Gateway to enterprise

HENRY TANG: Hong Kong's financial secretary.

Investors and entrepreneurs are being urged by Hong Kong financial secretary Henry Tang to use all the opportunities the China gateway city offers. 

The Hong Kong economy has undergone a surging few years since the spectre of SARS receded, helped along by continued boom times in mainland China itself. The Hong Kong Special Administrative Region, which has its own, British-style laws and regulations, increasingly acts as a service centre for mainland China. 

As the world's most populous nation becomes increasingly prosperous, more and more companies from the mainland are becoming outward looking and confident enough to list on the Hong Kong stock exchange. They now account for more than a third of the market's capitalisation. 

In addition, companies from China looking to invest outwards use Hong Kong as a convenient, midway platform for their foreign forays. Mr Tang says the system works in reverse, too, with overseas entrepreneurs and multi-nationals favouring Hong Kong as a stepping-stone for forays into mainland China. 

Hong Kong government figures show that last year, HK$3.9 billion ($800 million) worth of trade between New Zealand and mainland China (representing 18.7 per cent of the total trade between the two countries) was routed through Hong Kong.

The Financial Secretary wants the New Zealand business community to take advantage of the "huge opportunities" China offers. Those chances should become more plentiful when a free trade agreement, currently in negotiation, is signed between New Zealand and China. A similar deal between New Zealand and Hong Kong is also currently being discussed. 

"Chinese policy is now to have an outward investment policy as well as inward investment," says Mr Tang.

"New Zealand has a lot of the resources that China would be interested in whether it is forestry or fisheries; many of the natural resources would be of great interest to the Chinese." 

New Zealand is ranked 36th among Hong Kong's trading partners.

Mr Tang says: "New Zealand and Hong Kong share many similarities: they are both free and open economies and both small in a global context, but there are many strategic interests that can link us together. I believe there is a strong opportunity for a closer strategic economic relationship between us. 

"We have thrived based on our free trade, our free economy and also because of our geographical location. Our capital formation capability has surpassed Japan: we are now Asia's largest capital formation centre. That is no small feat considering Japan is much bigger. 

"Hong Kong's system is mature and world class, whether it is the stock market, regulations, or the professional practitioners accountants, lawyers, investment bankers that are here. It is a system that western investors know well, and where Chinese companies that come to Hong Kong to list and raise capital have come to be very familiar with." 

Mr Tang says: "There is so much worldwide interest in the China story, so that is why it has been so active. Even for companies that have dual listing in Hong Kong and New York, 70-80 per cent of the turnover is done in HK. We are their home market." 

The increasingly open China market offers tantalising prospects for any entrepreneur. There are 1.3 billion people in the vast nation, the overwhelming majority of them neophyte consumers who are becoming richer by the day; much of the money is concentrated around the eastern seaboard of the nation, where an estimated 300 million are estimated to have significant spending power. 

Mr Tang himself has witnessed the changes first hand.  Before entering the political arena he served as a member of the Legislative Council in 1991.  Mr Tang was a leading industrialist in Hong Kong. The company he ran has extensive textile and electronics manufacturing interests in China. 

The first China factory to be built was in 1978, right at the end of the tumultuous Cultural Revolution, the time when ruler Deng Xiaoping decided to open the country to outside investment. The nation has not looked back since, registering regular double-digit growth. 

"The factory was only one kilometre from the former Hong Kong-China border and from the office of the factory I could see the Union Jack," says Mr Tang.

"At that time there were fields and the roads were unpaved - today it is right in the middle of Shenzhen - which is almost a mini-Hong Hong, with concrete towers, roads, lots of people and a vibrant atmosphere." 

Those three decades of non-stop growth have seen almost all Hong Kong manufacturing shift across the border to China; nowadays, the city has a service-oriented economy that saw growth of more than 7 per cent last year. Mr Tang is expecting growth of 4-5 per cent this year, barring any serious crises such as the still-lingering prospect of a bird flu epidemic, higher oil prices battering the economy of its second-largest trading partner, the United States, or any major hiccups in the China economy. 

Mr Tang is due to arrive in New Zealand this week.  Among other things his trip will draw attention to New Zealand as a tourist destination: it is already a popular choice for Hong Kong people who revel in the novelty of a relaxed way of life, pure air and rugged scenery. 

"Lord of the Rings generated huge interest," says Mr Tang. "You can imagine how Hong Kong people appreciate the space of New Zealand: we have seven million people crammed into 1000 square kilometres."

And he says he will have a busy time while here. 

"On the business front we will be organising a number of functions as well as visiting a number of people - central bank, stock exchange and functions where we will get the movers and shakers from business world together," he says. 

"Hong Kong is successful because the people have always had the mentality of competition and the market economy, that constant vigilance on maintaining competitiveness. Each person thinks about how to maintain his, or her, competitiveness."