, 2006)
• Entrepreneurial energy
• Effective civil service
• Open and transparent purchasing practices

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HONG KONG A GATEWAY TO CHINA AND ASIA

• Financial centre and IPO capital of Asia
• Freedom of the press
• Low tax rates (corporate profits tax - 17.5)
• Free flow of capital
• Free movement of people
• Skilled and highly productive workforce

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HONG KONG - A REGIONAL CENTRE

• 6,354 overseas companies have operations in Hong
  Kong
• 1,228 are regional headquarters
• 2,617 are regional offices
• 2,509 are local offices
• Twice as many insurers than Tokyo
• 25 more international banks than Tokyo

Source HKSAR government survey, 2006
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HONG KONG - INFRASTRUCTURE

• Worlds busiest airport in terms of international
  cargo throughput
• Worlds 2nd busiest container port
• One of the most open telecommunication markets in
  the world
• One of the worlds highest penetration levels for
  mobile phones (120)
• Broadband to all commercial buildings and 90 of
  households
• WiFi access to be installed in all government
  buildings and public areas

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HONG KONG - TRADE

• Total exports US315 billion in 2006 (up 9.4)
• Total imports US333 billion in 2006 (up 11.6)
• Re-exports US298.3 billion in 2006 (up 10)
• 15th largest Canadian export market (CAD1.59
  billion in 2006)

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HONG KONG - SMEs

• Easy to do business
• Most Canadian clients are SMEs
• 1,755 Canadian companies interested in or selling
  to Hong Kong, mostly SMEs
• Most Hong Kong partners are also SMEs
• Great local interest in finding Canadian partners

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HONG KONG AND CHINA

• Leader in providing value-added financial and
  management services to China
• Principal source of international equity funds
  for Chinese companies
• Largest investor in every province and region of
  China
• Hong Kong has 56,000 trading firms dealing with
  import and export from China, employing 477,000
  in Hong Kong

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HONG KONG AND CHINA (CONT.)

• Hong Kong concerns own or control 80,000
  factories employing 13 million people in China
• Up to 12 of HKs GDP derives from repatriated
  profits from operations in China
• Closer Economic Partnership Arrangement (CEPA), a
  free trade agreement with China launched in 2003,
  offers many opportunities
• Hong Kong is a preferred location for new to
  market SMEs to tackle the Chinese market
• The city provides an excellent platform to
  demonstrate to Chinese buyers (e.g., Thales,
  Delcan)

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HONG KONG AND PEARL RIVER DELTA

• One of the most affluent and fastest growing
  regions in China
• Population of 47 million within a 150 km radius
  of Hong Kong
• Hong Kong enterprises have invested US78.9
  billion in Guangdong
• Hong Kong work program integrated closely with
  Guangzhou

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MACAO - A MACRO LOOK

• Population 513,400
• GDP US15 billion (2006)
• GDP per capita US 29,168
• GDP grew 16.6 (2006)
• Massive increase in overseas investment since 2001

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MACAO MERCHANDISE TRADE

• Total Exports (2006) US 2.62 billion
• Total Imports (2006) US 4.68 billion
• Growing rapidly

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MACAO A BOOMING ECONOMY

• Gambling revenues amounted to US 7 billion in
  2006, up 22 compared to last year
• Overtaken Las Vegas as the world top casino hut
• Growth fuelled by surge in tourist arrivals since
  travel restrictions were lowered in the Chinese
  mainland
• US 25 billion committed to building some 20 new
  hotel-casino complexes over the next few years in
  anticipation of tourist arrivals in excess of 20
  million

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CANADA IN CHINA
17
Beijing Shanghai Chongqing Guangzhou Hong
Kong

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PRIORITY SECTORS HONG KONG

• Information and Communication Technologies
• Processed Food, Fish and Agricultural Products
• Transportation
• Energy/Environmental Equipment and Services
• Life Sciences
• Construction Products and Services

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Canada The Pacific Gateway
20

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HONG KONG AND CANADA

• 15 Canadian companies have regional headquarters
  in Hong Kong
• 29 Canadian companies have regional offices in
  Hong Kong
• Over 150 Canadian companies have offices in Hong
  Kong, another 600 have representatives
• The Canadian Chamber of Commerce is the largest
  outside Canada (over 1,000 Members)

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HONG KONG AND CANADA

• Over the past century almost one million people
  have immigrated to Canada from Hong Kong
• 250,000 Canadian Passport holders in Hong Kong
• Consistently one of Canadas top 15 trade
  partners
• Hong Kong is Canada's 5th largest market for ICT
  products

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INVESTMENT POTENTIAL

• Cumulative investment from Hong Kong to Canada
  C6.27 billion
• Infrastructure investments
• Some industrial investment potential
• Venture capital for joint ventures in Asia

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PARTNERING POTENTIAL

• Biotechnology, bio-pharma
• Environmental technologies
• ICT products
• Auto parts

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AGRICULTURE AND AGRI-FOOD MARKET SIZE

• In 2006, Canadas Total Agri-Food Exports
• (including seafood)
• To Hong Kong 450 million
• To Macao 24 million

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AGRICULTURE AND AGRI-FOOD MARCO ENVIRONMENT

• Hong Kong and Macao import most of their food
  requirements
• A free market with transparent food laws
• English food labels are accepted
• An efficient and sophisticated food distribution
  system
• Food importers have good international
  procurement experience

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AGRICULTURE AND AGRI-FOOD MARKET TRENDS

• HK traders controls trading of higher value items
  through provision of finance and trade expertise
• Demands for safe, healthy, natural and organic
  food products
• Demands for nutraceutical and health food
  products
• A vibrant food services industry both in Hong
  Kong and Macao

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AGRICULTURE AND AGRI-FOOD MARKET OPPORTUNITIES

• Healthy food products, e.g tea drinks, high
  calcium, high fibre, low cholesterol and Omega-3
  enriched.
• Wellness food products, e.g., transfat free, low
  glycemic index foods, and fresh fruit drinks.
• Healthy snacks for school children.
• Pre-packaged processed organic food products.
• Low cost substitution food products

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AUTOBUSINESS ENVIRONMENT

• A major and growing industry in South China
• One of Guangdong provinces Pillar Industries
  with three automotive industry bases in Guangzhou
  alone
• Many local auto parts companies in PRD, Fujian
• LiuZhou, Guangxi - another important South China
  auto sector base

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AUTO CANADIAN SUCCESSES

• Magna in Foshan
• Vannatter in Shenzhen
• PP in Guangzhou

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AUTOWORKING WITH KEY PLAYERS AND PARTNERS

• Local auto manufacturers Golden Dragon (Fujian),
  Guangzhou Automobile
• Major OEMs e.g. Honda, Nissan, Toyota, Hyundai
• Local government officials Guangdong Science and
  Technology Department
• Promotion Event Auto Parts Guangzhou 2007

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SUMMARY OF ENVIRONEMENT MARKET OPPORTUNITIES

• Solid Waste Treatment Technologies and
  Equipment
• Water and Wastewater Treatment and Recycling
  Technologies
• Air Pollution Control Systems
• Odour Control Systems
• Green Building Design Products
• Renewable Energy Technologies
• Landfill Gas Recovery Technologies
• Clinical Waste Management
• Energy Saving Systems
• Indoor Air Quality Products
• Green Building Production Technologies
• Noise Control Equipment for construction site

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ENVIRONEMENT

• Waste
• In 2006 about 6.4m tonnes MSW disposal of.
• 3 Strategy Landfills - to be filled in the next
  6-8 years
• Major Initiatives Opportunities
• 1. Integrated Waste Facility under plan
• 2. Eco Park (C45m)
• 3. Landfill Extension (C1.2b)
• 4. Chemical Waste Treatment Facility Upgrade
• 5. Other Waste Programs

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ENVIRONEMENT

• Water
• About 1.5m tonnes of sewage dumped untreated.
• Major Initiatives Opportunities
• 1. Harbour Area Treatment Scheme (HATS)
• 2. Total Water Management Policy
• 3. Pilot Desalination Plant
• 4. Replacement of Water Mains
• 5. Others

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ENVIRONEMENT

• AIR
• Vehicle emission, power plant, regional air
  pollution
• 15,000 deaths a year linked to high particulate
  levels
• Major Initiatives and Opportunities
• Retrofitting heavy diesel vehicles with
  particulate removal device
• Emission Cap on Power Plants (installation of
  FGD)
• Use of alternative fuels (mainly wind, solar and
  biomass)
• Possible implementation of Emission Trading
  Scheme with Guangdong.
• Indoor Air Quality Program
• Mandatory VOC registration and labelling under
  reviewed

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ENVIRONEMENT

• Examples of Canadian Environmental Technologies
  and Products in HK
• Water and Wastewater Systems (UV systems)
• Reverse Vending Machines for Bottle Recycling
• Odour Control Systems
• Air Purification Systems
• Landfill Gas Recovery Systems
• Toxic Gas Detection Systems
• Total Degradable Plastic Additives
• Remediation Services
• Regional Air Consultancy Services

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ENVIRONMENT ENVIRONMENTAL CHALLENGES IN PRD

• Significant river pollution (Class V or worse)
• Low waste water treatment rate, limited
  processing capability
• Urban and industry solid waste management,
  e.g.hazardous waste disposal
• Severe air pollution

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ENVIRONMENT CLEAN-UP PLAN

• Guangdong plans to spend C17 b on pollution
  abatement and ecological protection in 2006-2010,
  focusing on 6 priorities
• Regional waste water management and river
  pollution abatement
• Desulphurization of coal fired power plants
• Solid waste management, including hazardous waste
  and electronics waste treatment
• Ecological protection and development
• Radiation source and waste treatment
• Environmental warning system and emergency
  response

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ENVIRONMENT BUSINESS OPPORTUNITIES

• Public utilities such as   water, wastewater and
  solid waste , BOT/TOT
• Air pollution management FGD(Flue gas
  desulphurization)  for coal fired power plants,
  environmentally friendly public transport
• Green construction energy efficient buildings
• Environmental software, including environmental
  information system, environmental assessment,
  emergency response and training
• Encourage clean /renewable energy development
  natural gas, solar, wind, fuel cells etc

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ENVIRONMENT CHALLENGES FOR CANADIAN EV COMPANIES

• Mismatch between Canadian companies and Chinese
  environmental projects since most are enormous by
  Canadian standards
• Growing demand for turnkey solutions, including
  financing and operating
• Emphasis on integrated, customized solutions
• Most Canadian companies are SMEs, focused on
  single-products or technologies

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HONG KONG AS AN ICT MARKET

• What is new, innovative and in demand in Canada,
  should have a market in Hong Kong (e.g.
  Blackberry)
• Most liberal telecom market in Asia
• 5 mobile operators (GSM, CDMA standards)
• Mobile phone subscribers (gt127) the highest in
  Asia.
• Four 3G Network operators (Hutchison 3, CSL,
  SmarTone, PCCW/Sunday)
• 10 FTNS operators
• Internet household users (63)
• Broadband penetration rate 2nd highest in the
  world (ITU Study)

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ICTCANADA HONG KONG RELATIONS

• Number of MoUs signed between Hong Kong and
  Canada 11
• Examples
• Government to Government
• Industry Canada Hong Kong Information
  Technology Broadcasting Bureau
• Associations
• The Canadian Wireless Telecommunication
  Association (CWTA) The Hong Kong Wireless
  Technology Industry Association (WTIA)
• Institutions
• Hong Kong CyberportBanff Centre

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SOUTH CHINA AS AN ICT MARKET

• South China, (Guangdong, Guangxi, Hainan and
  Fujian), 180 million people
• Guangdong, next door to HK, is the most active
  ICT market for Canadian companies
• Guangdong is the largest telecom market in China
  (Fixed line, 36 million subscribers and mobile,
  67 million) and 1 in China
• Shenzhen is the home of the world class Chinese
  ICT companies, ie. Huawei, ZTE and TCL

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ICT MARKET OPPORTUNITIES IN HK/SOUTH CHINA

• Whats hot HK S. China
• Wireless technology (Wifi, 3G, 4G and WiMax)
  v v
• Wireless content and applications v
  v
• Digital Broadcasting Technologies v
  v
• Computer animation / New Media / e-Learning
  v v
• IT in Security (e.g. border control, anti-spam)
  v v
• eLogistics, (e.g. freight movement) v
  
• e-Health v
• e-Commerce (e.g. e-government, e-payment) v
  
• Others (the 2010 Asian Games in Guangzhou)-S.I.
  v

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WHAT DO HK / CHINESE PARTNERS NEED FROM YOU?

• Best of Breed
• Vendor Support
• Recognized References (in Asia)
• International look feel / open standards
• ROI of 12-18 months.
• Good Profit Margins

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SUCCESS STORIES IN ICT SECTOR
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UPCOMING ICT PROMOTION EVENTS

• Hong Kong
• ICT EXPO 2008, April 2008
• China Sourcing Fair
• Electronics Components, May 2008
• South China
• China Intl Optoelectronic Expo, September 2007
• China High-Tech Fair, October 2007

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LIFE SCIENCES SECTOR OVERVIEW HK

• Increasing Demand including
• Dietary supplements
• Nutraceuticals
• Pharmaceuticals
• Medical products
• Other key factors threat of contagious diseases
  and viruses aging population government
  support improvement in the local economy and
  public awareness on health issues.

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LIFE SCIENCES SECTOR OVERVIEW HK

• Sub Sectors
• Pharmaceutical
• Medical and Healthcare Products
• Health Supplements
• Traditional Chinese Medicine.
• Established Technology Infrastructure
• Hong Kong Sciences Technology Park
• HK Jockey Club Institute of Chinese Medicine
• Universities and Teaching Hospitals
• Enhancing Canada-HK Partnership

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LIFE SCIENCES SECTOR OVERVIEW HK

• Summary of Business Opportunities
• Pharmaceuticals
• Products Registered website www.info.gov.hk/phar
  mser
• of Registered Products 20,000 of
  Pharmaceuticals and 2,700 of Vitamins and
  Minerals)
• Major Demand on cardiopulmonary disease, diabetes
  and neurological disorders, cancer treatment
• Nutraceuticals Health Supplements
• Medical, Rehabilitation and Home-care products
• Hospitals Equipment and Hygiene Sterilized
  Supplies
• Telemedicine
• Joint RD and licensing

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LIFE SCIENCES SECTOR OVERVIEW HK

• Examples of Canadian Products in Hong Kong
• Generic Drugs and Pharmaceuticals
• Health Supplements and Foods
• Rapid Test Kits 
• Medical Products
• Investment

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LIFE SCIENCES IN PRD

• The PRD Market
• In 2005, Guangdong had 16054 health institutions
• Large number of medical equipments expected to be
  replaced in recent years
• In 2006, Guangzhou became one of the four
  national biotech bases, mainly composed of
  Guangzhou Science City and Guangzhou
  International Bio-island
• Total revenue of the Guangzhou Biotech Base is
  expected to be RMB 100 billion by 2010.

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LIFE SCIENCES IN PRD

• Opportunities
• Medical devices
• Health Products
• Pharmaceuticals
• Nutraceuticals / food supplements
• Lab instruments
• Hospital equipment/supplies and clinical
  trials/joint development
• Hospital Management Consulting Service

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THE FUTURE

• Closer Economic Partnership Agreement (CEPA) is
  bringing new business and investment
• Hong Kong profits from Chinese growth
• Bridge to Macau/Zhuhai will open up south bank of
  Pearl River for freight and investment
• Cooperation through Greater Pearl River Delta
  Initiative (9 Chinese provinces Hong Kong and
  Macau) is improving

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RECENT KEY SUCCESS STORIES

• Roots partners with Li Fung to implement its
  ambitious expansion plan in Asia, starting with
  Hong Kong and planning to open 100 stores in
  China.

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RECENT KEY SUCCESS STORIES

• RIM has tripled the size of its office in Hong
  Kong
• Selected HK as entry point to Asia based on
  business network, infrastructure, and workforce

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RECENT KEY SUCCESS STORIES

• Supplying Train Control Signalling Systems
  (TCSS) to Hong Kong Subway Systems (MTR)
• Received contracts worth over C 200 million in
  Hong Kong
• Thales entered the China market via MTRs role as
  an equity partner/consultant for subway systems
  being built in China
• Thales has since won contracts in mainland China

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RECENT KEY SUCCESS STORIES

• Manulife employs 3,500 in its very profitable HK
  operations
• Will have 5,000 agents by 2010
• 2 provider of pensions in HK, with 15 market
  share
• Uses HK as a gateway to develop the 382 billion
  yuan China market

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RECENT KEY SUCCESS STORIES

• Purchases 10 of Canadian beef exports to HK
• Also buys Canadian fish roe and salmon
• Headquartered in HK, drives business development
  in the mainland
• Holds franchise rights for Yoshinoya in Hong Kong
  (30 outlets) and China (74 outlets, 25 annual
  growth)

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RECENT KEY SUCCESS STORIES

• Venetian Macao will open a Cirque du Soleil
  permanent venue at Macao Venetian Casino

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RECENT KEY SUCCESS STORIES

• Adrien Gagnon partners with CK Life Sciences to
  launch its products worldwide

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RECENT KEY SUCCESS STORIES

• K.S. Li of Hutchison Whampoa has committed an
  additional amount of USD 100 million investment
  in Husky Oil

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RECENT KEY SUCCESS STORIES

• Hong Kong has become the third largest market for
  Canadian beef, followed by Macao in 4th

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TCS CORE SERVICES

• Market prospect
• Key contact search
• Information on foreign organizations
• Visit information
• Face-to-face briefing
• Troubleshooting

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OUR CLIENTS

• Canadian companies that have selected and
  researched their target markets
• Large or small, new or experienced companies
  established in Canada
• Foreign subsidiaries of established Canadian
  companies
• Businesses or persons representing such companies

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