Sur­viv­ing com­mer­cial chal­lenges in the PRD

Eddy Li writes that HK com­pa­nies need to take ad­van­tage of the city’s strate­gic po­si­tion by ex­plor­ing op­por­tu­ni­ties in main­land free trade zones, B&R, e-com­merce, as well as avail­able de­vel­op­ment funds

China Daily (Hong Kong) - - COMMENT -

The SAR gov­ern­ment has re­cently started its six­month pub­lic con­sul­ta­tion on “Hong Kong 2030+: To­wards a Plan­ning Vision and Strat­egy Tran­scend­ing 2030”, which is an ex­ten­sive plan­ning blueprint on how the city could pro­vide a more “liv­able, work­able and en­joy­able” en­vi­ron­ment in the face of a huge chal­lenge posed by a grow­ing pop­u­la­tion. In this plan­ning pro­posal, the fu­ture strate­gic po­si­tion of Hong Kong is men­tioned, which will de­velop a “three-hour liv­ing cir­cle and one-hour in­ter­city traf­fic cir­cle within the Greater Pearl River Delta (PRD)” by 2030.

This is un­doubt­edly good news for Hong Kong busi­ness­men who in­vest in the PRD. But as ex­cit­ing as it sounds, Hong Kong in­vestors in the PRD to­day are fac­ing chal­lenges that are sev­erer than ever. On one hand, the Hong Kong dol­lar which is pegged to the US dol­lar has stayed at a high level of ex­change rate; the ren­minbi, de­spite its de­pre­ci­a­tion against the US dol­lar, hasn’t ac­tu­ally lost much of its value be­cause other ma­jor cur­ren­cies (such as the Ja­panese yen, the euro and the Bri­tish pound) are de­valu­ing at faster rates. On the other hand, the la­bor cost on the main­land is grow­ing rapidly, with the gov­ern­ment putting the im­ple­men­ta­tion of “five in­sur­ances (en­dow­ment, med­i­cal, un­em­ploy­ment, em­ploy­ment in­jury, and ma­ter­nity) and hous­ing fund” in place.

So how can the Hong Kong-funded com­pa­nies in the PRD area sur­vive the chal­lenges to en­joy the vision of 2030?

The first prac­ti­cal and fea­si­ble tac­tic is to uti­lize the Ded­i­cated Fund on Brand­ing, Up­grad­ing and Do­mes­tic Sales (BUD Fund) set up by the Hong Kong SAR in ac­cor­dance with the na­tional 12th Five-Year Plan (201115). The BUD Fund is aimed at pro­vid­ing fund­ing sup­port to as­sist Hong Kong en­ter­prises in ex­plor­ing and de­vel­op­ing the main­land mar­ket by de­vel­op­ing strong brands, up­grad­ing and re­struc­tur­ing op­er­a­tions, and pro­mot­ing do­mes­tic sales on the main­land. This aim in­di­cates that any Hong Kong in­vestors in the PRD area can ap­ply for this fund; what’s more, up to April this year, only about 30 per­cent of the HK$1 bil­lion BUD Fund has been suc­cess­fully taken up, which means it is still very much avail­able. Com­pa­nies can use the money pro­vided by the fund to im­prove their com­pet­i­tive­ness.

Sec­ond, com­pa­nies owned by Hong Kong in­vestors in the PRD should pay at­ten­tion to the ris­ing trend of e-com­merce. Nowa­days, shop­ping is a be­hav­ior that’s no longer re­stricted to shop­ping in per­son. Ac­tu­ally, the pop­u­lar­ity of on­line shop­ping is sur­pass­ing that of tra­di­tional pur­chas­ing; on­line shop­ping is now an in­dis­pens­able part of peo­ple’s daily life. Elec­tronic com­merce has not only changed peo­ple’s life­style, but also

Only about 30 per­cent of the HK$1 bil­lion BUD Fund has been suc­cess­fully taken up, which means it is still very much avail­able. Com­pa­nies can use the money pro­vided by the fund to im­prove their com­pet­i­tive­ness.”

re­duced the cost of busi­ness op­er­a­tion greatly. The use of e-check, e-sig­na­ture and e-shop can, to a great ex­tent, cut down the cost of busi­ness op­er­a­tion in many in­dus­tries.

If the busi­ness en­vi­ron­ment is truly dam­ag­ing the profits of Hong Kong en­ter­prises in the PRD, busi­ness­men can al­ways choose to tap other emerg­ing mar­kets. Ben­e­fit­ing from the Belt and Road Ini­tia­tive, there are more po­ten­tial mar­kets for us to ex­plore and de­velop, such as the South­east Asian mar­kets along the 21st-Cen­tury Mar­itime Silk Road and the Cen­tral Asian coun­tries along the Silk Road Eco­nomic Belt. With lower la­bor costs there and sup­port­ive poli­cies and match­ing lo­gis­tics fa­cil­i­ties pro­vided by the cen­tral gov­ern­ment, there def­i­nitely will be sat­is­fy­ing so­lu­tions for us.

As men­tioned in “Hong Kong 2030+”, the three pi­lot free trade zones in Guang­dong — Nan­sha, Qian­hai and Hengqin — will be eas­ily ac­ces­si­ble in the fu­ture. Hong Kong com­pa­nies which want to stay in the PRD area can find a way to get into these free trade zones; they will en­joy greater ad­van­tages there than most of the firms op­er­at­ing out­side. At the mo­ment, these Guang­dong free trade zones are act­ing some­how as com­peti­tors to Hong Kong in­ter­na­tion­ally and re­gion­ally. As a Chi­nese Peo­ple’s Po­lit­i­cal Con­sul­ta­tive Con­fer­ence mem­ber, I sub­mit­ted a pro­posal this year sug­gest­ing that Hong Kong and the Guang­dong free trade zones should main­tain healthy com­pe­ti­tion, which fa­cil­i­tates in-depth co­op­er­a­tion. This re­quires that the free trade zones should un­der­stand the role of Hong Kong, so as to co­op­er­ate and co­or­di­nate with us to build a world-class eco­nomic re­gion. If Hong Kong com­pa­nies in Guang­dong can en­ter the zones, the prospects for the whole re­gion will be more promis­ing.

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