18 April 2001
Speech by TDC Chairman Mr. Peter Woo Hong Kong Business Conference New Delhi Wednesday 18 April 2001
Introduction: building on ties
This is my first trip to India. My son beat me here by backpacking through India as a student two years ago. With red carpet treatment on Cathay Pacific's Hong Kong-New Delhi inaugural, we are making the most of our time here to see your great sights, including the Taj Mahal and Jaipur. We are also very enthusiastic about making meaningful business-to-business contact during our meetings here, in Mumbai and in Bangalore.
We see a new era dawning for trade between India and the Greater China area. I'm excited India is reaching out and competing globally. I'm also excited that China, on the threshold of World Trade Organisation (WTO) entry, is fast moving towards an open market economy. New opportunities are surfacing around these historic developments that involve almost half the world's population.
Ranked 10th in world trade, Hong Kong is the strategic trade services platform connecting India and China. This highly-energised platform is infused with ideas, talent and connectivity. It leverages a critical mass of business networks in the Chinese mainland and overseas.
Today, my fellow mission members will give the lay of the land for anyone interested to explore partnerships in their sectors. I'm happy they come from a broad mix of sectors so there is plenty to survey. First, however, please allow me to share a few thoughts about the high-performance Hong Kong platform from which they operate.
The Hong Kong model
Even without a large domestic market, Hong Kong's world ranking in trade improved from 23 to 10 in little over 20 years. We top world rankings in nine types of consumer exports. In a further seven, we rank second or third.
We did this with what I call the Hong Kong business model. We deal only in areas where we have a competitive edge. Everything else is outsourced or contracted out. This allows us to focus on moving up the value chain to get closer to our customers, who are end users.
With this business model, one adds value to one's business and value to one's customers. Requiring only 30 to 80 Hong Kong employees, it is a low risk, high valued-added business model. Entrepreneurs the world over are using Hong Kong and applying the same business model.
A super trade services platform
Hong Kong's core business is trade. 50 per cent of our GDP and 50 per cent of jobs are trade related. As an autonomous, separate customs territory -- and free port - you can appreciate why Hong Kong attaches top priority to being a super-efficient trade services and logistics platform.
We clear import/export declarations within 30 minutes and fully-loaded container lorries into Hong Kong at the rate of one per minute.
Being the world's busiest container port, we send containers off to sea at the rate of nearly 35 per minute. Being the world's busiest airport for international air cargo, we unload 747 cargo jumbos in an hour or less. Our banks clear letters of credit within 24 hours and stay open on Saturday mornings to facilitate weekend shipping dates.
A billion minutes of voice, data, teleconference and Internet traffic speeds along Hong Kong's state-of-the-art information highway each month. Our telecoms are competitive. Calling New York from Hong Kong is three times cheaper than vice versa.
All these logistical components work together seamlessly to ensure reliability and predictability. This is absolutely critical to just-in-time manufacturing and shorter product cycles.
Underpinning these vital logistical strengths are Hong Kong's institutional strengths, including a common law heritage we share with India. There is a level playing field for everyone and world-class enforcement of intellectual property rights.
With absolutely free and instant information flows, Hong Kong is Asia's leading hub for market information and trade intelligence. Over 130 international media organisations have correspondents there.
As a leading financial centre, our banking systems not only weathered the 1997 Asian financial turmoil but came out stronger.
Nearly four years after sovereignty change, Hong Kong's freedoms and way of life remain unchanged under "One Country, Two Systems". The political transition from British sovereignty has been a success.
Global marketplace in Asia
Hong Kong's platform offers two marketplaces. One is the TDC's Convention and Exhibition Centre, which hosted almost 2,500 events last year. Besides putting Hong Kong in number one spot as a global marketplace in the Asian time zone, it is an architectural landmark on Hong Kong's famous waterfront that you will not miss when you visit.
Of TDC's 15 trade fairs, six are the largest of their kind in the region. Together, these events pulled in more than 100,000 buyers from around the world last year to our marketplace.
A cyber marketplace
TDC also offers a cyber marketplace that brings fast-track, real-time information to your doorstep about products, sourcing and exporting opportunities in Hong Kong, the Chinese mainland and the region.
Our Internet portal tdctrade.com reaches 100,000 Hong Kong companies and 50,000 business sites. In just one year, hits on tdctrade.com have trebled to as many as 1.8 million per day.
Tdctrade.com exists to serve and accelerate trade, not profit from it. We want to link India's business chambers, trade associations and small to medium-sized enterprises (we call them SMEs) to tdctrade.com because it is effective. That is one of the objectives of my visit.
Hong Kong's "first mover" advantage in China
I now come to my second topic. China's trade is expected to double in the five years after it joins the WTO. Hong Kong and our partners can not only manufacture there to sell to the world but also -- for the first time -- to sell to China as a domestic market.
Our companies have a "first mover" advantage there. As the saying goes, "location, location, location" is everything. Reinforcing this physical proximity are natural ties of language, culture and kinship.
Hong Kong's strength in the China market has been earned through 20 years of successes and failures - though mostly successes. Twenty years ago, China's share of our export market was six per cent. Now it is 35 per cent. Hong Kong accounts for over half of overseas investment in the mainland, and operates a huge installed customer base for products and services.
TDC provides tremendous reach for anyone doing business in China. With offices in 11 mainland cities, ours is the largest network of any overseas trade promotion entity. Our trade fairs in Hong Kong, which attracted 16,000 mainland buyers last year, are also very effective for penetrating the mainland market.
Entrepreneurs' haven - tax advantage
Another advantage of Hong Kong is that it is a haven for entrepreneurs the world over. Our flat taxes are reckoned to be among the lowest. 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.
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. As Hong Kong's 22,000-strong Indian community bears witness, no true entrepreneur can afford not to be there.
Partner into China
China's growth will need strong service support. Presently, services account for less than 40 per cent of the mainland's GDP, compared with 85 per cent for Hong Kong. We are keen to attract to Hong Kong's business service platform new products, new ideas and especially new partners from India. That is another reason I am here.
Conclusion: TDC - working for you
I've talked about the opportunity, which is China's market. I've talked about Hong Kong's efficient trade services platform, which is the logistics, and I've talked about tdctrade.com, which is the fast connection to Hong Kong companies and products. I've also talked about Hong Kong's tax advantage, which to many is the ultimate incentive.
Now I will conclude by suggesting how TDC can serve you.
TDC's job is to "connect" as we "collect" buyers and sellers into our marketplace. We want to grow the number of players on Hong Kong's platform.
Using the Hong Kong business model, Hong Kong companies have moved up the value chain - 36 per cent with their own brands and more than 60 per cent with original design manufacturing (ODM) - and they have successfully built up a trade base of over US$400 billion a year. They are keen to partner with Indian companies who have excellent products, brand names or proprietary expertise which they can help bring to market in China and the region.
Already, more than 3,000 overseas companies have regional headquarters or offices in Hong Kong. On average, at least one new regional headquarters per week was set up in the last seven months of 2000. Still more are arriving in anticipation of China's WTO entry. Crown Pacific reports a big jump in moving executives to Hong Kong. Jim Thompson is here to tell you that story himself.
TDC has nearly 35 years of trade experience. Our annual budget is close to US$200 million. We have 900 staff and a global network of 48 offices.
Please think of TDC as an international organisation working for you. When you engage in Hong Kong, you are one of us. You have full access to TDC's services.
The stage is set. The platform is ever ready. We invite you to sign on to Hong Kong's dynamic platform and partner with our entrepreneurs to capture exciting new trade prospects. And let TDC serve you. For your success is Hong Kong's success.
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