CITY’S ROLE TO LIFT CHI­NESE FIRMS’ EX­PAN­SION DRIVE

China Daily (Hong Kong) - - BUSINESS -

Main­land com­pa­nies are try­ing to cap­i­tal­ize and lever­age on the ir­re­place­able ad­van­tages of Hong Kong’s bridg­ing role to go global on a large scale, while Hong Kong is also try­ing to en­hance that role, a re­cent re­port has said.

Hong Kong has al­ways been the first stopover des­ti­na­tion for the ma­jor­ity of main­land com­pa­nies ex­pand­ing glob­ally. The bulk of those com­pa­nies’ over­seas for­eign di­rect in­vest­ment, or OFDI, goes through the city be­fore mov­ing on to other coun­tries and re­gions.

Ac­cord­ing to China CITIC Bank In­ter­na­tional’s China Eco­nomic Re­port re­leased in June, Hong Kong had 47.8 per­cent and 61.6 per­cent of the in­vest­ment flow and in­vest­ment stock of the main­land’s OFDI in 2011, re­spec­tively, mak­ing the city the big­gest im­me­di­ate in­vest­ment des­ti­na­tion for main­land com­pa­nies ex­pand­ing glob­ally.

The bulk of the main­land com­pa­nies’ OFDI into Hong Kong flows into the leas­ing and com­mer­cial ser­vices sec­tor, where it ac­counted for 38.1 per­cent and 35.7 per­cent of the in­vest­ment flow and stock, re­spec­tively, in 2011. The sec­ond ma­jor sec­tor to get the com­pa­nies’ OFDI in 2011 was whole­sale and re­tail trade where it ac­counted for 24.7 per­cent and 15.6 per­cent of the in­vest­ment flow and stock, the re­port added.

Ac­cord­ing to the re­port, more than half of the main­land’s OFDI in Hong Kong, and more than 70 per­cent of the non-fi­nan­cial OFDI in Hong Kong, even­tu­ally flows into other coun­tries and re­gions.

Hong Kong’s main com­pet­i­tive ad­van­tages are: ge­o­graph­i­cal prox­im­ity, eco­nomic in­te­gra­tion and lin­guis­tic con­nec­tions with the main­land, which make it a nat­u­ral choice for Chi­nese main­land com­pa­nies try­ing to ex­pand.

Also, Hong Kong boasts a com­pre­hen­sive pro­fes­sional ser­vices net­work that sup­plies all-round, highly ef­fi­cient and topqual­ity ser­vices to main­land com­pa­nies head­ing to­ward in­ter­na­tion­al­iza­tion.

The city’s ef­fi­cient govern­ment, sound le­gal and reg­u­la­tory sys­tem, trans­par­ent and free in­for­ma­tion flow, ro­bust cap­i­tal mar­ket net­works, strin­gent in­tel­lec­tual prop­erty pro­tec­tion and so­phis­ti­cated in­fra­struc­ture also con­trib­ute to a su­pe­rior busi­ness set­ting for main­land com­pa­nies.

The Hong Kong mar­ket also op­er­ates within a frame­work in com­pli­ance with in­ter­na­tional pro­to­cols, an­other ad­van­tage for com­pa­nies with in­ter­na­tion­al­iza­tion plans.

The re­port added that Hong Kong should boost its global in­vest­ment and ser­vice plat­forms to main­tain its com­pet­i­tive edge in the in­dus­try be­cause other fi­nan­cial cen­ters like Lon­don, New York and Sin­ga­pore are gear­ing up to serve main­land com­pa­nies plan­ning to ex­pand glob­ally.

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