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China Investment Strategy

In the advent of China's accession to the WTO, the recently delivered Policy Address by the Chief Executive has added impetus to the efforts made by professionals trying to enter the China market. The Chief Executive announced that:

  • the Business and Services Promotional Unit under the Commerce and Industry Bureau will co-ordinate the efforts of relevant departments to offer active support
  • HK$100 million will be set aside to set up a support fund, on an equal matching basis, for useful projects that can enhance the standard of professional services in Hong Kong, and
  • the government undertakes to join hands with the professions in promoting their services to open up new markets in the Mainland and overseas.

I welcomed these initiatives in LegCo on 17 October, but had also made clear that accountants are not seeking financial assistance in competition with the poor and needy. Nonetheless, I felt that the support fund could be useful if managed independently by the Government and applied to the research and training efforts of professional bodies to enhance the knowledge, linguistic skills and qualifications of professionals in preparing themselves for the new economic era. The fund should not be wasted, however, on superficial promotional activities, with little or no specific business projects in mind.

As a matter of fact, I have been busy lobbying for just these types of policy support from the Government in meetings with the Chief Executive, the Financial Secretary, the Secretary for Justice, the Secretary for Financial Services and the Secretary for Commerce and Industry for some time. My Policy Address and Budget speeches of past years provide good evidence of these efforts. But the real work has just begun.

During meetings with officials, I have frequently cited the discussion paper released by the HKSA earlier this year on the 'Anticipated Increase in the Opportunities of Co-operation between the Accountancy Profession in Hong Kong and the Mainland Emerging from China's Impending Entry into the WTO'. I shall be working closely with this group to see what practical proposals may arise from it.

In the meantime, I have suggested that in conjunction with the legal profession's efforts in promoting Hong Kong as an international arbitration and mediation centre, accountants could advocate to promote Hong Kong as the springboard for overseas investments in and out of China. We have the financial and legal infrastructure, the professional skills and the global network to provide a 'one-stop' service centre for both Mainlanders and overseas investors.

I believe that accountants are not looking for special privileges in seeking business opportunities in China. However, one must recognise that China covers a wide territory and in addition to language and cultural barriers, there exist many arbitrary administrative barriers to entry.

Especially for the smaller firms that lack long-term capital funding and the chance to cultivate business relationships inside China, the initial hurdle can be great and the long-term business risks quite unbearable. However, with the help of clear governmental support, and hopefully a gradually improving business environment inside China, these smaller firms may have a chance to compete fairly with multinationals and their local counterparts.

I believe that the Hong Kong Government could help to procure such a Memorandum of Understanding or expressed Policy Statement from the highest authorities in China which might help to speed up this process of evolution.

I do not believe that Hong Kong professionals can avoid making great efforts on their own part. What the Government can do is to open doors of opportunity and provide a more certain and equitable business environment. It is still up to us to develop a long-term business strategy, invest in sourcing of business partners and potential clients, staff training, brand name enhancement and marketing. It takes time and first-hand knowledge to build confidence in this new, but vast market with almost unfathomed potential.

I can understand why many would hesitate to make a move towards the China market at this point in time. However, it is also evident that the open door policy of China is already taking a toll on Hong Kong before we can count our future unrealised benefits.

At only a fraction of the costs when compared with developed countries, China acts like a giant magnet in attracting foreign investment, creating jobs and transferring technology to the eager working population in China. This transfer of wealth is likely to have significant impact for the entire Asia-Pacific region in the foreseeable future. Hong Kong is taking the brunt of the impact with investments, jobs and consumption all draining across the border. Fierce competition is already at our doorsteps!

Despite the looming economic recession, people in Hong Kong still hoard away substantial savings, which is not deployed to profitable investment projects. We now have surplus manpower of skilled professionals, contrasting sharply with the desperate shortages in China. If we can remove the arbitrary barriers in between, and give confidence to the people in Hong Kong, we have potentially a mutually beneficial scenario for both the Mainland and Hong Kong.

Hong Kong has already undergone drastic economic restructuring in the last century. We thrived on change. The people of Hong Kong have been pragmatic, unyielding and never pessimistic. It is these qualities and the readiness to embrace change that has built the foundation of our present success. There is no reason why we cannot do it once again!

Credit: Eric Li is the LegCo Accountancy Functional Constituency Representative. For more information, refer to his website at http://www.ericli.org.

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