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TDC Survey: Hong Kong remains the preferred service platform for Taiwan companies in the mainland

A Trade Development Council report released today (October 31) says the majority of Taiwan companies investing in the Chinese mainland will continue using Hong Kong as the service platform even after the establishment of "three direct links" between two sides of the Strait.

About 80% of responding Taiwan companies operating in Hong Kong said they would continue using Hong Kong's banks and port to support their mainland operations after the establishment of "three direct links", while 70% of respondents in the mainland said they would continue to use or make increased use of funds and financial services provided by Hong Kong as well as make equity investments through the SAR.

According to the survey, Taiwan investment in the mainland is also set to increase in the WTO era as mainland continues to open its market and Taiwan relaxes on cross-strait investment.

Near to 80% of the responding Taiwan companies in the mainland indicate that they would increase their mainland investment over the next two years.

TDC's Chief Economist Edward Leung urged Hong Kong service providers to capitalise on the opportunity by moving even faster into the Pearl River Delta (PRD) and the Yangtze River Delta (YRD) to win Taiwan customers.

The survey was carried out between May and June this year and a total of 272 completed questionnaires were received. Of these, 155 were from Dongguan and Shenzhen; 83 from Shanghai, Suzhou and Kunshan; and 34 from Hong Kong.

Surveyed Taiwan companies in the PRD and YRD said they use a wide range of commercial services provided by Hong Kong. Of these, the most important being transit travel (77%), followed by goods re-export (72%). For Taiwan companies in the Pearl River Delta, Hong Kong's banking and financial sector provides the major support services for their daily operation (77%).

Taiwan companies in the SAR and the mainland agree Hong Kong has an obvious leading edge as a service platform, with the free movement of funds being its biggest advantage, followed by "sound and transparent legal system" and "full range of financial services".

According to the report, services provided by Hong Kong companies not only serve the PRD region, but also extend to the distant area such as the YRD region.

Although Taiwan companies in the Yangtze River Delta are less dependent on Hong Kong's services, they are more than willing to use the services provided by Hong Kong companies operating in the YRD, especially logistics and transports.

70.9% of Taiwan companies in the YRD are using the logistics/transport services provided by Hong Kong companies in the mainland. Among those that are not yet the clients of Hong Kong companies, 84.6% said they would consider using their services.

Taiwan companies in the YRD that use Hong Kong's services in sales, market development and purchasing is similar to that of their PRD counterparts.

Edward Leung is optimistic of Hong Kong's competitiveness in serving Taiwan companies in the mainland. He pointed out that Hong Kong not only has highly efficient port facilities but its logistics services are more advanced than the mainland.

"As just-in-time delivery is becoming increasingly important these days, the port and transport services offered by Hong Kong to Taiwan companies operating in the mainland, especially the PRD, are a definite advantage."

Surveyed Taiwan companies in the mainland are mostly in the manufacturing sector, with 23.6% in electronics and 65.1% in other manufacturing industries. Those in Hong Kong are in the service sector and serve as the management and financial arm of their operations on the mainland, with import/export trade and banking/finance accounting for 36.9% and 26.3% respectively.

This new report is available at TDC's Retail Outlets. It can also be purchased through the TDC Bookshop section in the TDC's trade portal: www.tdctrade.com

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For press enquiries, please contact Lawrence Yau of TDC's Corporate Communication and Marketing Department at 2584 4510

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Content provided by Hong Kong Trade Development Council