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The Development of the Macau One Platform Strategy

Under the Macau SAR Five-Year Development Plan for 2016 to 2020, Macau is set to take its role as a service platform for commercial and trade co-operation between China and the Portuguese-speaking countries (PSCs) to a new level. Ultimately, it’s hoped the plan, also known as the One Platform strategy, will boost co-operation between China and the PSCs, while also promoting diversified and sustainable economic development in Macau itself.

The Chinese government’s policy is for Macau to act as a commercial and trading intermediary between China and the PSCs. In the 12th Five-Year Plan, released in 2011, the government proposed speeding up the development of Macau as a service platform for co-operation between China and the PSCs. Its successor, the 13th Five-Year Plan (released in 2016), spells out what needs to be done to develop Macau’s commercial, trading and convention/exhibition sectors.

Developing Macau as a Service Platform

Macau’s role as a service platform between China and the PSCs was first established in October 2003 with the formation of the Forum for Economic and Trade Co-operation between China and PSCs (Macau) – or Forum Macau for short. Part of a central government initiative, Forum Macau is a multilateral, intergovernmental mechanism promoting trade and economic development. Its aim is to enhance the economic and trade links between China and the PSCs by emphasising Macau’s role as a bridge between them.

Since then, the Forum has secured the support and participation of eight PSCs – Angola, Brazil, Cape Verde, Guinea-Bissau, Mozambique, Portugal, Sao Tome and Principe, and Timor-Leste. A ministerial conference has been held in Macau every three years. To date, five Forum Macau ministerial conferences have been held and five Strategic Plans for Economic and Trade Co-operation have been drawn up and signed by the ministers of the participating countries.

At the last Forum Macau ministerial conference in October 2016, Chinese Premier Li Keqiang announced 18 new initiatives designed to enhance co-operation between China and the PSCs. Five of these involve the promotion of Macau’s role as a service platform:

  • Supporting the Macau SAR to develop financial services platform, targeting on China and PSCs in order to provide financial support for the co-operation between Chinese and PSCs’ companies;

  • Establishing the Association of Enterprise Directors of China and the PSCs with its secretariat based in Macau;

  • Building up a Chinese-Portuguese bilingual talent training base in Macau, by encouraging Macau to participate in the Mainland-Macau joint diploma programs funded by government aid and providing 30 on-the-job diploma education places for participating PSCs;

  • Setting up a Centre for Cultural Exchanges between China and the PSCs and a Youth Innovation and Entrepreneurship Centre between China and the PSCs in Macau; and

  • Setting up a Complex of Commercial and Trade Co-operation Platform for China and the PSCs in Macau, which will support co-operation between China and the participating PSCs in a number of fields, including trade, investment, conventions/exhibitions and culture.

Forum Macau and the Macau SAR Government also conduct annual Business People Meeting for Economic and Trade Co-operation between China and the PSCs. Since 2005, the different PSCs have taken it in turns to host the meetings.

The Three Centres

At present, Macau’s role as a service platform between China and the PSCs revolves around the three centres – the Commercial and Trade Service Centre for Small- and Medium-sized Enterprises (SMEs) of PSCs, the Food Product Distribution Centre for PSCs, and the Centre for Conventions and Exhibitions for Economic and Trade Co-operation between China and PSCs. The three centres concept was first put forward at the fourth ministerial conference (2013).

The Commercial and Trade Service Centre for SMEs of PSCs supports SMEs on the Chinese mainland, in Macau and in the various PSCs. A number of commercial and trade activities such as business delegations are also organised from time to time.

The Food Product Distribution Centre for PSCs has been tasked with promoting co-operation between China and the PSCs in the food industry. This includes a number of marketing activities, such as introducing Portuguese food to the Chinese mainland.

The Centre for Conventions and Exhibitions for Economic and Trade Co-operation between China and PSCs is mainly responsible for promoting co-operation between China and the PSCs regarding convention/exhibition activities. All three integrate both online and offline services to provide assistance to businesses in China and the PSCs.

Macau is actively looking to establish an information-sharing platform in order to enhance the circulation of information between the Chinese mainland, Macau and the PSCs. In 2015, Macau set up the Economic and Trade Co-operation and Human Resources Portal between China and PSCs to provide related commercial and trade information on China and the PSCs. This includes databases of PSC food products and Chinese-Portuguese bilingual talents, and information on professional service providers and conventions/exhibitions, as well as on economic and trade activities.

Macau is also putting in place measures to help train up bilingual professionals versed in both Chinese and Portuguese. These include the formation of the Forum Macau Training Centre and the organisation of regular talks and exchange activities.

The establishment of the three centres and the Economic and Trade Co-operation and Human Resources Portal between China and PSCs is primarily aimed at providing related commercial and trade information to Chinese and PSC businesses. The Commercial and Trade Service Centre for SMEs of PSCs, for example, mainly acts as an enquiry service for SMEs, while the Food Product Distribution Centre for PSCs provides a facility for the physical display of PSC food products, which mostly come from Portugal.

Macau is also planning to construct a Complex of Commercial and Trade Co-operation Service Platform for China and the PSCs, which will integrate the functions of economic and trade exchanges, enterprise services, conventions/exhibitions, cultural displays and staff training. The complex will provide convention venues, offices and an information centre for the related government organisations, institutions and communities of China and the PSCs.

Room for Development

Over the last decade and a half, Macau’s economic and trade co-operation with the PSCs has become increasingly significant. Imports and exports between the two have more than doubled in value since the return of Macau to China, from around MOP192 million in 1998 to MOP649 million in 2017. Before the establishment of Macau as a China-PSC platform in 2003, there was a slight downturn in trade values between Macau and the PSCs, but it has since risen significantly.

Macau’s imports from the PSCs have seen a particularly large increase, growing from MOP158 million in 1998 to MOP648 million in 2017. This rise of more than 300% is significantly higher than the rate of increase in Macau’s total trade with PSCs.

Most of Macau’s trade with the PSCs involves Brazil and Portugal. 59% of the trade between Macau and the PSCs in 2017 was with Brazil and 41% with Portugal. By contrast, less than 1% involved Mozambique or Angola.

Chart: Total Import and Export Values between Macau and PSCs
Chart: Total Import and Export Values between Macau and PSCs

Although the trade between Macau and the PSCs constitutes less than 1% of Macau’s total trade value, it is believed that most trading activity conducted through the China-PSC platform of Macau is offshore. This involves goods being shipped directly to the Chinese mainland without physically passing through Macau.

Most Macau-PSC trade involves food products, such as wines, olive oils and sardines, many of which are produced by Portuguese SMEs. In 2017, about 54% of the goods imported from the PSCs by Macau were meat and edible meat offal, while beverages, spirits and vinegar accounted for another 11%. As many large companies in the PSCs, particularly those in Brazil, have already built up direct commercial relationships with Chinese importers, the services provided by Macau as the China-PSC platform are mostly targeted at SMEs.

Despite the growth in commerce between Macau and the PSCs, these countries do not presently enjoy any preferential treatment or special status in their trade with Macau or the Chinese mainland. For example, China provides no particular incentives for the trade of food products imported from the PSCs through Macau. Although there may be some individual cases where raw materials processed in Macau, such as coffee beans imported from Timor-Leste, are treated as in compliance with the CEPA standard on place of origin when exported to the mainland, in general the place of origin requirements on imports from the PSCs are exactly the same as those applied to imports from non-PSCs.

An area where one would expect Macau to have an edge in business dealings with the PSCs is language. The Basic Law of the Macau SAR states: “The executive authority, legislature and judiciary of the Macau SAR can use Portuguese in addition to Chinese, and Portuguese is also the official language of the SAR.”

However, according to the 2016 by-census of Macau, only 2.3% of its population is fluent in Portuguese. Because of this, Macau has in recent years, taken steps to train up more bilingual professionals well-versed in Chinese and Portuguese. It set up the Forum Macau Training Centre, organises exchange activities and provides financial subsidies for Macau students to study in the PSCs. The increasing popularity of learning Portuguese in Macau will, it’s hoped, be beneficial to the future development of its role as the China-PSC platform.

Under the One Platform strategy, the Macau government is gradually pushing forward measures to try to promote commercial information exchanges between China and the PSCs, particularly among SMEs. Efforts have also been made to expand trade co-operation to products other than food and liquor. However, it is clear there is still further room for development in shaping Macau’s role as a platform between China and the PSCs.

Opportunities for Hong Kong

Macau’s role as a platform is, then, still at the development stage. Given Macau’s historical relationship with the PSCs, however, and the active support of the Chinese government for its role as the China-PSC platform, Hong Kong should pay close attention to the progress Macau is making in this field and the opportunities that may arise from it. Furthermore, the development of the Guangdong-Hong Kong-Macau Bay Area should encourage Hong Kong to use the platform of Macau to build up a commercial and trading network with the PSCs, particularly among SMEs.

One area where Hong Kong and Macau should consider working together is in the promotion of their convention/exhibition industries and in expanding the service areas of these industries to the markets of the PSCs. The Macau government announced a “convention first” policy in its policy address for the fiscal year 2016, while Hong Kong has, over the years, built up an extensive international exhibition network.

PSC enterprises could make use of Hong Kong’s international exhibition platform to tap the Asia-Pacific regional market, including China. Macau, meanwhile, could use its historical relationship with and knowledge of PSCs to serve as a link between businesses, particularly SMEs, in China and PSCs, and to provide customised professional services to the parties concerned.

By virtue of their respective advantages in these fields, Hong Kong and Macau can complement each other when promoting their respective convention/exhibition industries. Through working together, they can co-operate in organising professional exhibitions and conventions targeted at the markets of PSCs.

Hong Kong’s enterprises could also use the Macau platform to build up relationships with businesses in the PSCs. Trade between PSCs and the Chinese mainland and Macau is currently focused largely on food products, with several steps having been taken to encourage the development of this sector.

In addition to the online databases of PSC food products, part of the Economic and Trade Co-operation and Human Resources Portal between China and PSCs, the Food Product Distribution Centre for PSCs has also set up an offline bricks-and-mortar store called the PSC Food Products Exhibition Centre to boost the promotion of PSC food products and provide operators with information on food products and their suppliers and agents. Given the rapidly increasing demand in China for imported food products, it would be a good idea for Hong Kong companies engaged in the food import sector to make use of the Centre to identify co-operation opportunities with other enterprises.

With Macau keen to expand its platform functions to other commodities (such as clothing, coffee, medical and pharmaceutical products) and services, Hong Kong companies wishing to build up commercial and trade relationship with the PSCs would be well advised to pay close attention to this development in particular.

Content provided by Picture: Doris Fung
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