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aysayers predicted havoc when the British handed over Hong Kong to Mainland China in 1997. But instead of Red Chinese soldiers charging in to take control, the floodgates opened the other direction. Hong Kong capitalists living in this landlocked economic powerhouse began pouring large sums of money into South China.
Now with China anticipating accession to the World Trade Organization (WTO), Hong Kong faces another defining moment in the structural transformation of its economy. The implications are enormous. By becoming a WTO member, experts project China’s current worldwide trade at US$360 billion to double in the first five years.
Frank Martin, president of the American Chamber of Commerce in Hong Kong admits that while China’s accession to the WTO is fraught with challenges, overall it will be beneficial to the Mainland, Hong Kong, Macau, the United States and other global trading partners.
“Hong Kong’s role as a deal maker providing sourcing, merchandising, distribution, financing, legal and accounting services will increase,” he says. He also sees Hong Kong’s know-how, expertise, experience, strategic alliances and contacts giving local traders a competitive advantage.
“Hong Kong will continue to be a preferred location for multinational corporate headquarters,” he adds.
Hong Kong’s Success Opens
New Mainland Market
Paul Brown, chief information officer for the Information Service Dept. of the Government of the Hong Kong Special Administration Region (HKSAR), points out that most foreign investment continues to be done in Hong Kong because the currency there is convertible. Consequently, scores of industries are going at Hong Kong’s doorstep across the border in the Pearl River Delta.
Shenzhen, directly across from Hong Kong in Mainland China, is already home to more than 1,500 computer component makers, 500 software companies and 200 research and development centers. Shenzhen encompasses a population of 11 million. The entire Pearl River Delta has some 26 million people. China’s total population hovers around 1.2 billion.
“The Pearl River Delta is the greatest source of labor in the world,” says Brown. “It is also the fastest developing economic zone in China.”
Today, Hong Kong is considered one of the most open, externally oriented economies in the world. There are no barriers to trade — no tariffs, no quotas and no exceptions to this rule. Companies and individuals find no restrictions on investments, inward or outward. In addition, Hong Kong’s trade-to-Gross Domestic Product (GDP) stands at 250 percent.
On top of that, Hong Kong’s laws remain the same as prior to the handover.
“Our Basic Law embodies the concept of One Country, Two Systems,” says Brown. “This guarantees a high degree of autonomy with Hong Kong people running Hong Kong.”
American business executives who travel frequently to Hong Kong refer to Hong Kong as a “finely oiled economic machine.”
Infrastructure Provides Efficiency
Efficiency is at the heart of everything here. The Port of Hong Kong is the world’s busiest container port. In 1999, its throughput totaled more than 16.2 million twenty-foot equivalent units (TEUS). The average turnaround time for ships calling at Hong Kong is 12 to 13 hours.
Hong Kong International Airport (HKIA) handles more than 32 million passengers and almost 2.2 million tons of freight a year. It is the busiest airport in Asia.
“Half of the world’s population lives within five hours flying time of Hong Kong,” says HKIA Chairman Dr. Victor Fung Kwok-king.
