27 Nov 2000
Hong Kong's Global Outreach And China's WTO Entry
Consuls-General; Trade Commissioners; Forum participants; friends of Hong Kong from around the world.
It is a great pleasure to see all of you and I warmly welcome you, especially visiting leaders of Hong Kong's overseas business associations. This is the first time the Trade Development Council (TDC) has organised a global meeting for this unique network of nearly 8,000 Hong Kong-affiliated companies, most of them small or mid-sized. We are committed to making the Hong Kong Forum an annual event.
This morning, 25 associations established themselves as a global federation.
I congratulate you for opening this exciting new chapter in your long and loyal
history. Personal congratulations go to the newly-elected Chairman, Maxwell
Brotman of Canada, the Vice-Chairman, Bjorn Larsen of Denmark, and the Honorary
Treasurer, David Chu of Australia. We wish you every success in your important
Passing the stress test
Over the last three years, Hong Kong has passed two crucial and serious tests: the 1997 political transition, which is unprecedented in world history, and Asia's financial crisis, the worst in the region since the Second World War.
Facts have overtaken doubts about Hong Kong's future as a Special Administrative Region of China. You can experience this by walking in our streets, talking to our people and reading our newspapers. Information, the rocket fuel of business, flows more freely than ever. With each passing day we lengthen our successful track record as a free, open, tolerant society under the rule of law, as promised under "One Country, Two Systems".
People ask how did Hong Kong make it? My answer is trade. Yes, sustainable trade -- with good access to overseas markets -- has kept Hong Kong going through these and other challenges. It binds us together as a business community, steadies our economy and has underpinned our progress over 50 years. My 1992 article "Hong Kong Plus" offered this simple formula for understanding the Hong Kong phenomenon: trade equals cargoes, equals work, equals employment, equals stability and prosperity.
Hong Kong's greatest strength as a trader is the
entrepreneurism and creative output of 300,000 small and medium-sized
enterprises (SMEs). They create real value for their global partners -- and real
jobs at home. They are Hong Kong's true champions in world markets; the
individuals that drive Hong Kong's collective successes. They are our
A new dynamism
Hong Kong is busy restructuring to higher value-added activities. But even as we embrace the "new economy", with bold initiatives such as Cyberport, trade remains Hong Kong's core business.
Our new trade dynamism is brought on in part by China's imminent entry to the
World Trade Organisation (WTO). It is estimated China's trade with the
world will double in the first five years after accession. Hong Kong has a
strong "first mover"
advantage in the mainland market, one we wish to share with all our trading partners - especially with overseas associations. This "first mover" advantage also encompasses Hong Kong's excellent professional services, such as legal, accounting and management consulting.
What has changed is that for the first time, Hong Kong
is also able to look upon the mainland as a domestic market for goods and
services, one of continental scale and promise. This is exciting.
For as the United States, Europe and Japan have proven, economies can leverage
strong domestic markets to achieve greater stature in global trade.
Hong Kong's "triple play"
I'd like just to share my own thoughts on where Hong Kong fits in to this dynamic scene and to tell you the Hong Kong story. Let me liken this to baseball's triple play.
For the first play, which began 50 years ago on this "barren rock", Hong Kong manufactured in Hong Kong and sold to the world. In the 1980s, as China began to open up, Hong Kong manufacturers moved most of their production to the mainland and expanded their output in quantum leaps. It gave us our double play: manufacturing in China and selling to the world.
In little over 20 years, Hong Kong's world trade ranking has moved up from 23 to 10. We have become world leaders in five types of consumer exports, including toys. In a further 12 categories, including clothing, textiles, footwear, watches and clocks, we rank second or third. Of more critical importance, our businesses have gained critical mass. Equally important, they have accelerated up the value chain.
Now, with China's WTO accession we have a triple play: Hong Kong and our partners manufacturing on the mainland, selling to the world and selling to the mainland.
Each phase has brought Hong Kong closer to the consumer. Initially, we functioned as an OEM base making other people's products to their specifications. Now we are moving towards ODM, branding, distribution and after-sales servicing of our own products. The Trade Development Council estimates that more than one-third of Hong Kong's manufacturers have developed their own brands. Some have already scored globally.
Hong Kong is also fast evolving in customisation and consumer-driven
production. Our capabilities in this area are formidable given the geographic
spread, flexibility and responsiveness of our supply chain. As our companies
create more value for customers, they also see the stock market valuation of
their businesses jump up.
We offer a dynamic platform for global distribution, manufacturing and customisation in Asia. Capitalising on this platform, entrepreneurs of all nationalities sell to the world from Hong Kong, produce goods on the mainland and, soon, will sell more to the mainland. This is Hong Kong's new paradigm.
An entrepreneurs' haven
We have in Hong Kong both the entrepreneurial skills and the right conditions to propel us to this higher level. We are a haven for entrepreneurs and it is important to understand why.
A high percentage of Hong Kong's SMEs operate across two or more boundaries. They embrace international partnerships and global alliances. In fact, for the next five years and beyond, they are actively seeking quality strategic partners. TDC's task is to help them realise this goal. This is also where all of you can help - and benefit -- in your home countries.
Two key elements underpin Hong Kong's entrepreneurial prowess: low taxes and our position as Asia's premier hub for trade finance. Let me explain.
First, not only are Hong Kong's flat taxes reckoned to be the lowest in the region, there is no capital gains tax, no dividend tax, no sales tax, no tax on overseas income and no estate duty tax on non-Hong Kong assets. (Hong Kong was founded by Scottish merchants and you know how they feel about taxes.)
Think about it. You work hard, you work smart, you make money and you keep the money you make. Government keeps its hand out of your back pocket, leaving real economic power in the hands of individual entrepreneurs. This triumph of the individual is a major incentive and a key reason why Hong Kong's economy is constantly charged with creative energy.
Secondly, dovetailing with our manufacturing core, we can lay strong claim to
being the world's best at trade finance. We truly create total solutions,
with banks that are the best in the world at trade finance; superior logistics;
the port, both air and sea, and Hong Kong's own world-class customs regime,
which is both user-efficient and predictable. With this total package we offer
the very best service and reliably facilitate killer applications of the
"just-in-time" business model.
The three "ts"
I will leave with you this simple concept of the three "ts" - the "triple play" is the opportunity, "tax advantage and trade finance" cover the money angle and, in layman's terms, "opportunity plus money equals wealth creation".
I believe these three "ts" are what make Hong Kong unique and what makes it
tick for overseas companies. They define our competitive edge. They
explain why now, and in the future, we are much more than a middleman; much more
than a gateway. Our entrepreneurs are working for themselves and with
global partners to reach customers. This is the Hong Kong business platform of
the 21st century: a value creation centre for all who sign on.
TDC's dual mission
I would be remiss to close without mentioning the fourth "t" - the Trade Development Council. Perhaps I should say capital "t" now that I am working closely with TDC's highly professional executives.
Our primary mission is to promote and develop Hong Kong's external trade. This is what we do well. As I mentioned earlier, Hong Kong has risen from 23rd to 10th position in world trade since 1978.
Tactically, the Trade Development Council sees the IT revolution as an accelerator for trade. This is evidenced by growing use of our Internet trade portal, tdctrade.com, which now receives more than one million hits a day. This cyber marketplace is an indispensable tool for entrepreneurs at home and overseas to access valuable trade information, opportunities and contacts.
Synergistically, tdctrade.com reinforces Hong Kong's leadership as a physical marketplace hosting the region's largest trade fairs. Five of TDC's 16 trade fairs have already attained this status. They are housed in a magnificent piece of architecture, the Hong Kong Convention and Exhibition Centre, which is not only a landmark in Hong Kong but in all Asia.
TDC is also helping to develop Hong Kong as a platform and marketplace for value-added content and ideas. We are major contributors to the free, fast and accessible flow of business intelligence about markets, products and sectors. With cutting-edge speakers and business leaders participating in our convention programmes, we provide a global platform for industry insights as well as for deals. All in all, TDC aims to develop Hong Kong as the global marketplace in the Asian time zone.
In addition to helping grow trade volume for existing
players, we are also committed to help grow the actual number of players. This
is TDC's dual mission. We are keen to motivate more local executive talent
and young people to turn to trade, a process that begins with schools,
universities and continuous education classes. Secondly, we aim to attract
more overseas players to Hong Kong's trade platform, especially mid-sized
companies going international for the first time. We wish to grow
alliances between local and overseas firms in Hong Kong's expanding pool of
global players. This is a top priority.
Conclusion: Leveraging network power
When I accepted my TDC appointment in October, I made it plain that all business bosses in Hong Kong are my bosses. I am at your service. So think of TDC as an organisation working for you, as well as for Hong Kong companies. When anyone sets up a business in Hong Kong you become one of us. We don't distinguish between local and overseas firms registered here. That means you also become a TDC stakeholder with the fullest possible access to our resources and services.
We look to Hong Kong's network of overseas associations to help us grow the critical mass of global business transacted in and through Hong Kong. Together, we can do far more than TDC can achieve alone.
Until now, interaction between each national association and Hong Kong has mostly been on a bilateral basis. This morning's decision to establish a global federation opens the way for multilateral interaction, regions with regions; cities with cities; sectors with sectors. TDC will facilitate this interaction by establishing and supporting a web site for the federation's global membership.
We urge association members to leverage Hong Kong's connections to build a matrix of global alliances that are anchored here. We encourage you to bring in talent and know-how to incubate new businesses. We hope you will also actively multiply these Hong Kong connections in your home chambers of commerce and other business organisations.
Mark Twain said "To eat is human; to digest is divine". Hong Kong is a feast of opportunity, as reflected in the 80 pages or more of career opportunities advertised each Saturday in the South China Morning Post. There is, indeed, much to digest:
Not least, TDC has a clear goal to enhance Hong Kong as the world's marketplace as well as the capital for SMEs. With this Hong Kong Forum we move to new heights. We are witnessing the birth of a powerful global alliance of small and mid-sized companies. I am thrilled by this prospect. So are my TDC colleagues around the world who provide support to the associations. You are our ambassadors, our partners and our friends. We look to your valuable advice and input. You can absolutely count on our continued commitment to you. For your success is Hong Kong's success.
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