Transcript Multinationals, China, Hong Kong and... By Mark

Multinationals, China, Hong Kong and Competitiveness
Presentation for The Competitiveness Institute
Annual Conference
10 November 2005
Latest economic Data
In 2004:
• GDP up 8.1%
• Exports of goods up 32.4%
• Exports of services up 7.3%
• Hang Seng Index up 3.8%
• World’s 11th largest trading
economy
In last 6 months:
• GDP up 6.5%
• Inbound tourists for first 9
months of 2005: 16.9 mil
Sources: HK Census and Statistics Dept; HKEx; HKTB; HKTDC
Latest investment data
Inward
• 2nd largest recipient of
FDI in Asia after
Mainland, 7th in world
Outward
• Largest source of
outward FDI in Asia; 7th
in world
• US$34 billion in 2004
• US$20 billion for first
half of 2005
• Largest investors:
Mainland, Netherlands,
US, Japan
Sources: UNCTAD World Investment Report 2005; HK
Census and Statistics Dept.
Foreign Direct Investment
Inflow of FDI in Hong Kong
Year
2002 2003 2004
2005
(Q1-Q2)
Amounts (US$billion)
9.7
13.6
*preliminary figures
Source: Census and Statistics Department
34.0*
19.8*
Inward Direct Investment by Major Investor Economy
Country
Mainland China
Netherlands
United States
Japan
Singapore
United Kingdom
US$bill
99.0
32.9
24.1
18.3
7.5
6.2
Total
$380.5
2003; HK Census & Statistics Dept
FDI Inflows of 10 Neighbouring
Economies in Asia
(US$ billion)
Ranking
2002
2003
2004
1
Mainland China
(52.7)
Mainland China
(53.5)
Mainland China
(60.6)
2
Hong Kong (9.7)
Hong Kong (13.6)
Hong Kong (34.0)
3
Japan (9.2)
Singapore (9.3)
Singapore (16.1)
4
Singapore (5.8)
Japan (6.3)
Japan (7.8)
5
India (3.4)
India (4.3)
S.Korea (7.7)
6
Malaysia (3.2)
S.Korea (3.8)
India (5.3)
7
S.Korea (2.9)
Malaysia (2.5)
Malaysia (4.6)
8
Philippines (1.8)
Brunei (2.0)
Taiwan (1.9)
9
Taiwan (1.4)
Thailand (1.9)
Vietnam (1.6)
10
Vietnam (1.2)
Vietnam (1.5)
Thailand (1.1)
Inward Direct Investment by Major Economic Activity
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Investment holdings, real estate, business services
Wholesale, retail and import/export trades
Banks and deposit-taking companies
Other financial institutions
Transport and related services
Communications
Manufacturing
Insurance
Restaurants and hotels
3,800 regional operation centres
900
800
700
600
500
400
300
200
100
N
e
Th
Source: Report on 2005 Annual Survey of Regional Offices Representing Overseas
Companies in Hong Kong, Census and Statistics Department, Hong Kong
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One Country, Two Systems
• Hong Kong retains its advantages
 Rule of law
 Level playing field
 Currency convertibility, separate from Renminbi
 International business practices
 Free flow of information
• Negotiates and signs own economic/trade agreements
• Hong Kong is a full, separate member of WTO and
APEC
• At the same time, Hong Kong is an integral part of China
Why Hong Kong ?
Why do so many international investors establish
operations in Hong Kong rather than any other cities in
the Asia-Pacific region?
Essential to Hong Kong’s appeal and success are
competitive advantages that help build the foundation of
Hong Kong's prosperity and stability.
Hong Kong - Key advantages
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Rule of law
Unrivalled location
Low and simple taxes
World’s freest economy
Clean government
Free flow of information
World class infrastructure
Skilled workforce
International lifestyle
Gateway to the Mainland
International financial centre
• Asia’s 2nd largest stock market
• Home to 73 of the world’s 100 largest banks
• Mainland firms have raised over US$100 billion
• World’s 7th largest foreign exchange centre
• Asia’s largest fund management and insurance hub,
outside Japan
• Controls over 28% of the venture capital under
management in Asia
• Full currency convertibility
• Real time USD and Euro settlement system in place
Sources: HKTDC; The 2004 Guide to VC in Asia
Hong Kong - Key advantages
And…
OUR PEOPLE
Hong Kong & the Pearl River Delta –
A Winning Combination
Hong Kong provides the capital, management,
technology, market knowledge and access to
international markets
Mainland PRD cities provide world-class,
low-cost manufacturing, and access to a new,
demanding consumer base
Closer Economic Partnership Arrangement (CEPA)
What is it?
• China’s - and Hong Kong’s - first free trade agreement
• Covering trade in goods, services and investment
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facilitation
Reaffirms Hong Kong role as gateway to Mainland
• Provides easier access to Mainland for HK-made
products and HK-based service companies
Available to people and businesses of all nationalities
WTO compliant
Being introduced in phases:
• CEPA I, fully effective from 1 January 2004
• CEPA II, fully effective from 1 January 2005
• CEPA III, fully effective from 1 January 2006
CEPA Benefits
• Trade with the Mainland through HK and enjoy CEPA
benefits like:
 Cost savings now
 Short term gain through earlier market access than
WTO (WTO early)
 Greater market access than WTO will ever allow in
some sectors (WTO plus)
• All Hong Kong-origin products may be exported tariff-free
to the Mainland
Our main competition
• HK as a regional centre
− Singapore main competitor
• HK as part of China
− Shanghai, Beijing
• HK as part of S. China/GPRD/Pan-PRD
− Guangzhou, other PRD cities
Parting shot…
Hong Kong is a world leading business centre poised at
the edge of the world’s biggest market. Hong Kong’s
potential is huge and its opportunities unique.
www.InvestHK.gov.hk