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November 14, 2008
Immigrant-Owned Businesses Provide Important
Contribution to U.S. Economy - Immigrants are 30 percent more likely to start
businesses than non-immigrants
Washington, D.C. –The Minority Business Development Agency (MBDA) and the Small
Business Administration (SBA) join together to share the report, “Estimating the
Contribution of Immigrant Business Owners to the U.S. Economy” by Robert W.
Fairlie, PhD, professor of economics at the University of California Santa Cruz
at an event held at the Department of Commerce from 10:00 am through 12:00 pm.
The study, funded by SBA’s Office of Advocacy, finds that immigrants are nearly
30 percent more likely to start a business than non-immigrants, representing
16.7 percent of all new business owners in the United States.
There are approximately 1.5 million immigrant business owners in the United
States, representing 12.5 percent of all business owners. Immigrant business
ownership is geographically concentrated in a few states, such as California,
New York, New Jersey, Florida and Hawaii. Nearly 30 percent of all business
owners in California are immigrants. One quarter of all business owners in New
York are foreign-born and one-fifth of all business owners are foreign-born in
New Jersey, Florida and Hawaii.
“U.S. Census figures predict that by 2050, the United States will be a
majority-minority country. This growth will be fueled by immigrants-specifically
people of color,” says Ronald N. Langston, National Director, MBDA. “Some fear
this change and others complain about the burden and cost of immigration,” he
adds. “But, this report illustrates the positive rewards of embracing inclusion,
diversity and minority entrepreneurship.”
“This report is the first time that immigrant business ownership rates and
immigrant-owned businesses contributions to the economy have been studied in
detail,” said Dr. Chad Moutray, Chief Economist for the Office of Advocacy.
“These findings can make a significant contribution to public policy debates,”
Although Mexican immigrants make up the largest percentage of immigrant business
owners, the top five countries of origin also include Korea, India, China and
Vietnam. Immigrants also own businesses that range from low-skill businesses
such as retail and wholesale trade to high-skill jobs like technology and
engineering. In fact, approximately 25 percent of engineering and technology
jobs started in the past decade were founded by immigrants. These specific firms
had more than $52 billion in sales and hired 450,000 workers, according to the
About the Minority Business Development Agency (MBDA)
MBDA, http://www.mbda.gov, an agency within
the U.S. Department of Commerce, serves minority entrepreneurs across America
who are building and growing enterprises. In doing so, minority-owned firms are
better equipped to create jobs, impact local economies and compete successfully
in domestic and global marketplaces. With a nationwide network of more than 40
business centers and strategic partners, MBDA assists minority entrepreneurs and
business owners with consulting services, contract and financing opportunities,
bonding and certification services, building business-to-business alliances and
About SBA’s Office of Advocacy
The Office of Advocacy of the U.S. Small Business Administration (SBA) is an
independent voice for small business within the federal government. The
presidentially appointed Chief Counsel for Advocacy advances the views,
concerns, and interests of small business before Congress, the White House,
federal agencies, federal courts, and state policy makers. For more information,
visit www.sba.gov/advo, or call (202)
February 25, 2007
Hong Kong Manufacturers
Enjoy Priority in PRD Power Supply Increase
Guangdong plans to increase its installed capacity by 8.35 million kw this year
to ease the problem of power shortage, which has forced many factories to "open
for three days and close for four days" a week. Hong Kong manufacturers in the
PRD will enjoy priority in electricity distribution.
Guangdong's power shortage has been a major headache for enterprises, including
Hong Kong manufacturers, who find the practice of "opening for three days and
closing for four days" a week unacceptable because it affects their normal
production process. In light of this, measures have been taken in recent years
to give Hong Kong manufacturers priority in power supply. Under these measures,
Hong Kong companies enjoy shorter power cutoff hours and more prompt service. In
the event that their power supply is interrupted, they can notify the local
foreign trade and economic cooperation department and their problem would be
Demand for electricity in Guangdong will continue to grow rapidly and steadily
this year. Total power consumption is expected to reach 333.9 billion kwh, an
increase of 12% year-on-year. Maximum load demand will reach 56 million kw, up
13% year-on-year. Of this, 46.5 million kw are subject to overall planning, up
24% year-on-year. With the increase in installed capacity by 8.35 million kw
this year, the problem of power shortage in the province could be eased.
Guangdong will see power generation projects going into operation in Guangzhou,
Shenzhen, Zhuhai, Huizhou, Shanwei and other places this year. Three of these
projects have 2 x 600,000 kw generating units. Each of them will increase
installed capacity by 1.2 million kw and flue gas desulfurization capacity by
1.2 million kw. The three projects are: the installation of generating units
Nos. 1 and 2 in the first phase of the Shanwei Power Plant at a cost of Rmb580
million; the installation of generating units Nos. 3 and 4 in the first phase of
the Zhuhai Power Plant at a cost of Rmb500 million; and the installation of
generating units Nos. 1 and 2 in the first phase of the Huilai Power Plant at a
cost of Rmb600 million. Following the completion of these projects, except for
the January-April dry season when a small power shortage is to be expected,
power supply will be basically well-balanced for the rest of the year under
normal circumstances. Overall, the year will see an easing of power shortage.
Proven Track Record Needed When Applying for Foreign-Invested
Design Enterprise Qualifications
On 1 February, the Ministry of Construction and Ministry of Commerce jointly
issued the Implementing Rules for Regulations on the Administration of
Foreign-Invested Construction Engineering Design Enterprises. The new rules set
strict standards for the application and verification of qualifications of
foreign-invested construction engineering design enterprises.
Under the new rules, when applying for verification of qualifications,
foreign-invested construction engineering design enterprises must not only meet
the necessary professional requirements, but must also provide documents
supporting their track record as foreign service suppliers outside China as well
as qualification certificates of individual registered architects and engineers.
As required by the Ministry of Construction, foreign service suppliers should be
enterprises engaged in construction engineering design or natural persons who
have obtained relevant professional qualifications in their own countries or
regions. While foreign enterprises must have proven track record as construction
engineering design enterprises in their own countries or regions, natural
persons must be registered architects or engineers engaged in construction
engineering design in their own countries or regions.
When foreign-invested construction engineering design enterprises employing
foreign registered architects or engineers as principal professional personnel
apply for qualifications as a construction engineering design enterprise, the
professional titles of these personnel will not be verified. Verification will
only be conducted on their academic qualifications, number of years of service
in engineering design, as well as their registered qualifications, track record
and goodwill in engineering design abroad.
February 11, 2007
Michael Wu with his grandfather, the late
S.T. Wu, and great uncle James Wu. The younger Wu has helped to modernise Hong
Kong's largest restaurant group. Hands-on maxim a recipe for
success by ENOCH YIU
In 1992, Michael Wu Wei-kuo had to make one of those gut-wrenching choices
common to the progeny of successful entrepreneurs. About to graduate from Brown
University with a degree in applied mathematics and economics, he had been
planning to become a banker. But then his grandfather S.T. Wu, co-founder of
Maxim's Group, made him an offer: work in the family's half-owned business -
Hong Kong's largest restaurant group - and if you do well, you may be the boss
For the 22-year-old, that meant turning down an offer from US investment bank
Merrill Lynch for US$40,000 a year plus a US$12,000 annual bonus, to become a
HK$8,000-a-month trainee toiling as a delivery boy for the company's fast-food
restaurants, as well as waiting tables at the Mandarin Oriental's coffee shop
and grill and making pies at Pizza Hut, all which are owned by the Jardine Group
and Maxim's 50 per cent stakeholder, Dairy Farm.
Reminiscing about having to carry 20kg loads of frozen chicken legs, he said:
"The kitchen staff didn't know I was a trainee. They thought I was a new
delivery boy and felt sorry for me, that I was carrying such a heavy load. They
gave me a piece of toast, thinking I must be hungry. That was the best piece of
toast I ever had - it was hard-earned."
This in-the-kitchen experience, he said, was his most important training,
preparing him to take the helm from his grandfather in 2000, at the tender age
of 29 (his father had already died).
"It was a gradual transition. My grandfather never really gave up his job when
he retired in 2000. He still wanted to know everything, although he let me make
decisions and he fully supported me," said Mr Wu.
His challenge, as for many inheriting a business, was to transform a brand
established in 1956 into something attractive for a new generation of customers.
In part, his hand was forced by the city's changing tastes. Wedding banquets had
traditionally been a key income contributor for the group, but in the past
decade couples increasingly preferred hosting their nuptials at deluxe hotels.
His answer was to launch a brand, m.a.x concepts, unbound by the public
impressions of the old, but retaining its organisation and core focus on
service. Launched in 1998, it opened a slew of restaurants in Hong Kong,
including eating plus, Thai Basil, Mezz and Kiku, which in style and temperament
were nothing like their predecessors.
At present, 30 per cent of Maxim's revenue comes from m.a.x concepts, Genki
Sushi and Starbucks and the rest from the traditional Maxim's business. It was
the same thinking - move on from the old - that led the company to bring
Starbucks to Hong Kong.
"Starbucks not only has a good brand worldwide but also has the knowledge, the
system and technique to run the coffee chain," he said. Not that this radical
change came without a battle. The fiercest was with is grandfather, who died in
2003, aged 92.
"My grandfather was very against Starbucks and many m.a.x concepts restaurants
because he didn't like the products or the decorations. After I convinced him
that our young customers liked it, he let me try, but made sure I was aware of
the risks," he said.
The younger Wu also broke with
tradition by eschewing the company's strict adherence to organic growth, opting
instead to also expand by acquisition. Last year, the company bought Genki
Sushi, the largest sushi chain in the city, becoming number one seller in Hong
Kong of a cuisine popular among Michael Wu's contemporaries. In September,
Maxim's won the local franchise rights for well-known US steak chain, Lawry's
In some ways, even as he was moving away from tradition, he was returning to the
company roots. Maxim's now might be most recognised for its cake shops around
the city or as a place for yum cha in its chain of namesake Chinese restaurants
and Peking Garden.
But in fact, the group began with a western restaurant set up in 1956 by S.T. Wu
and his brother James in Central, where the Landmark now stands.
From there the company traveled a long road to become Hong Kong's largest
restaurant group, with more than 12,800 employees working at 413 outlets - 50
Chinese restaurants, 25 m.a.x. concepts, 150 cake shops, 95 fast food
restaurants, 70 Starbucks, and 23 Genki Sushi.
In order to manage the empire, Mr Wu also needed to break from his grandfather's
hands-on mode of management. "My grandfather wanted to make decisions on
everything, no matter how small. He was very opinionated. That was good, as his
judgment was usually correct. As for my management style, I like to delegate
more and I like my people to be accountable by giving them authority to make
their own decisions," Mr Wu said.
But in at least one way, Mr Wu adheres to his grandfather's credo of close
control. The company has turned down requests to open outlets in London and
Vancouver, because, he said, "one has to be very hands-on in the restaurant
business. If we don't have control of the chefs and managers, it is very
difficult to manage".
Despite reports every year of investment bankers receiving multimillion-dollar
bonuses, Mr Wu has no regrets about his choice of career. "The restaurant
business is fun," he said. "I can create something - a new concept or brand -
and if people like the food and concept, it is very satisfying. Even more
fulfilling is if it makes money."
January 11, 2007
A new life - In the first big share
offering of the new year, China Life debuted on the Shanghai stock exchange, its
stock price more than doubling in value to make it the third-largest insurance
company in the world with a market value of US$141 billion. The company will be
added to a number of Shanghai bourse indices before the end of the month. The
market rose from 2,650 to over 2,800 on the strength of the offering. Meanwhile,
the company’s Hong Kong shares fell 4.7% amid general profit-taking on mainland
companies. China’s second-largest insurance company, Ping An, is expected to
list in Shanghai later this year.
Setting the tone - In a series of addresses, top Chinese officials outlined
the country’s outlook for 2007. PBOC Governor Zhou Xiaochuan said the central
bank would continue to keep a keen eye on overinvestment and liquidity, starting
with a 50-basis-point raise of the reserve requirement ratio, the fourth hike in
seven months. He also hinted that regulators would allow greater flexibility in
the official RMB exchange rate. President Hu gave a few speeches indicating that
both the prosecution of corrupt officials and the buildup of the nation’s armed
forces would carry on. Meanwhile, it was reported that certain members of the
leadership were urging Hu to step down from the presidency – an unlikely
outcome, it would seem.
Mutual appreciation - As the value of China’s mutual fund market passed
US$100 million for the first time, up 83% in the last year, regulators announced
a freeze on the creation of new funds to last “a few months” with the aim of
cooling the market. According to one source, “mutual funds are required to start
buying shares within 10 days of launching, which obviously pushes up stock
prices”. At the same time, the bond market is looking to expand: mainland
financiers will soon be permitted to sell RMB-based bonds in Hong Kong, further
expanding yuan-based business in the Special Administrative Region.
January 9, 2007
Flexible measures to attract overseas
Chinese Ministry of Personnel has vowed to work harder to provide better
channels for overseas talented people to serve the motherland.
According to MOP's 11th five year plan, China will implement three major
measures to attract three types of talented people including leading persons in
academic research, senior managerial personnel and special talents in need to
help build a well-off society and independent innovation.
First, the leading persons who master the core technology and are capable of
independent innovation in academic field. China will encourage the national key
laboratories, universities and scientific and research institutions to openly
recruit their leaders or leading research fellows both home and abroad in order
to introduce a group of world's first class scientific and technological leaders
and strategic scientists. Meanwhile, in combination with the national key
programs and important innovation projects, China will also introduce high level
overseas talented people, scientific and research teams and creative talented
people who have great potential to contribute in technology and independent
innovation in the fields of energy, water, mineral resources, environment and
agriculture, biotechnology, advanced manufacturing and new materials.
Second, senior management and operation personnel who are familiar with
international practices and capable of international operation. In order to
grasp the important opportunities of the new round of optimization and
industrial transfer of global production factors, in combination of the demand
of China's upgrading of industrial mix and utilization of foreign investment,
China will actively introduce a group of senior management personnel in
financial, legal and trade fields.
Third, special talented people who have special expertise for the economic and
social development. According to the special introduction plan, China will take
flexible and special methods to introduce top strategic talented people.
According to the plan, a group of industrial bases will be established on the
basis of market demand. They will provide good momentum for returned overseas
talents to produce, study and research.
In the following five years, Ministry of Personnel will continue to cooperate
with the local governments to establish special zones for returned overseas
students and encourage them to help the latter apply for government supported
projects in proper procedures, support the zones recruit advanced personnel home
and abroad and find proper projects for them. A total of 10 thousand enterprises
are expected to settle in 150 special entrepreneurs' zones.
In order to encourage overseas talented people to come back, a series of
favorable measures will be taken: supporting the transfer of patents, special
know-how and scientific and technological achievements by allowing the returned
overseas personnel to hold shares or establishing new enterprises, providing
them with convenience in tax, co-financing and labor and personnel. A
co-financing mechanism in high-tech transfer will be established and foundations
for returned overseas students will be set up. Special zones with better
conditions are encouraged and supported to introduce venture investment funds or
entrepreneurs' fund so that those who returned from overseas can get funding
MOP encourages overseas talented people to take part in the construction of
China in various forms. The plan proposes to make full use of those talented
people surrounding the strategy of opening up. Overseas talented people can
serve China in a broader extend and higher level through part-time work,
cooperative research, giving lectures in China, conducting academic exchanges,
visiting or providing intermediate services as long as it is conducive to
promoting domestic reform and development. During the 11th five year plan
period, MOP plans to attract a total of 200 thousand people to come back and
work for the country in various ways.
To facilitate the service channel, MOP is more open for new ways, for example,
appointing someone to a certain position for certain term or contracting certain
projects so that it is easier for more overseas talented people to serve China.
A stimulating model will be established for the talents by participating in the
distribution of production factors including knowledge, technology and
management. MOP will constantly complete the new mechanism for overseas talented
people to work for China and encourage them to organize teams and establish
bases for them to have opportunities to support key field and industry in China.
MOP will continue to host various returned overseas talented people's exchange
program, provide exchange platform and widen the service field and make the
service channel smooth.
MOP vows to complete the work mechanism for returned overseas students and
create a 'green passage'. It proposes to complete policies and measures in
attracting overseas talents to work for the motherland and providing convenience
for their work, career and living conditions. A working mechanism will be formed
and the role of the working office for the overseas talented people should be
exerted. MOP will encourage the hosting of the annual liaison meeting and guide
the overall development of the work of attracting more overseas talented people.
MOP's plan also stresses to take flexible and special methods to open a 'green
passage' for high level overseas talented people to come back. Those people will
be provided with convenience in applying programs, appraising professional
titles, rewards, spouse's employment, children's education and entrance and exit
of the border. To create new working methods, MOP can treat special talented
people with special service. With a better work environment, harmonious
relations among people, democratic academic environment, respect and
understanding in society, MOP hopes to attract more overseas talented people to
come back to China.
December 13, 2006
High-Tech Hong Kong: Into a New Era - Has
high-tech left Hong Kong behind? Not according to Peter Woo. HKTDC’s Chairman
argues that Hong Kong is already more high-tech than it realises. He contends
that the logical next step for Hong Kong is to develop a high-tech partnership
with Shenzhen and climb to a new and dynamic level of business. Let's start with
a misconception. There is a saying in Hong Kong's local industry that "high-tech
means losing money". Some also say Hong Kong is not perceived as a place for
front-end research and development (R&D) activities. No massive production
plants for high-tech products of well-known brands are visible. Many conclude
Hong Kong is simply not a place for tech development.Well, just where do we
stand on that? For a start, industry insiders say that Hong Kong possesses
certain key technologies that have contributed to its success in international
Riding on China's Coat
Tails in Uncertain Times: Hong Kong Merchandise Export Outlook 2007 - Hong
Kong's traders should see a modest wind in their sails over the next 12 months.
While the US leads a slower global economy, Hong Kong should benefit from a more
dynamic Asia, led by the Chinese mainland. But there’ll be "down drafts" - in
particular, Chinese regulatory uncertainty. China is going to make much of the
running in the global economy in 2007. A softer US outlook implies slower global
growth, but that won't be the dominating wind of economic change swirling
through Hong Kong's merchandise export sector. Rather, it will be China's inward
and outward trade performances, allied to the dynamism of other Asian economies.
The Mystery of the
Disappearing Industry - Manufacturing has mostly disappeared from Hong Kong. But
have the huge benefits forindustrialists setting up on the Chinese mainland
removed a central pillar of the SAR's economy- and with it, added to local
unemployment? A new HKTDC evaluation looks at whether it's time to hold a
requiem or a re-think on the economic model.
Every so often, doomsayers have been forced to recant when they've warned of
Hong Kong's sudden demise. But there's been one story which has so far refused
to lie down: That's the disappearance of Hong Kong's manufacturing base across
the boundary to the Chinese mainland, and whether it could spell the SAR's
eclipse, should the remainder of Hong Kong's core economic activity take the
China's Agent of
Change - Chinese mainland firms are readying themselves to develop brands,
upgrade technology and generally "go out" to create investment opportunities on
world markets - all are goals that have been set out under the country's 11th
Five-Year Plan. A study reveals that to make the right adjustments for change,
they need look no further than Hong Kong's services sector. Chinese mainland
executives worry a lot about how to create the kind of brands that will appeal
in global markets - rightly so, since there are currently precious few beyond
the likes of TV manufacturer Haier and computer giant Lenovo that actually have
great resonance away from home.
The Promise of
Europe’s Eastern Lands - Not everything about Central and East European trade is
uniformly positive. But EU accession and a growing bridge to Asian manufacturers
and markets are giving East European companies new imperatives to look even
further east for better business. Ask Hungarian, Czech or Romanian importers
about the business they expect with Asia in the future and many are single
minded: They want to recognise the opportunities and are determined to take
November 25, 2006
The highs and lows - The Shanghai
composite climbed above 2,000 points for the first time in five years,
continuing the market’s 2006 bull run. The Shanghai Stock Exchange has gained
74% in value since the beginning of the year as it and the Shenzhen exchange
have gotten closer in line with China’s overall economic growth. But not all is
well with China’s story of prosperity. A new report from the World Bank revealed
that the lowest decile on the economic ladder – some 130 million people – saw
their incomes drop 2.4% in 2001-2003; conversely, the richest 10% had income
gains of 16% over the same period. Meanwhile, the chief of the PBOC drew
attention to the country’s growing pension problems; the environmental agency
said that the captains of industry were continuing to pollute the air and water;
and, most worryingly, the Ministry of Health confirmed that the number of
HIV/AIDS patients is up 30% on the year. Something is rotten in the state of
Bankrolls - Since the release last week of new banking regulations further
opening the sector to overseas competition, applications for new branches have
been flowing into the banking regulator’s office. At least 10 foreign banks,
including HSBC and Standard Chartered, have applied for local subsidiaries which
would allow them to offer RMB services to Chinese clients throughout the
country. Meanwhile, the acquisition of domestic banks continues unabated, as
deals were announced by Banco Bilbao Vizcaya Argentaria of Spain and Australia’s
Eastern summit - The leaders of the
world’s two most populous nations sat down to talk. Hu Jintao said that China’s
economy is “complementary” to India’s and that the two nations should work
together rather than against one another as they both regain prominence in world
affairs. A flurry of accords and agreements were signed as President Hu and
Indian Prime Minister Manmohan Singh vowed to double bilateral trade to US$40
billion by 2010. More difficult issues – such as the presence of the Dalai Lama
and the 120,000 Tibetan exiles in India, and China’s arms sales to Pakistan –
saw zero progress. Hu left India for Pakistan on Thursday.
November 2, 2006
Hong Kong Hotels bask
in booming economy
At the plush Four Seasons, in addition to
near-capacity room occupancy, guests are spending on spa treatments and fine
Hong Kong hotels are basking in a bumper
2006, a year that is exceeding projected business forecasts to achieve
near-record results. As business and leisure travellers flock to Hong Kong,
occupancy rates across all categories of hotels and guesthouses leapt to 89 per
cent in August, three percentage points higher than for the same month in 2005.
In the bustling tourist areas of Kowloon (Yau Ma Tei and Mong Kok), hotels
recorded a near-capacity occupancy of 93 per cent. Demand for beds continues to
increase, despite the fact that Hong Kong’s hotel room supply grew by 3.4 per
cent between August 2005 and August 2006. The average room rate across all hotel
categories also increased to HK$920 (US$118), 18.3 per cent higher than in
James Lu, Executive
Director of Hong Kong Hotels Association
Good news all round - James Lu, Executive
Director of Hong Kong Hotels Association (HKHA), said hotel operators had
expected a bumper 2006, but the results exceeded expectations. “Firstly, all
major (tourism) markets registered double digit growth this year, and in
particular the MICE market (meetings, incentives, conferences and conventions,
and exhibitions) has done exceptionally well,” Mr Lu said. “We’ve had more
events in Hong Kong and each event has had more participants, both in exhibitors
and buyers. “The positive business performance in both Hong Kong and China has
triggered a strong surge in business travelers, while the stable economies of
the region have resulted in increased intra-Asia travel in both business and
Peter French, General Manager of the Mandarin
Peter French, General Manager of the Mandarin
Oriental Hotel, which reopened last month following a HK$1.09 billion (US$140
million) refit, agrees. “For the past three years Hong Kong has experienced a
stable business demand from all of its major markets, both long haul and short
haul. The outlook going forward is very positive, predominantly from the Asian
markets and of course in particular, China,” Mr French said. “On the back of
strong room occupancy, room rates have returned to levels not seen since 1997.”
On current figures, HKHA expects to end the year with overall room occupancy of
86 - 87 per cent across all hotel categories – close to the record 88 per cent
achieved in the late 1990s and again in 2004. With an additional 8,000 hotel
beds coming on stream in 2007, Hong Kong is positioning itself for a further
influx of visitors resulting from major attractions such as Disneyland, Nong
Ping 360 Cable car and the Hong Kong Wetland Park, and by business tourism drawn
to world-class events at the Hong Kong Convention and Exhibition Centre and
“Hong Kong is well entrenched as a must-visit destination, both for doing
business and for leisure,” HKHA’s Mr Lu said. “The mood among hotel operators is
Vice-President and General Manager of Hong Kong’s Four Seasons Hotel
Hong Kong’s plush new Four Seasons Hotel,
which recently completed its first full year of business, had “fulfilled our
expectations and more”, Vice-President and General Manager William Mackay said.
“In fact, this opening remains one of the most economically successful Four
Seasons has ever had.” “Besides the hotel’s own strength in terms of location,
service quality and produce quality, we were fortunate to open when the market
was just sizzling, and it has remained sizzling ever since,” said Mr Mackay,
whose hotel is running very close to capacity. Going forward, he said the
outlook is extremely positive given a broad range of indicators ranging from
office absorption rates and rentals, to residential rentals, business
registrations in Hong Kong, and unemployment at a record low.
“The economy here is so well managed there is not the danger of overheating,” Mr
Mackay added. “We are in an almost ideal business situation. And as people are
economically successful, so the brands and suppliers of luxury products also
benefit. There is a feelgood factor that works well not only for room occupancy,
but because people feel comfortable spending more on spa treatments and fine
SMEs thrive in world’s
freest economy - Global entrepreneurs flock in their thousands to Hong Kong’s
annual SME World Expo
Executives from the world’s leading small and medium-sized enterprises (SMEs)
flocking to Hong Kong this month will find a city that has long counted the
sector as its main economic growth engine.
Entrepreneurs from 30,000 SMEs will converge on Hong Kong’s Convention and
Exhibition Centre on November 29 for three days of networking seminars and
marketing, in an event organised by the Hong Kong Trade Development Council.
(World SME Expo) A particular focus will be on how to exploit China’s accession
to the World Trade Organisation and Hong Kong’s Closer Economic Partnership
Arrangement (Cepa) with China, which allows Hong Kong-based enterprises special
access to mainland markets. The world’s SMEs will find their Hong Kong
counterparts have an enviable environment in which to operate. The city’s
economy has for years been dubbed the freest in the world by global think-tanks,
allowing SMEs to thrive in the city.
Dynamic force - Private sector employment in Hong Kong rose 2 per cent in March
versus a year earlier in the most recently available government figures, with
1.8 per cent of the extra jobs being created by SMEs and only 0.2 per cent by
large enterprises. SMEs are defined as manufacturing companies with less than
100 employees and non-manufacturing businesses with less than 50 staff. “SMEs
provide a very dynamic force in the Hong Kong economy. They provide a major
source of employment and they are also a source of Hong Kong’s economic
flexibility,” said Hong Kong government economist K.C. Kwok. “Typically if you
have a new type of business, the SMEs are there first,” he said. “Some of them
may fail but others survive and that provides the dynamism”. Hong Kong had
nearly 271,500 SMEs at the end of March, accounting for 98 per cent of business
establishments by number. They provided 1.18 million jobs or about 50 percent of
total employment outside the civil service.
Bedrock of Hong Kong - “My impression is that SMEs have not only been the
bedrock of the Hong Kong economy but have a major share of Hong Kong’s
productivity [gains],” said Simon Lee, co-founder of Lion Rock Institute, a Hong
Kong-based free-market think tank. “That contribution to the economy has been
because the economy has been driven by a free market. There are virtually no
barriers to entry for people to start their own business, especially in goods
and services.” Hong Kong has a corporate profits tax rate of 17.5 per cent, one
of the lowest in the world, while unincorporated businesses pay only 16 per
cent. All tax payers are treated equally, regardless of their residential
status. No tax is levied on profits arising from abroad. The biggest portion of
Hong Kong SMEs are in the import/export trade, underlining the importance of
small businesses in the city’s traditional role as middleman for commerce
between Asia and the West. The real estate, insurance and financial sectors are
also heavily populated with SMEs. “Setting up the company in Hong Kong was
super-easy. It only took a few days,” said fund manager David Devine, who
decided to open his own business, Lynas Capital, in 2002.
Strong support - Hong Kong has great support services for SMEs with specialist
lawyers and corporate facilitators on hand to speed the creation of a new
company. “You can even buy a new company off the shelf,” said Mr Devine, whose
company has grown quickly to have more than HK$467 million (US$60 million) under
management. He also noted that Hong Kong officials were efficient and fair, a
big plus in a region which has its share of corrupt bureaucracies for business
people to deal with. SMEs in other parts of the world often have to suffer the
heavy hand of regulators and local officials, but Hong Kong small business
owners say the light touch in terms of red tape in their city means
entrepreneurs can focus on business rather than completing endless official
documents. “It was pretty straight forward to set it up and once it’s up and
running it’s easy as well,” said Brie Sievert, a 34-year-old Canadian who
operates a landscape garden business in Hong Kong called Asian Earth. Asian
Earth imports plant pots and other supplies from Indonesia and Vietnam and Ms
Sievert has found processing the imports through Hong Kong’s port
straightforward. That’s a rarity in Asia where form filling and unscrupulous
customs officials can make importing goods into a country a real headache.
Help when needed - On occasion, entrepreneurs need help from officialdom.
Corinne Jedwood, who runs a successful community magazine, Inside DB, for Hong
Kong’s Discovery Bay district, recalled being impressed with how the city’s
Small Claims Tribunal helped her recover some overdue payments. Hong Kong’s SME-friendly
environment has played a part in helping her business thrive. “I had never done
a publication before. I started working from home in a little corner of my
living room. I just wanted to do something small and it got bigger and bigger,”
said Ms Jedwood, a French national who is a long-time Hong Kong resident. She
now has seven full and part-time employees and this year has successfully
launched a second magazine, Square Foot, which focuses on the city’s property
market. One lasting impression for her when she was starting up was how
executives at established companies in Hong Kong would offer help, advice and
even capital. “People were very supportive. There was a need for the magazine
and now we have a niche in the market.”
October 28, 2006
New Vision Arts inspires and delights -
The dynamic New Vision Arts Festival runs
Avant-garde, unconventional and cutting-edge - these are the themes that inspire
and run through the New Vision Arts Festival due to hit Hong Kong in
mid-October. Artistes from around the world will converge in Hong Kong,
collaborate with local talent, and put on a unique show for the pleasure of an
“This festival is being organized for the third time in Hong Kong, and the aim
is to give our audiences something really new and cutting-edge in terms of
crossover art forms,” said Elaine Yeung, Senior Manager at the Festivals Office
of the Leisure and Cultural Services Department (LCSD).
“Most of our programs are not readily available on the market, and many of them
are specially commissioned for this festival. This festival is also a platform
for artistes in Hong Kong to work with talent from around the world, and create
something entirely unique in the process.”
East-West fusion - In the spirit of East-West fusion, crossover music will break
new ground as Mongolian long songs and throat singing by the Khoomii Sound
Machine blend with Western jazz and contemporary music played by artistes from
Sweden, Austria, Korea and Argentina, and Hong Kong’s Dickson Dee.
The Hong Kong Philharmonic Orchestra will perform one of the most controversial
works of the 20th Century, Igor Stravinsky’s Rite of Spring. They will also
perform Iris Dévoilée (Iris Unveiled) - an orchestral suite devoted to the nine
facets of a woman – composed by Paris-based Chinese composer Chen Qigang.
Opening the festival will be two signature pieces by US-based Chinese
contemporary dance choreographer and painter Shen Wei, who is renowned for his
unique style that combines dance with visual art.
Groundbreaking Singaporean director Ong Keng Sen will present Geisha, uncovering
fresh insights into the famous Japanese cultural symbol; while Japanese Ryuichi
Sakamoto will team up with German Alva Noto to bring insen, a unique
collaboration where evocative music is transformed into digital sonic and visual
images on a large LED screen.
World premiere - A specially-commissioned collaboration will be the world
premiere of city:zen, blending the talent of British-Asian choreographer Shobana
Jeyasingh with Hong Kong dancer and choreographer Mui Cheuk-yin. More eclectic
fusion will be on display as the Yoshida Brothers of Japan put on their
unconventional shamisen concert, mixing traditional Japanese instrumental music
with elements of punk, folk, rock and jazz.
The festival will also host the “Theatre Criticism Project for Tertiary
Students” in conjunction with the International Association of Theatre Critics (IATC)
and the leading universities in Hong Kong. The aim is to foster the skills of
arts appreciation and critique-writing in local students through a series of
forums for exchange of ideas and views.
The New Vision Arts Festival, organized by the LCSD, will run from October 20 to
September 28, 2006
First Negotiated Bidding
for 2007 Textile Export Quotas
The Ministry of Commerce (MOFCOM) issued a notice on the first negotiated
bidding for 2007 quotas for textile exports to the EU and the US on 22
September. According to the Measures for the Administration of Textile Export
(Provisional), textile products under categories 4, 5, 6, 7, 26 and 31 for
export to the EU and products under categories 338/339, 340/640, 347/348,
349/649, 638/639, 647/648 and 847 for export to the US will be open for
A minimum number of quotas for bidding is set for each category, while the
maximum number of quotas individual enterprises may bid for is worked out on the
basis of their export value between January and July 2006 and the formula
stipulated in Article 11 of the Measures for the Administration of Textile
Export (Provisional). Enterprises may decide to bid for any number of quotas
between the minimum and maximum amounts in the categories they are qualified to
The negotiated bidding price for different categories are determined in the
light of the market situation in the following year and after consultations
carried out by the China Chamber of Commerce for Import and Export of Textiles
on the views of leading enterprises.
The bidding will be conducted electronically. Enterprises should submit their
bids to the bidding office through the "electronic bidding system" between 09:00
hrs on 15 November and 02:00 hrs on 24 November.
For details in Chinese regarding the bidding arrangements, bidding price,
minimum number of quotas and list of enterprises qualified to place bids, please
visit the website of MOFCOM at:
For details in Chinese of the Measures for the Administration of Textile Export
(Provisional), please visit the website of MOFCOM at:
September 27, 2006
industry braces for overhaul
China's advertising industry has been told to brace itself for a major overhaul
over the next 10 years. Experts attending the 2006 China (International)
Creative Concepts Forum in Beijing on Sept. 3 said to expect upheaval and major
readjustment during the upgrading process. According to a report released at the
forum, the current output value of China's advertising industry is 100 billion
yuan (89.38 billion U.S. dollars), and it will take 'only six years' to double
The ad industry, one of the barometers of social, cultural and economic
development, plays a key role in the building of a 'creative society', said Shen
Jianjun, secretary of the Party Committee of the Capital University of Economics
and Business. Shen added that China's ad industry is attracting worldwide
attention because of its high rate of growth in the last six years. In 2000, the
British government published a white paper on the creative industry. 13
industries were grouped under this classification. 'Of the 13 industries,
advertising industry ranks No.1,' according to Yang Tongqing, a professor at
On a global scale, the daily output value of the creative industry has reached
22 billion dollars and this is increasing at an annual rate of 5 percent, Yang
added. In developed countries, the annual growth rate of the industry is of
course higher; 14 percent in the US, and 12 percent in Britain. The innovations
industry has become Britain's second largest industry accounting for 7.9 percent
of its GDP, after the financial services industry. The Chinese ad industry will
no doubt follow the trend of the times, said Zhang Xiaoping, chief executive
officer of the Guangdong Heima Advertising Co. Ltd. 'Once advertising is
classified as part of the creative industry, it will upgrade itself quickly to
become more professional, varied and colorful.'
In the meantime, however, experts pointed out that the current pace of economic
development will continue to place heavier demands on domestic companies who
have to fend off competition from big global names. From January 1, wholly
foreign-funded advertising companies were permitted to operate in the Chinese
market, which many saw as the beginning of the end for domestic players. But Wu
Xiabo, general manager of Guangdong Pingcheng Advertising Co., saw it as an
opportunity: 'The year 2006 marks the beginning of a new era in the Chinese
advertising industry. Now, it is truly on the road to globalization.'
'And with globalization, we can't cling to accepted practices without thinking
of making any improvements,' Wu said, adding that this is the time for
restructuring and readjustment. But there are challenges ahead. These include
restrictions placed on creative concepts by the incumbent economic structure; an
underdeveloped professional structure; fixed patterns of urban development and
planning; lack of effective intellectual property rights protection; a
traditional and conventional education system; and low consumption levels of
Kang Jun, a member of the Tianjin Municipal Committee of the Chinese People's
Political Consultative Conference, added that stronger government support for
the development of the industry is required in the face of increasing
competition from foreign companies.
China’s Auto Industry Hits
By the end of 2006, China is expected to over-take Germany as the world’s third
largest producer of cars and vans, with output to reach about 5.9 million units
compared to 5.38 million units for Germany. While the US and Japan are still the
world’s largest producers with output of 11 million and 10.63 million units
respectively, China is inline to be the next top global auto-manufacturing hub.
Between 2000 and 2005, China experienced an average of 40 percent growth in
export of vehicles and auto parts, with the export of completed cars growing at
70 percent per annum. In 2005, exports reached USD10.9 billion and are targeted
to reach USD70 billion by the end of 2010. Nevertheless, China’s export of
vehicles and auto parts represents only 1 percent of the world’s market share,
signifying the massive potential that is still open to car manufacturers, in
particular foreign joint ventures on the mainland. Currently, Chinese-made
automobiles are mostly sold to emerging markets such as Russia, South America,
Africa and the Middle East.
In recognition of such market potential, the Chinese government has been quick
to adopt measures to build the reputation of the industry and incentives to
attract further investment in the sector. On 1 July 2006, China reduced its
import tariff on light vehicles and small buses from 28 percent to 25 percent,
and the tariff on import of auto-parts was reduced from 13.8-16.4 to 10 percent,
which is in line with WTO entry commitments.
There are also plans to develop eight automobile export bases with the hope of
raising quality standards, encouraging technical innovation as well as
protecting intellectual property rights. The eight national bases, which cover
160 manufacturing companies are located in Changchun, Shanghai, Tianjin, Wuhan,
Chongqing, Xiamen, Wuhu and Taizhou. Another measure to help raise the quality
of Chinese-made automobiles is to only allow “authorized” manufacturers to
engage in exports starting in 2007. Those that fail to guarantee product quality
or after sales service would be banned from exporting.
As it stands, foreign automotive joint ventures in China are best positioned to
take advantage of this enormous market potential. With their strong design
capabilities, low cost base and a network of sales channels overseas where they
can increase market share and improve profit margins.
September 22, 2006
US Treasury Secretary Hank Paulson arrived in
China this week for his first trip as a government official, though he
previously made over 70 journeys here in his capacity as chairman of Goldman
Sachs. He was scheduled to meet with senior officials in Beijing. Paulson’s
comments on China’s fiscal policy have been a relief to moderates who shrink
from the rhetoric of China hardliners such as Senator Charles Schumer. The
secretary has been less critical of China than his predecessor John Snow, and
has said that he is not looking for any “quick fixes” on US-China trade issues,
a blunt reference to congressional calls for immediate, drastic RMB revaluation.
Rather, Paulson said he is interested in fostering an "economic dialogue" with
China that would focus on long-term issues.
Increasingly credible rumors that the CSRC is going to merge two of China’s
share classes drove the B-share market up almost 10% early this week. For some
time now, the securities regulator has been talking about merging B-shares,
which are relics from the days when foreigners faced heavier investment
restrictions in China’s markets, with the dominant A-share market. Investors now
believe this could happen by the end of the year. Meanwhile, the CSRC also
unveiled China's first financial futures product, which will debut late this
year or in early 2007; and Credit Suisse claimed that mainland markets could
overtake Hong Kong’s within five years.
September 20, 2006
74 countries, int'l
organizations sign up to Shanghai World Expo
By Monday, 66 countries and eight international organizations had accepted
invitations from the Chinese Government to attend the Shanghai World Expo 2010.
About two thirds of the countries that have signed up for the Shanghai World
Expo are from Africa and Asia, alongside 14 European nations such as France, the
Netherlands, Switzerland and Britain, according to Zhou Hanmin, deputy director
of the Shanghai World Expo Coordination Bureau.
Franklin Lavin, U.S. Under Secretary of Commerce for International Trade, said
during a recent visit to Shanghai that the United States would support the 2010
Shanghai World Expo and is likely to take part.
International organizations including the United Nations and the World Bank have
also officially confirmed they will be participants in the expo scheduled to run
from May 1 to Oct. 31, 2010.
Invitations signed by Chinese Premier Wen Jiabao were sent out to 190 countries
and 60 international organizations in March, inviting them to take part in the
expo. The theme of the expo is 'Better City Better Life'.
'Our ultimate goal is to attract more than 200 countries and international
organizations, outnumbering the 155 present at the 2000 World Expo in Hanover,
Germany,' said Zhou.
September 15, 2006
China Adjusts Its Tax Rebate on Exports
On 14 September 2006, the Ministry of Finance together with four other
government organisations issued a joint Notice on Adjustments of Tax Rebate on
Exports and Additions to the Prohibited Category of Export Processing Trade.
According to the Notice, tax rebate on export items under Chapter 25 of the
imports and exports classifications (except salt and cement) will be removed.
Tax rebate on some items including iron and steel, textiles, household products,
plastic materials and lighters will be reduced. However, tax rebate on items
such as IT and pharmaceutical products will be raised.
According to the Notice, all items which no longer enjoy tax rebate are now
included in the prohibited category of export processing trade. The new
adjustment takes effect on 15 September 2006.
For details of the adjustment, please visit the website of the Ministry of
September 13, 2006
Planned weddings get a
wedding services market has spurred demand for new service options such as
bride's secretaries, wedding supervisors and wedding masters of ceremonies
(MCs). There is said to be tremendous market potential for these types of
management services, bearing in mind the high cost of holding weddings on the
Chinese mainland. Take for example Miss Zheng, who works as a bride's secretary
at a wedding service company in Beijing. She sees her job as a true bride's
"maid": she has to be with the bride all the time during the wedding. She
carries with her a host of small "rescue" items such as drinking straws, combs,
brushes, rubber bands, needles, pins, threads, stockings and scissors to deal
with unexpected situations that may need attention.
The straw is for the bride to drink water through, so as not to ruin her
beautifully-adorned makeup. Needles and thread are needed in case of
embarrassment, such as if the seams of the wedding gown burst open. An extra
pair of stockings will come in handy as the bride may get hers torn when
climbing in or out of the wedding limousine. And so it goes on. "The secretary
has to be with the bride from the time she leaves home until the time she
retires to her nuptial chamber," Zheng explains. "She has to remind the bride of
a host of little details, such as not to wear broaches with the wedding gown,
not to lift up her gown when she walks, not to look too stiff, and to wear a
blouse when putting on makeup - so she can easily slip it off and change into
her wedding gown."
In the opinion of
Mr Yang, who's a wedding "housekeeper", the custom is old in Beijing but still
one that is irreplaceable, particularly when wedding banquets get under way
before 12 noon. According to traditional scheduling, the wedding ceremony
usually starts at 11:08 am and it is the housekeeper's role to keep the whole
business down to within 50 minutes. "On one such occasion, the ceremony started
late because of some accident and time was running out. I was absolutely
drenched in sweat. I tried to [encourage] the master of ceremonies to stick to
the rundown while asking the restaurant to start serving cold dishes. Finally,
we managed to start the banquet at 11:58 am."
The housekeeper also has to try out different routes for the wedding party
during rehearsals and analyse them one by one, often with different options. If
traffic is too smooth on the wedding day, he will have to ask the driver to make
up time by driving around to avoid the embarrassment of arriving before the
guests. The master of ceremonies also has an important role in the proceedings,
as Mr Wu (himself a wedding MC) explains. For example, Wu suggests that music
can add to or evoke the right mood for the ceremony. Good music at suitable
moments can achieve the right effect, which is not only pleasing to the new
couple and the guests - but may also bring the company new business. "These days
nearly all wedding ceremonies are accompanied by music," Wu says. "Wedding DJs
must be experienced and be able to come up with new ideas."
affairs departments reckon that over 120,000 couples will register to get
married in Beijing this year. Among them, more than half will choose to walk the
traditional red carpet. "With only 500 to 600 wedding planners in Beijing, each
of them has to plan 100 weddings. This could really wear them out," says Shi
Kangning, executive director of the Committee of Wedding Service Industries with
the China Association of Social Work.
It is understood that wedding planners will be included in the list of new
professions to be announced by the Ministry of Labour and Social Security in the
fourth quarter of this year, with the prospect of an acute shortage of wedding
service professionals on the market. Efficient and able brides' secretaries are
hard to come by. Those who are familiar with wedding ceremonies and nuptial
rites, sensitive to the bride's feelings and can deal with emergencies are well
worth their weight, when making sure that nothing goes wrong.
secretaries charge about Rmb600 (HK$582) each, for taking care of an event.
Training courses offered by the Committee of Wedding Service Industries with the
China Association of Social Work have trained nearly 100 secretaries. Of course,
standard wedding expenses include wedding pictures, jewellery, the rental or
purchase of wedding gowns and tuxedos, wedding service companies, the honeymoon
- as well as purchases of cigarettes, spirits and sweets, as gifts for guests.
Wedding pictures are important, although they don't constitute the largest items
of expenditure. Many new couples are not satisfied with stereotypical pictures
taken in studios and would rather spend more money to capture the most beautiful
and memorable moments of their lives outdoors. According to figures available
through Shanghai's wedding service industries, over 90% of new couples in the
city prefer to have their wedding pictures taken outdoors. Time and money
permitting, they love to take wedding photo trips with their personal
Siguniang Mountain and Jiuzhaigou in Sichuan, the Yulong Snow Mountain in
Yunnan, ancient and mysterious Tibet, the blue sky and clear water of Hainan, as
well as coastal cities like Xiamen and Qingdao are considered the ideal venues
for taking the right wedding images. The rental and sale of wedding gowns are
rapidly-developing businesses. It costs between Rmb100 (HK$96) and Rmb800
(HK$768) to rent a gown, but some people are buying their own because they have
personal preferences or want to maintain their dresses as memorabilia.
For those who look for better quality and design, professional wedding gown
workshops can look after most needs. But hand-made gowns are by no means cheap
and can cost thousands of yuan each. The wedding expenses list prepared by a
well-known wedding services company in Beijing for a couple getting married in
October this year speaks for itself. Wedding pictures will cost Rmb17,500
(HK$16,975) while jewellery at Rmb100,000 (HK$97,000) includes a 0.5 carat
diamond ring, a 1 carat diamond necklace, a diamond broach, diamond earrings and
Then there are other banquet expenses. Features costing up to Rmb14,000
(HK$13,580), include candles, champagne tower, spotlights, bubble machine, cold
fire, dry ice and a smoke generator. The list does not cover the wedding gown
and tuxedo for bride and groom, the limousine rental, the banquet or honeymoon
expenses. For this particular list, the couple both work as managers with
foreign companies and so are willing to dig deep for the right event. In fact,
this is by no means the most expensive wedding.
Although there are
many wedding service companies on the mainland, there are not that many truly
innovative wedding planners around. Shanghai is the current market leader, but
even in this city, there are only about a dozen wedding planners and often they
are all fully booked. The same is true for Beijing. Top wedding planners are
booked up a year in advance. "Planning a wedding is like directing a movie and
involves script writing, planning and implementation. It requires a director and
production assistant, and constant communication with the customer is necessary
to come up with the most brilliant ideas," says Mr Zhang, the planner for a
wedding service company.
In the opinion of a wedding service company operator, good wedding planning is
not only about novelty and extravagance. It is important to pay attention to
details and make the guests share warm feelings with the newly-weds. Innovative
and touching wedding arrangements are enthusiastically embraced by younger
people. The bride and bridegroom could be exchanging vows on the beach, on green
lawns, in a garden, by the poolside, in a bar or even under the sea or up in a
Traditional wedding processions, such as with trumpets blowing and a bridal
sedan chair carried by eight porters, are also popular among retro-minded young
people. Shanghai's Wedding Service Industries Association appears to be
encouraging the creative wedding arrangements that are very popular among new
couples who want to be different.
The creativeness not only finds expression in the ceremony itself but also in
gimmicks that reflect the couples' character. Some weddings make use of
high-tech wizardry, such as when a magician waves his hand and produces an
eight-layer wedding cake from under the table. In another escapade, the
bridegroom presses a remote control and a wedding ring drops from the ceiling.
Guests can also send sincere, humourous or idiosyncratic messages to the new
couple through text messages.
Industry sources admit that some wedding service companies are still not very
professional in their operation. They may raise their prices or change the
limousine on the actual wedding day - or even charge additional fees for editing
or post-production of wedding videos. Better wedding service companies rely on
word-of-mouth to win customers. Established overseas wedding service companies
should be able to find great business potential venturing into the mainland
August 31, 2006
HK leads financial hub race for Asia -
Hong Kong is the most competitive financial center in Asia Pacific, ahead of
Japan and Australia, a survey has found. The city ranked high for its
transparent business regulations and low tax base, among other advantages,
according to a study by the Securities and Futures Commission. "Hong Kong is
clearly ahead of other Asian markets in most factors," said the SFC study, which
extracted and compared the scores of 12 regional economies, including the
mainland, Hong Kong, Taiwan, Japan, Australia and Singapore, in two recent
global competitiveness surveys run by the Geneva-based World Economic Forum and
the International Institute of Management Development, based in Lausanne.
Hong Kong slipped seven places to 28th in the WEF's latest Global
Competitiveness Report, released last September, but retained second place in
the IMD's latest World Competitiveness Scorecard, released in June. The SFC said
the SAR scored higher than other economies in financial- services-related areas
in the surveys. "Hong Kong may be the most competitive market regionally for
equities, but it needs further development of the debt market to be an all-round
financial center," said Standard Chartered economist Frances Cheung.
"However, the same can be said of most other Asian financial centers, with the
exception of Japan and Australia." A record HK$195 billion was raised in initial
public offerings last year on the Hong Kong stock exchange, making it the second
largest IPO market in the world behind the New York Stock Exchange. This was
largely as a result of several blockbuster share sales by giant mainland
companies, including China Construction Bank (0939) and China Shenhua Energy
(1088). The trend is continuing this year, with the IPO by Bank of China in June
raising a record HK$90 billion.
"There needs to be a further balancing in Hong Kong in favor of other funding
channels such as bonds," said John Bailey, director of corporate and
infrastructure ratings at Standard and Poor's. The size of the market for
corporate and government bonds in Hong Kong stands at less than US$100 billion
(HK$780 million) at present, compared with more than US$7 trillion in Japan.
"The Hong Kong government doesn't have much need to raise debt, which makes it
difficult for the bond market to be kick-started," said Cheung from Standard
The relatively lop-sided nature of Hong Kong's financial markets does not
detract from their ability to attract international investors, the SFC said.
Foreign funds now account for about 34 percent of total stock market
transactions in Hong Kong, the SFC said, compared with 30 percent for local
retail investors, and 27 percent for domestic institutional investors.
"Hong Kong is one of the more transparent markets for investors, and one of the
easiest to work in," said Bailey. "Also, it provides international investors the
best opportunities to participate in the growth of the mainland economy." The
SFC said Hong Kong also scored higher than the other 11 economies in its ability
to produce and attract qualified financial professionals.
There are more than 3,000 certified financial analysts in Hong Kong, compared
with just 200 in 1995, the SFC said. The number of certified public accountants
has also more than doubled to 25,000, from 11,500 in 1995, the SFC said.
August 30, 2006
Hong Kong’s Position to be
Significantly Enhanced by New Tax Pact
On August 21, 2006, China’s mainland and Hong Kong signed a groundbreaking
agreement in a bid to further enhance the potential of Hong Kong as the
strategic gateway to China. Essentially a tax treaty in form, the new tax pact
will ensure that business profits will not be doubly taxed in the two places,
securing Hong Kong’s position as the ideal offshore base for foreign investments
flowing into China. Analysts are confident that the new pact will sharpen Hong
Kong’s competitiveness and encourage investment in the region by providing added
incentives for international investors to enter the vast market on the Chinese
mainland via Hong Kong.
Having contributed nearly 42% of China’s US$621 billion foreign investment over
the last two decades, Hong Kong firms have played a critical role in developing
China from an agrarian socialist state to an economic powerhouse. Unlike the
United States, Britain and 80 other countries which have enjoyed preferential
status to limit the taxes their nationals pay on items such as capital gains,
Hong Kong had to rely solely on other advantages until this moment.
The new tax pact will cover profits that are classified as direct income, such
as operating profits and employment income, and indirect income, such as
dividends, interest and royalties. According to the new arrangements, maximum
withholding tax for dividends a Hong Kong business receives from mainland
investments will be reduced from 10 percent to 7 percent, and if the business
holds at least 25 percent of the enterprise’s capital in the mainland, the rate
can be further reduced to just 5 percent. Also importantly noted is that the
pact also introduces a tax-credit agreement that will ensure that the same
income will not be taxed twice.
With the new agreement in place, businesses in the region can assume much
greater confidence as the preferential tax treatment will enable them to better
assess their investment positions and greater synergies can be realized between
Hong Kong and the Chinese mainland. The new arrangements will also promote Hong
Kong’s economy, enhance its competitiveness and attract overseas capital by
promoting cross-border financing arrangements and the transfer of technical
know-how and patent rights between the two locations.
The ratification of the pact will be subject to an order under the Inland
Revenue Ordinance, subject to the Legislative Council’s review and approval. If
the pact is ratified before 31 December 2006, the new arrangement will come into
effect with respect to Hong Kong taxes from the year of assessment beginning on
or after 1 April 2007. With respect to taxes on China’s mainland, the pact will
be effective on the taxable year beginning on or after 1 January 2007.
Aug 22, 2006
New deal puts paid to double taxation - Jonathan Cheng
The government has claimed a victory for Hong Kong residents and businesses
operating in the mainland, signing an agreement with Beijing that will
eliminate double taxation and pave the way for more mainland investment through
Hong Kong. The deal, signed in the city Monday by Chief Executive Donald
Tsang Yam-kuen and Xie Xuren, the mainland's Minister of the State
Administration of Taxation, will cut the top tax rates on direct income, such as
operating profits and salary, as well as indirect income, like dividends and
It will also increase cooperation between the two sides to stamp out tax evasion
in either jurisdiction. Tsang hailed the new agreement as another attempt to
draw both sides closer together economically, saying the new tax agreement would
enhance cross-border financing and the exchange of patent rights between Hong
Kong and the mainland.
"These will help promote Hong Kong's economy, enhance our competitiveness and
attract overseas capital," Tsang said. Under the agreement, Hong Kong residents
earning money on dividends, interest income and royalties from mainland
enterprises will see the top rates on withholding tax - the tax that is
automatically deducted before it even goes to the recipient - slashed by about
In particular, top withholding tax rates on mainland dividends for Hong Kong
residents would fall from 20 percent to 10 percent, and from 10 percent to 5
percent for local businesses with major stakes in a mainland enterprise. The top
withholding rates on mainland- based interest income and royalties, meanwhile,
would drop to a standard 7 percent. Also, any Hong Kong entity that makes gains
on a transfer of shares in a mainland enterprise will see the taxes diverted
entirely to the Hong Kong government.
The new agreement stipulates that any other instances of double taxation will be
resolved by issuing tax credits to the taxpayer. Double taxation occurs when a
person or company that earns money in two jurisdictions ends up paying both
governments for the same income or profits. All told, the terms of the new
agreement will help clarify tax responsibilities and "provide a further level of
certainty and stability to potential investors," the government said in a
statement. The government also said the measures would attract more overseas
investment into the mainland through Hong Kong, while the cutback on royalty
taxes would encourage artistic creativity and innovation.
But some raised concern about the exchange of personal information between Hong
Kong and mainland taxation authorities, saying investors wary of mainland prying
would be more reluctant to pour money into the mainland after Monday's
announcement. That concern aside, most tax experts and business leaders praised
the new agreement. "This is a step forward," said Wong Ting-kwong, a pro-Beijing
legislator who heads the Hong Kong Chinese Importers' and Exporters'
Association. Wong said some businessmen who frequently shuttled between Hong
Kong and the mainland often got caught between the two jurisdictions, leaving
them with "the worst of both worlds."
"It was a problem that needed to be resolved, and this agreement highlights the
central government's support for the Hong Kong government, and shows that the
relationship between them is very close," he said. Taxation Institute of Hong
Kong president Richard Chow Yeung-tuen welcomed the announcement saying it would
help taxpayers and the two governments avoid gray areas. Marcellus Wong
Yui-keung, a member of the Taxation Institute and a tax partner at
PricewaterhouseCoopers, said the treaty would strengthen the competitiveness of
Hong Kong investors and businesses.
"With fewer tax burdens, Hong Kong's financial position will be strengthened,"
Wong said. He said Hong Kong businesses would benefit from the fact that any
capital gain made by transferring shares would not be taxed in Hong Kong, as
long as the gain is not an operating profit or sourced in Hong Kong. Paul Chan
Mo-po, president of Hong Kong Institute of Certified Public Accountants, said
the deal could make the territory a "springboard" for overseas investment into
The Hong Kong General Chamber of Commerce had no comment on the agreement, while
the American Chamber of Commerce in Hong Kong was not available for comment.
The new deal, which will take effect when both the sides ratify the agreement,
will have no expiry date, and officials said the agreement was meant to be a
permanent part of the tax landscape, though either government could request a
review of the conditions if any problem arose later. Hong Kong's commissioner of
inland revenue, Alice Lau Mak Yee- ming, emphasized that withholding rates would
be lower than those agreed upon in parallel agreements Beijing had made with
both Macau and Singapore. But she conceded that it was hard to estimate how much
extra tax revenue the agreement would bring the Hong Kong government, or to
predict exactly how many people and businesses would benefit from the agreement.
But she pointed to figures showing that 228,000 Hong Kong residents were working
in the mainland in 2004, saying she anticipated that "more and more will work
there" as a result of Monday's announcement and other conditions under the
Closer Economic Partnership Arrangement.
She also said the new deal would not affect China's World Trade Organization
Financial Secretary Henry Tang Ying-yen said the new arrangements would allow
investors to accurately gauge their tax burdens.
Aug 14, 2006
Hong Kong Freight Forwarding
arranging cargo transport, the freight forwarding industry has contributed
fundamentally to Hong Kong's success as the 11th largest merchandise trading
entity and one of the most trade-oriented economies in the world.
Most of the
larger freight forwarders have a wide network of overseas branches, and act
as agents for international air and ocean liners.
industry is responding to customers' needs by also providing more
value-added services such as warehousing, packing, sorting, distribution and
total logistics solutions.
industry has benefited from Hong Kong's leading freight infrastructure:
combined cargo handling capacity of Hong Kong's two air cargo terminals
has already amounted to 3 million tonnes. In particular, Asia Airfreight's
new air cargo terminal (T2) is expected to be in operation by the end of
2006 with a handling capacity of 910,000 tonnes.
Marine Cargo Terminal, which was opened in March 2001, provides a one-stop
service linking the airport with various river ports in the Pearl River
Airport Freight Forwarding Centre provides on-airport premium warehousing
services and houses over 50 freight forwarding/logistics companies and
ancillary service providers.
Industry Data -
Freight Movement (million tonnes)
Source: Summary Statistics
on Port Traffic of Hong Kong,Port, Maritime and Logistics Development Unit
Number of Air Cargo
Number of Sea Cargo
Source: Quarterly report
of Employment, Vacancies and Payroll Statistics, 2005, Census and
Business Receipts of Air/Sea Cargo Forwarding
Exports - Cargo Forwarding
Contribution to Services Exports
Source: Report on
Hong Kong Trade in Service Statistics for 2004,Census and Statistics
Range of Services
business of a freight forwarder is to move a shipper's consignment to the
consignee within the stipulated time, in perfect order and at the most
competitive cost. Responding to changing customer demands, many freight
forwarders also provide more value-added services such as warehousing,
distribution and total logistics solutions.
The services offered by the industry vary according to the sophistication of the
freight forwarder. The larger and more comprehensive freight forwarders offer a
full range of transportation and logistics services including warehousing,
consolidation, air express, trucking, distribution and customs clearance,
tracking and monitoring of freight being transported, and applying electronics
data interchange (EDI) technology to facilitate just-in-time based supply chain
management. Their customers, particularly those in the time-sensitive
manufacturing, trading and retail sectors, can thus concentrate on their core
competencies and reduce their business cycle time.
In general, the smaller freight forwarders provide more basic and economical
services. Related services involved in the import/export process, such as the
preparation of shipping documents, customs clearance and logistics, may be
undertaken by the import and export traders or their agents. The smaller firms
do provide more flexibility and a more personalized service. In addition they
have lower overheads as they "piggyback" on the fixed capacities of the larger
companies, and therefore can often provide lower rates.
The Hong Kong Association of Freight Forwarding Agents (HAFFA), formed in 1966,
is a local association representing the interests of the freight forwarding
industry. It has been renamed as Hong Kong Association of Freight Forwarding and
Logistics Ltd to reflect the sophisticated nature of the business.
The larger sea freight forwarders tend to target big companies for exclusive
deals. They provide value-added services and invest in information technology to
ensure that they meet the expanding needs of the customer's changing markets.
They can also set up individual logistics subsidiaries to provide tailor-made
and specialized services in order to work as a service partner for their
customers. Generally speaking, larger companies' well-established brands and
far-reaching logistics networks have enhanced their significant market shares in
the global export market. The smaller regional players, however, have better
understanding of the business culture, better knowledge of their markets and
have established networks in the region.
As reliable and speedy delivery is the key to successful freight forwarding
services, Hong Kong's forwarders' understanding of the international practices
and their networks can help them to secure the confidence of international
The specialist freight forwarders such as conference freight forwarders also
provide industry expertise which is not offered by many other companies.
The destinations of freight forwarding services mirror the trade routes. The
main markets for international freight forwarders are thus North America, Europe
and Japan. The Chinese mainland is the most important source of cargo for Hong
Kong's freight forwarders.
The larger freight forwarders often follow their big international customers to
new markets. In some instances transport service providers set up business in
the new markets before recommending their customers to follow suit. They expand
overseas usually by setting up subsidiaries, joint ventures or appointing agents
to render global services.
In order to provide an integrated, seamless storage and distribution network,
freight forwarders often build warehouses, logistics bases and other supporting
facilitates in other countries.
Major Export Markets of
Cargo Forwarding Services 2001-2004 (HK$ million)
Report on Hong Kong Trade in Services Statistics for 2004, Census
and Statistics Department
Industry Development and Market Outlook
Outsourcing Logistics Services
A number of global trends are affecting the freight forwarding industry,
including the globalisation of the supply chain, mass customisation,
shortening of product lifecycles, low inventory, and quick response
requirements. In facing these trends, an increasing number of businesses
feel the need to optimise their supply chains via external experts, i.e.
third-party logistics (3PL)and fourth-party logistics (4PL).
3PL refers to an outsourced provider that manages all or a significant
part of a business' logistics requirements and performs transportation,
locating and sometimes product consolidation activities. In contrast,
4PL refers to an outsourced provider which completely integrates its
client's supply chain - managing the resources, capability and
technology of all parties, including the 3PLs, to deliver a
comprehensive supply chain solution.
Freight Forwarding Market in China
In 2005, China's logistics cost totalled RMB 3,386 billion (US$422
billion), up 13% over 2004 in current prices, according to statistics by
the China Logistics Alliance Network. The national logistics cost was
equal to 18.6% of China's GDP in 2005, down 0.2% from 2004. It is
generally estimated that China's logistics spending as a percentage of
GDP is about twice that of the US, an indication of the inefficiency of
its logistics and transportation sector.
China's logistics sector is fairly fragmented, with more than 18,000
logistics service companies. It is estimated that no single logistics
company currently offering nationwide distribution services and
commanding more than 2% of the market. With China's logistics market
becoming much more open after phasing in all of the related WTO
commitments, the continued influx of foreign logistics companies is
expected to fuel consolidation of the mainland's logistics market.
Besides, according to IDC, there will be an increased dependency on 3PLs
on the mainland, with logistics outsourcing expected to grow annually by
more than 20% over the next decade.
For the mainland's top 100 freight forwarding enterprises, the average
business transactions amounted to RMB1.5 billion in 2004 (up 40% from
2003), according to figures by the China International Freight
On the regulatory front, the mainland government introduced a new
register system in April 2005. In contrast with the old examination
system which required RMB 5 million as registered capital, the new
system imposes no access restriction and fee. Records on forwarders are
shifted from hard copies to digital-based.
Since 11 December 2005, the mainland government has allowed the access
of wholly foreign-owned forwarders to the industry as part of China's
WTO accession terms. These new opportunities are expected to bring
further changes to the already robust freight forwarding market.
The Closer Economic Partnership Arrangement between Hong Kong and
the Mainland (CEPA)
When CEPA was first implemented in 2004, Hong Kong companies were given
a head start of one to two years, compared to other foreign companies,
to set up wholly-owned enterprises on the mainland to provide logistics
services, freight forwarding agency services, storage and warehousing
services, and road freight transport services. While WTO commitments
have been gradually phased in, CEPA still offers Hong Kong companies
with WTO-plus access to the mainland market.
Under CEPA, the minimum registered capital requirements for
international freight forwarding agency companies and storage and
warehousing companies set up on the mainland by Hong Kong companies are
clearly stated in mainland regulations.1
Hong Kong companies are permitted to provide direct non-stop road
freight transport services (i.e. direct road transport services between
Hong Kong any mainland city), a niche area in which Hong Kong companies
may be interested. Hong Kong services providers must be enterprise
According to Administration Measures on Foreign Invested
International Freight Forwarding Enterprises, foreign agencies need
to have operated in China for one year, have paid up the registered
capital and obtained the approval from the Ministry of Communications (MOCOM)
before they can establish a subsidiary. Thus, the CEPA provisions allow
Hong Kong services providers to penetrate the market more effectively as
they can set up branch offices upon full payment of registered capital.
According to China's WTO commitment and the Regulations on the
Administration of Foreign Investment in International Marine Shipping (issued
by MOCOM, which became effective in June 2004), only foreign
joint-venture is allowed to provide the following services: maritime
cargo-handling services, customs clearance services for maritime
transport, container station and depot services, international shipping,
international shipping agency, international ship management,
international marine shipping freight loading and unloading
international marine shipping container terminal and yard business.
By contrast, the CEPA provisions allow Hong Kong services provides to
have greater flexibility to access the market as they are allowed, from
1 January 2005, to form wholly-owned units in providing certain types of
maritime services like international ship management services,
containers station and depot services, non-vessel operating common
carrying services, port cargo loading and unloading services.
Further, from January 2006, CEPA allows Hong Kong companies to set up
wholly-owned companies to provide, for tugs that they operate between
Hong Kong and mainland ports, regular business such as shipping
undertaking, issuance of bills of lading, settlement of freight rates
and signing of service contracts.
According to China's WTO commitments, foreign investors are only allowed
to hold majority ownership in maritime auxiliary services enterprises.
CEPA therefore gives Hong Kong companies greater scope of development in
the mainland's logistics market.
CEPA is considered a breakthrough for Hong Kong companies to penetrate
the mainland market. Hong Kong's freight forwarders and
storage/warehousing operators, who already have a strong presence on the
mainland, may have more flexibility in business strategy without having
to worry about identifying good joint venture partners.
However, if the asset and capital requirements remain unchanged for
integrated logistics services, Hong Kong players, particularly the
smaller ones, may still have difficulties entering the market alone.
Besides, for a Hong Kong company offering maritime transport services,
Hong Kong-registered vessels must account for over 50% of the total
tonnage of its fleet.
Land transport Services
Announced in June, 2006, the "Further Liberalization Measures under
CEPA in 2006" allows the set up of wholly foreign-owned enterprises
in the Mainland by Hong Kong companies to operate road freight transport
station (depot) and motor vehicle repair.
Since CEPA was implemented, the transport and logistics sector has
accounted for the majority of approved HKSS applications. As of June
2006, out of 1013 approved applications, 456 (45%) of them were from the
transport/logistics sector. In March 2004, the Ministry of Commerce
granted the first wholly-owned international freight forwarding license
to a Hong Kong company under the CEPA procedure.
Aug 8, 2006
CEC expansion gives mega-fairs room to grow
The world meets at Hong Kong Convention and Exhibition Centre (CEC), voted
Asia’s leading conference centre three years in a row - Work has begun on the
Trade Development Council’s HK$1.4 billion (US$180 million) expansion to the
Convention and Exhibition Centre (CEC), Hong Kong’s award-winning waterfront
venue which has hosted many world-class events and international exhibitions. To
be completed by 2009, the project will create 40 per cent more exhibition space
(19,400 sq metres, equivalent to 1,000 booths) in the structure that connects
and integrates the facility’s two buildings. There will be no reclamation and no
significant visual impact on the Victoria Harbour or on the CEC’s landmark
architecture. “Preserving the environmental integrity of this special site is
our priority,” said TDC Chairman Peter Woo in an earlier press release when
approval was granted for the CEC extension.
Timely decision - Mr Woo noted that the present facility was bursting at the
seams during peak trade fair seasons, with long waiting lists of exhibitors.
Meanwhile, other cities in the region had built vast fairgrounds to compete
directly with Hong Kong. “We haven’t a moment to lose as trade fairs are a
winner-take-all business. They’re about building critical mass in your
marketplace faster than your competitors can,” he said.
It is estimated the CEC extension will bring more than HK$40 billion (US$51.4m)
in additional economic benefit to Hong Kong in the first 15 years after
completion, not counting business orders at the trade fairs. The expansion will
also allow many of Hong Kong’s mega trade fairs to have further room to grow and
many undoubtedly will become number one in the world for their industries.
Global kudos - CEC, which was first opened in 1988 and later expanded in 1997,
has won many international awards. Last year, CEC was voted “Asia’s Leading
Conference Centre” for the third consecutive year at the world prestigious World
Travel Awards. Over 150,000 frontline agents and 80,000 travel agencies
worldwide gave the top honour, described as the “Oscars of the world tourism and
travel industry”. This year, CEC was once again voted the most popular
exhibition venue in the Asia-Pacific region in a survey by the CEI Asia Pacific
Aug 4, 2006
with Prakash Khatri - Ombudsman and Ted Gong - Ombudsman/Executive Officer of
Citizenship and Immigration Service, U.S. Department of Homeland Security of
Washington DC regarding the ongoing Approved Destination Status (ADS)
discussions with the People Republic of China, the challenge that Group VISA
currently not available or not granted by the U.S. Government and Biometric
information at the time of VISA application. There are also various immigration issues and
concerns such as people entering the United States for training has job
guaranteed upon returning home. College graduates working in the field of
studies using their 1 year practical training option has the opportunity to put
in supervisory or management position i.e. international hotel chains in Hawaii
not part of their Asia division expressed no interest to invest in the cost of
training management employees for operations like China when more than 800
hotels are expected to be built in the next 3 - 5 years. Special VISA for
wealthy retirees to live in Hawaii or anywhere in the USA without subject them
to negative U.S. tax implication. How the State of Hawaii could work with other
States to improve the chances to work out the final ADS Agreement?
click here to view the Citizenship and Immigration Services Ombudsman Annual
Report 2006 (completed in June 2006)
August 1, 2006
HK-based Ocean Park is planning a HK$5.55 billion
(US$713m) makeover of its Aberdeen marine-based theme park. Fifteen construction
contracts will be awarded to local and international companies. Ocean Park
Corporation is looking to award 15 construction contracts for its HK$5.55
billion redevelopment plan to be carried out in eight phases. The redevelopment
is aimed at making the Aberdeen attraction a much- improved marine-based theme
park. The makeover for the government- owned park was announced in March 2005.
Speaking to The Standard, chief executive Tom Mehrmann said 11 major and four
minor contracts will be available. Certain packages will be "high value" such as
the infrastructure works contract, which includes the funicular train and
tunneling and also a 4,500-seat killer whale stadium. A Legislative Council
paper last November noted that site formation, access roads, infrastructure and
area development could cost a combined HK$994 million. Development of facilities
at the summit (150 meters above sea level) and in the park and waterfront are
estimated at HK$1.75 billion and HK$1.24 billion, respectively. So far it has
called for expressions of interest from contractors for three contracts. These
are for infrastructure work, the veterinary hospital, and a temporary entrance
and skyfair for the waterfront at the main entrance to the park. The main
entrance at present is on the northern side of Nam Long Shan. Mehrmann said the
park has received between six and 12 expressions of interest from contractors,
depending on the contract. "I think we were able to get the major contractors,"
Mehrmann said, but added the contractors may decide to form joint ventures so
the number could fall as a result. The park also decided to abandon its
two-phase approach planned earlier, and redevelop in eight phases over a period
up to 2012 to allow more "management latitude."
"It really gives us more marketing opportunities,"
Mehrmann said. The building contracts will use the government's standard form of
contract instead of the private sector's new 2005 standard form that the park
had originally planned to use. "We did it because it was the right thing to do,"
Mehrmann said, adding that as the industry is familiar with it, then "why
reinvent the wheel." Asked about the possibility of bonus payments for finishing
projects ahead of schedule and below budget, he said "we can certainly entertain
the idea," but only at a later time. The park is continuing to refine its plans
- for example, when it issued the expressions of interest for infrastructure
work, contractors were told they will have to remove one million square meters
of a hill to make way for facilities on the summit. However, after value
engineering studies, the amount of removal is "now substantially less" and the
park's objective now is to find a site that can take in rock fill. "We'd rather
not go to limited landfill sites," Mehrmann said. He also defended the park's
handling of recent tenders for the design work for the infrastructure and
waterfront, as well as legal and insurance advisers' packages. Design
consultants, insurers and law firms have been critical of the park's brief to
tenderers, the prolonged wait for results, a claimed lack of transparency as
well as suggestions of favoritism. The issue of the "draft" tender for the
infrastructure design package prompted the Association of Consulting Engineers
of Hong Kong to write to the park to request the removal of onerous conditions
it wanted to impose on designers. "We feel we've been incredibly transparent,"
Mehrmann said, pointing out that as a public body the park had strict procedures
for tendering which had been reviewed by the Independent Commission Against
Corruption. He said engineering consultant Maunsell AECOM, which has done
preliminary studies for the park, did not get "the lion's share" of design work.
While Maunsell is lead consultant on the infrastructure design, the second
design consultancy for the waterfront went to architects Aedas and not Maunsell,
as had been previously believed by the consultancy industry. However, Mehrmann
confirmed Maunsell is one of the subconsultants for Aedas. For the third and
last design consultancy for the summit, Maunsell did not summit a tender,
Mehrmann said. But The Standard has learned of attempts by Maunsell to join
another consultant's bid. Ocean Park was opened in 1977, funded by the Hong Kong
Jockey Club, and operated until July 1987 as a subsidiary of the club.
Hong Kong is moving closer towards
integrating its economy with China – a process which is helping to lay the
foundation for the city’s long-term future. Soon, Hong Kong companies and
foreign firms based in Hong Kong will be able to settle bills for imports from
China in the mainland’s currency the renminbi (RMB) or yuan. In addition,
Chinese financial institutions will be allowed to issue bonds in Hong Kong
denominated in yuan. The moves were announced as Hong Kong celebrated the ninth
anniversary of its handover to China. “This is a major policy initiated by the
Central Government in support of the consolidation and development of Hong
Kong's status as an international financial centre,” said Hong Kong’s Chief
Executive Donald Tsang. The State Council in Beijing is putting the finishing
touches to the legal framework for the initiatives before they get underway.
Kong provides an ideal bridge between the West and China for intellectual
property protection, according to Simon Speeks, a partner in the Hong Kong
office of UK’s leading trademark and patent attorney firm Marks & Clerk. “Hong
Kong has Western experience, but it also has Chinese knowledge. Many overseas
firms don’t understand how Chinese patent law operates. Here in Hong Kong we
have someone who understands their point of view, and also understands Chinese
law and culture,” said Mr Speeks. Marks & Clerk helps foreign and local
companies acquire, secure and register IP rights and manage their IP portfolios,
and counts leading brands such as MGM, McDonalds and Southern Comfort among its
clients. The company plans to open a Shanghai office this year. Because Hong
Kong and China have separate legal jurisdictions, companies have to register IP
rights in both Hong Kong and China. “If companies are setting up in China, it’s
very important to look at protecting their ideas, otherwise the likelihood is
that the possibility of an infringement occurring is much higher in China, or
South East Asia generally, than elsewhere. Without some form of IP registration
(e.g. Patent, Design or Trademark) it is almost impossible to take effective
action against infringers.
Two international ratings agencies have upgraded Hong Kong’s long-term credit
rating, reflecting the city’s sound economic fundamentals and improved fiscal
position. Standard & Poor’s Rating Services raised the city’s long-term credit
rating to AA from AA-, the highest rating it has ever assigned the city. This
upgrade came hot on the heels of another credit lift from Fitch Ratings which
upgraded its long-term foreign currency outlook on the city to “positive” from
“stable”. “The upgrades confirm that Hong Kong’s improved fiscal position and
sound fundamentals deserve a much higher rating,” said Financial Secretary Henry
Tang. “It is also recognition of the continued strength of China’s economic
performance and the overall strengthening of its creditworthiness. Hong Kong
will continue to capitalize on the opportunities arising from China’s rapid
July 26, 2006
China tightens control over
foreign investment in real property market - O'Melveny & Myers LLP
The PRC government has adopted a number of measures recently in order to stop
the perceived speculative activities in China's real estate market. One such
measure is the Opinions on Regulation of Approval and Administration of Foreign
Investment in the Real Estate Market, known as Circular Jian Zhu Fang  No.
171 (¡°Circular 171¡±) issued by China's Ministry of Construction, Ministry of
Commerce, National Development and Reform Commission, People's Bank of China,
State Administration for Industry and Commerce and State Administration of
Circular 171 is specifically targeted at foreign investment in China's real
estate sector. The following is a brief summary of its key provisions plus our
preliminary comments (in square brackets):
A foreign invested enterprise engaging in the real estate business (a ¡°Real
Estate FIE¡±) must have a registered capital representing no less than 50% of
its total investment amount, if the total investment amount is US$10 million or
more. [Note: Under the general FIE rules, the percentage could be one third if
the total investment amount exceeds US$30 million. In addition, it is not clear
if a Real Estate FIE includes purchasers as well as developers of real
The purchase price for the acquisition of a domestic real estate enterprise by a
foreign investor must be paid in full by the foreign investor in one lump sum.
[Note: Under the general foreign investment M&A rules, such payment could be
made by a foreign purchaser in installments within one year.]
A Real Estate FIE may borrow loans only upon the satisfaction of the following
conditions: (i) its registered capital has been fully paid; (ii) the land use
right certificate has been obtained; and (iii) its registered capital
constitutes 35% or more of the total capital demand of the construction project.
[Note: This is presumably applicable to loans from either domestic or foreign
sources and from either banks or shareholders.]
A foreign investor (corporation or individual) must establish an onshore
¡°commercial presence (i.e., a ¡°foreign invested enterprise or an°FIE) to
invest, develop, own or operate real property in China (except for ¡°real
property for self use discussed below).
Offshore institutions may purchase real property in China for self use only, if
they have been duly approved to set up branches or representative offices in
China. The relevant documents evidencing such approved ¡°presence¡± must be
submitted before an offshore entity can register title to real property in
Foreign individuals may purchase real property in China for self use only, if
they have been working or studying in China for more than one year. The relevant
documents evidencing such resident duration must be submitted for a foreign
individual to register title to real property in China. Residents of Hong Kong,
Macau and Taiwan, and overseas Chinese citizens may purchase real property of a
certain floor area for self use. [Note: Hong Kong, Macau and Taiwan residents
and overseas Chinese citizens are presumably exempted from the one-year
durational requirement, but this is not clearly provided.]
The formal approval certificate and business license of a Real Estate FIE will
be issued only after the Real Estate FIE has paid off land grant premium and
obtained the related land use right certificate. [Note: This is presumably only
applicable to real estate developers.]
In case a Real Estate FIE is a Chinese-foreign joint venture, the parties must
not guarantee fixed returns to any party in their joint venture contract or
other investment documents.
Any irregularities engaged in by Real Estate FIEs will be investigated and
sanctioned under applicable rules. [Note: Circular 171 specifically mentions
that the State Council Circular 37 regarding ¡°stabilization¡± of real property
price, issued on May 24, 2006, must be applied.]
Local governments must not issue new unauthorized policies favorable to foreign
investment in real property market, and those existing favorable policies should
be reviewed and amended if warranted.
Circular 171 is not free from ambiguities (e.g., it is not clear if the new
registered capital ratio would apply to existing FIEs when they apply for
increase in total investment). The various ministries involved are reported to
be in the process of drafting the relevant implementing rules. While they may
shed light on how to implement Circular 171, they could contain further
restrictions on foreign investment in China's real estate sector.
July 21, 2006
DESIGNATING THE FIRST DAY ON THE ASIAN LUNAR
CALENDAR AS “ASIAN LUNAR NEW YEAR DAY”
BY THE CITY AND COUNTY OF HONOLULU
- Proposed by Johnson Choi, President of the Hong Kong.China.Hawaii Chamber of
Commerce, Introduced by Honolulu City Councilman Charles D'jou and PASSED by the
Full Council on July 19, 2006
Honolulu will join more than 1.5 billion
of the World Population, with almost all major economies in Asia, Major Cities
in North America and Europe recognizing the significant of the Asian Lunar New
Year to enhance and promote cultural ties and business collaborations
CITY COUNCIL No 0 6 2 1 5
CITY AND COUNTY OF HONOLULU
DESIGNATING THE FIRST DAY ON THE ASIAN LUNAR CALENDAR AS “ASIAN LUNAR NEW YEAR
DAY” FOR THE CITY AND COUNTY OF HONOLULU.
WHEREAS, a lunar calendar is based on the phases of the moon, with a lunar month
being measured as the time between new moons and a lunar year consisting of
twelve lunar months; and
WHEREAS, the new year on the Asian lunar calendar begins with the second new
moon following the winter solstice, the day in December with the fewest daylight
hours when the Northern Hemisphere is the most inclined away from the sun; and
WHEREAS, the new year marks the beginning ofthe Asian Lunar New Year
celebration, also known as Spring Festival or Chinese New Year, which lasts 15
days and ends with the arrival of the full moon; and
WHEREAS, for example, the Asian Lunar New Year in 2006 took place between
January29 and February 13; and
WHEREAS, the lunar new year is a time of commemoration and celebration for more
than a billion people in Asia and of Asian ancestry worldwide, including more
than 12 million Asian-Americans; and
WHEREAS, other jurisdictions, including New York State, New York City, and
Maryland, have adopted measures recognizing the Asian Lunar New Year; and
WHEREAS, forty-six percent of the city population is of Asian descent, the
highest percentage of Asian residents out of all U.S. counties; and
WHEREAS, the council recognizes the special significance of the Asian Lunar New
Year for these residents; now, therefore,
CITY AND COUNTY OF HONOLULU NO.06-215
BE IT RESOLVED by the Council of the City and County of Honolulu that it hereby
declares February 18, 2007 and the second new moon following the winter solstice
thereafter as “Asian Lunar New Year Day” for the City and County of Honolulu.
DATE OF INTRODUCTION:
JUN 09 2006
Honolulu, Hawaii Council Members
CITY AND COUNTY OF HONOLULU
C E R T I F I C A T E
I hereby certify that the above is a true record of action by the Council of the
City and County of Honolulu on this RESOLUTION.
Introduced: 6/9/06 By: CHARLES DJOU (BR) Committee: EXECUTIVE MATTERS
Title: RESOLUTION DESIGNATING THE FIRST DAY ON THE ASIAN LUNAR CALENDAR AS
“ASIAN LUNAR NEW
YEAR DAY” FOR THE CITY AND COUNTY OF HONOLULU.
EM 07/07/06 CR-357 – RESOLUTION REPORTED OUT OF COMMITTEE FOR ADOPTION.
COUNCIL 07/19/06 RESOLUTION AND CR-357 ADOPTED.
DELA CRUZ Y
Y = Yes Vote
DENISE C. DE COSTA, CITY CLERK
DONOVAN M. DELA CRUZ, CHAIR AND PRESIDING OFFICER
Page 1 of 2 CITY COUNCIL
From: Johnson Choi, China-Hawaii Chamber of
Commerce; Hong Kong-Hawaii Chamber of Commerce, Hong Kong China Hawaii Chamber
of Commerce – Support Res.
Page 2 of 2 CITY COUNCIL
for fair taxes - Bernard Chan,
The Hong Kong government is always looking for consensus, and perhaps now it
will get its wish: nearly everyone in the community seems to agree that they
don't like the proposed goods and services tax (GST). Of course, nobody likes
taxes - except those that only other people have to pay. The whole point of a
GST is that everyone pays it, so it would be amazing if the proposed tariff were
At the same time, many people agree that we do need a broader tax base. We saw
one weakness of our current, narrow tax base during the recession a few years
ago. Revenues fell sharply, and the government ended up with a serious deficit.
It had no way of knowing whether the problem was cyclical or structural, or how
long it would take to get its books in order again.
There has been an international trend to cut corporate and individual income
taxes. In many cases, this is a deliberate attempt to attract businesses and
talented individuals. In other cases, policymakers think it's fairer to tax
consumption rather than income (in order to encourage saving and investment, for
Low taxes on profits and salaries are among Hong Kong's key attractions and
advantages as a business centre: that international trend could threaten our
overall economy. We have actually been increasing salaries and profits taxes in
recent years, even though other economies have moved in the opposite direction.
From that point of view, it makes sense to spread the tax burden more onto
consumption, cutting taxes on incomes at least a little.
Several sectors claim that a GST would hurt their business. But I doubt that a
price increase of a few per cent would make that much difference to most
consumers' behaviour, at the end of the day. However, I do worry that the work
involved in monitoring compliance will be a burden.
The simplicity of our tax system is almost as attractive as our low tax rates.
This is a valid concern.
A serious worry is that a GST, combined with cuts in corporate and individual
taxes, is basically a transfer of some of the burden from the better off to the
poorer. This is inevitable when you are broadening from such a narrow base.
If the richest 83 per cent of the population forced the poorest 17 per cent to
pay more tax, that would be unfair and immoral.
But what we are looking at here is the other way round. Only 17 per cent of
Hongkongers pay salaries tax. Only 35 per cent of working people actually pay
any salaries tax.
And the number of people in the workforce will decline as the population ages.
Nearly all of us use government services at some time. Just because someone is
richer than you does not mean you are totally free of responsibility to make any
But no one should have to pay more than they can afford, and the GST proposal
includes systems to compensate the poor for higher shopping bills.
But that raises other worries: could a GST lead to bigger government, more
bureaucracy and more spending programmes?
The government believes we need to broaden the tax base, and it has identified a
GST as a viable way to do it. But, at the end of the day, it is a question for
the community as a whole.
Read the consultation document, which is detailed but in plain language, and
think about responding. If you don't think we need to broaden the tax base, say
why. If you accept the need for a broader tax base but don't want a GST, offer
There are alternatives, though all have their pros and cons. We could broaden
the existing salaries and profits tax net. We could have a basic retail sales
tax. Some suggest a tax on all electricity and gas bills, which would be simple
Or we could cut spending - and that brings us back to the basic problem: the
more people want public services, the more people need to pay taxes.
July 21, 2006
China Bans Offices of
Foreign Firms from Business Activities
Many foreign firms (including those from Hong Kong) have offices on the
mainland, but very often they are engaging in activities beyond their scope of
operation and are actually involved in other lines of business. To address this
problem, the Chinese government has just issued a set of implementation opinions
banning unauthorized business activities by foreign firms. Hong Kong companies
should take note of this development. These rules, which form part of the
supporting measures for the Company Law and Regulations on the Administration of
Company Registration amended earlier this year, are intended to straighten out
the investment activities of foreign firms.
One of the measures is to require each foreign firm to sign a pledge, stating:
"This office has never engaged in business activities and will never engage in
any form of business activities in future." The authorities will also make
surprise inspections of all offices of foreign firms. This work is already
underway in places like Zhejiang and Shanghai, with officers from the industry
and commerce administration conducting the inspections. This exercise will soon
commence in Guangdong.
The above regulations, jointly issued by the State Administration of Industry
and Commerce, Ministry of Commerce, General Administration of Customs and State
Administration of Foreign Exchange, took effect immediately upon promulgation.
The implementation opinions pointed out that with immediate effect, existing
offices of foreign firms may continue to exist provided they do not engage in
business activities. They may not engage in unregistered business activities,
and must apply for approval to set up a new branch if they intend to engage in
This new rule has made many offices of foreign-invested enterprises feel all at
Under the Company Law and Regulations on the Administration of Company
Registration, foreign-invested enterprise may set up branches or offices at
places other than their domicile. While branches may engage in business
operations, offices may only engage in business liaison within the parent
company's scope of business.
Different tax policies apply to branches and offices. These mainly concern
corporate income tax and turnover tax. "Company branches pay corporate income
tax and turnover tax in their domicile. Since offices do not engage in business
activities, they naturally do not have to pay tax in their domicile. They only
have to pay tax in the company's domicile," explained an officer from the State
Administration of Industry and Commerce.
Different places have different preferential tax policies, and development zones
and bonded areas have more tax concessions to offer. Many companies try to tap
these benefits by registering in development zones and setting up offices in
other places for business operations.
According to the implementation opinions, no alteration or extension
applications for registration will be accepted from offices already registered.
Upon expiration of registration, they have to complete deregistration
formalities or apply for permission to set up branches if necessary.
Actually, local departments of taxation and industry and commerce administration
have long been aware of offices of foreign-invested enterprises engaging in
business activities. However, since the government was under pressure to attract
foreign investment, they did not take any strict actions against these
China badly needed foreign capital and welcomed any form of foreign investment
in the past, but these days are gone. Through strict control of the offices of
foreign-invested enterprises and the abolition of the system of annual
verification, foreign firms that engage in operations beyond their scope or in
violation of regulations will disappear, and so will those with low value-added
and those which exist on low taxation. Only those with a higher profit ratio and
better quality of output will remain.
July 21, 2006
Secret world of China's
Most people envy men of wealth and their grand appearance, but what do you
really know about their world?
Southern Weekly recently conducted a survey of the richest entrepreneurs on the
Chinese mainland, all of whom had an average individual wealth of 2.202 billion
yuan. They were asked about their career and money, as well as religious
beliefs, marriage and family, views on sexual relations and life in general.
There are 80 people on China's annual richest entrepreneur list, which draws
only from the mainland. While 55 percent of these men on took part in the survey
and returned their questionnaires, only 33 of them were valid .
The average age of those surveyed is 49.8; the oldest is 58 and youngest 33.
Seven were in their 30s, accounting for 21.2 percent of the total; nine were in
their 40s, 27.3 percent of the group; eleven were in their 50s, the largest age
group, making up 33.3 percent of the total figure; and only 6 were over 60, 18.2
percent of the Chinese mainland's richest men.
Only 17 of these men held bachelor degrees, 51.5 percent of the group, and 8
held masters degrees or higher, 24.2 percent of the group.
In terms of career, as many as 75 percent of China's richest entrepreneurs have
worked in similar organizations and industries, and some of them have held high
managerial posts. Of them, 16 were CPC members, 48.5 percent of the total.
There were five categories in the questionnaire: career, wealth, marriage and
family, religion and life.
Career is just one part of life, and a course through it, but wealth plays a big
Of those surveyed 27 acknowledged this when they were asked for their views on
their career. Only four said their careers meant everything to them and two
claimed to be indifferent.
When asked how they would choose to dispose of their property, only three were
willing to hand it over to the stand. Fifteen said they would trust the process
to professional agents and twelve would pass it on to family members. One said
he would hand donate it to those in need, one had never considered the matter
before and one declined to answer.
Most of mainland China's richest men have mixed feelings about money.
Asked where they spent most of their money outside of further business
development 13 of the 33 surveyed said they would improve the welfare of their
employees and managerial team, 12 said they would donate money to charities, 5
said they would cultivate and develop their personal hobbies, and 3 said they
would improve their own standard of living.
As of what the huge wealth would bring on them, most of the rich people attached
great importance on social status and sense of achievement money has brought on
them. Meanwhile, 7 of them have also acknowledged that money brought them sense
of insecurity and vexation.
Rich entrepreneurs laid more importance on career than marriage and family and
half of them turned a blind eye to extramarital affairs.
On the question of which one will you choose, career or marriage and family, 21
chose the former as against only 12 the latter.
As of the extramarital relations, ten said they were indifferent to it while six
believed it was reasonable as against 16 who held it was irrational. Apart from
that, six of them have ever divorced.
Most of the rich entrepreneurs hold a proper attitude towards life.
When answering the question of what can make you feel great happiness, 11 chose
health, 9 successful career, 8 easy life and 6 happy family.
Being asked on the attitude on life, 20 of them have voiced positive opinion on
that, while 9 held life was changeable as against 1 who held an indifferent
Generally speaking, most of the rich entrepreneurs held proper and active view
on life. But there were still a certain amount of people held that life was
changeable, which showed their helplessness towards the reality.
Rich entrepreneurs are polarized on religious belief.
When being asked the view on religious belief, 16 voiced their indifferent view
followed by 13 positive answers and 4 negative ones.
On the question of whether you had religious belief or not, 23 chose no while 10
As of the question of which religion you believed in, only 12 chose Buddhism,
and 2 who declined to acknowledge personal belief also chose Buddhism. They
believed to be non-Buddhists but appropriated Buddhist ideas and were fascinated
by the influence of Buddhist doctrine and posed themselves off as disciples of
Generally speaking, there were 20 rich entrepreneurs who held indifferent or
negative idea towards religion, and most of them adopted an attitude of negating
it. However, there were also 13 who had positive view on religion or believed in
Buddhism, which could not be neglected.
July 20, 2006
Food and Agricultural
Import Regulations and Standards - China Streamlines Food Label Approval Process
During the past 3 years, we have been working with exporters from Hawaii and
North America to bring their products to China. One of the many areas an
exporters need to be aware of is the labeling requirements. A manufacturer or
exporter cannot simply load their goods on a container and send it to China.
I would like to share with you a report prepared by the USDA. Their Offices in
China are valuable resources. Before you contact them, you should also do some
homework. The GAIN report covering the subject matter is included for your
I have also met with USDA Officers in Shanghai China and the Head of the
Shanghai CIQ in May 2006 to get a clear understanding on how the rules will
apply to importers.
If you have further questions, feel free to contact our office. Johnson Choi,
President, Hong Kong.China.Hawaii Chamber of Commerce at 808-524-5738 or by
email to firstname.lastname@example.org
USDA Foreign Agricultural Service - GAIN Report - GAIN Report Number: CH6020
Global Agriculture Information Network
Template Version 2.09
Required Report - public distribution
Peoples Republic of China
Food and Agricultural Import Regulations and Standards
China Streamlines Food Label Approval Process
Approved by: Maurice House, U.S. Embassy Beijing
Prepared by: James Butterworth, Ralph Bean, & Zhang Lei
On March 27, 2006, China’s General Administration of Quality Supervision,
Inspection, and Quarantine (AQSIQ) announced that, effective April 1, 2006, it
would no longer require a separate approval process for labels used on imported
and exported foods and cosmetics. Approval of the label will be conducted as
part of the import inspection at the port of entry. This report is a free
UNOFFICIAL translation provided for the benefit of U.S. exporters by the USDA
FAS Agricultural Affairs Office in Beijing.
Includes PSD Changes: No
Includes Trade Matrix: No
On March 27, 2006, the General Administration of Quality Supervision,
Inspection, and Quarantine (AQSIQ) released its Announcement No. 44 2006,
“Adjustment of Import/Export Food and Cosmetic Label Examination System.” The
original document is available in Chinese at:
Effective as of April 1, 2006, the Announcement eliminated the need for a
separate, preliminary examination and approval of labels used on imported and
exported foods and the fee associated with that review. The label will be
approved as part of CIQ’s other inspection responsibilities at the port of
The new policy also states that, up until October 1, 2006, labels used on
imported and exported food that do not comply with China’s labeling requirement
can be changed to bring them into compliance. After October 1, 2006, however,
any imported foods that use labels that do not comply with the relevant labeling
laws will be disposed of according to “Regulations on the Enforcement of the Law
of the People’s Republic of China on the Inspection of Import and Export
Commodities.” Please refer to GAIN Report CH5071 for the unofficial translation
of the Regulations, which is available at:
Post believes this streamlined label approval procedure may facilitate imports.
Also, importers will not be charged an additional label pre-examination fee. One
potential downside, however, is that this decentralized approval process
increases the likelihood of inconsistent interpretation of China’s labeling
requirements because every CIQ official at the port of entry is authorized to
approve or reject the label as part of their other inspection responsibilities.
Announcement No. 44 2006
By the General Administration of Quality Supervision,
Inspection and Quarantine (AQSIQ)
March 24, 2006
In fulfillment of the spirit of the State Council’s administrative approval
reforms, simplification of procedures, and ease imports and exports, it is
decided to modify the label examination system applicable to imported and
exported foods and cosmetics as follows:
The label of imported foods and cosmetics must comply with China’s law,
regulations, and mandatory standards (which are available at AQSIQ website:
www.aqsiq.gov.cn); labels of exported food
and cosmetic must comply the requirements of the importing countries and
Effective on April 1, 2006, the examination of labels used on imported and
exported foods and cosmetics will be combined with goods inspection and
quarantine procedure; pre-examination will not be conducted anymore. CIQs at all
levels will not accept label pre-examination applications for imported and
exported foods and cosmetics. The Import/Export Food and Cosmetic Label
Examination Certificate will not be a mandatory document for the inspection
CIQs will check if the label used on imported and exported foods and cosmetics
to ensure it complies with China’s laws, regulations, and standards; and check
the truthfulness and accuracy of quality-related content when imported and
exported foods and cosmetics are subjected to inspection and quarantine. The
inspection certificate of goods that meet all the requirements will be marked
“Label is qualified”.
Prior to October 1, 2006, any product whose label fails to meet the new standard
will be given the opportunity to be changed under CIQ’s supervision to meet the
new standards, after which it may be released. After October 1, 2006, products
whose labels fail to meet the new standard will be disposed of according to
according to Article 19 of “Regulations on the Enforcement of the Law of the
People’s Republic of China on the Inspection of Import and Export Commodities”;
those export food and cosmetic, whose label does not comply with requirements of
imported countries or regions, will be disposed according to Article 27 of
“Regulations on the Enforcement of the Law of the People’s Republic of China on
the Inspection of Import and Export Commodities.”
All Imported/Exported Food and Cosmetic Label Examination Certificates already
issued are still valid. If the labels of imported and exported foods are
consistent with the content of the certificate, examination of the label will
not be required.
Those who need new certificates because of the labeling requirements contained
in “GB7718 – 2004: General Rules of Prepackaged Food Labeling” and “GB13432 –
2004: General Standard of Labeling for Pre-packaged Food of Special Dietary
Use.” must renew their certificates according to the requirements of
“Notification on Renewal of Imported Food Label Examination Certificate”
released by AQSIQ’s Import/Export Food Label Office on December 9, 2005. Renewal
of such certificates will be accepted until May 1, 2006. After that, any
certificates that do not comply with the new labeling laws, regulations, or
standards’ will automatically become invalid.
CIQ's inspection and quarantine services on import/export food and cosmetics
includes all label examinations and reviews. Charges for these services are
included in the inspection fees. No additional or specific charges will be
levied for label examination and approval.
[1 Article 19 Unless provided otherwise by laws and administrative regulations,
the exit and entry inspection and quarantine institutions shall order the
parties concerned to destroy the import commodities subject to mandatory
inspection that are found via inspection to have failed to meet the standards
for personal life and property safety, health and environmental protection. They
may also issue a return notice and notify custom in writing. With the return
notice, customs shall handle the formalities of shipping the goods back. Goods
failing to meet other standards may be technically treated under the supervision
of the exit and entry inspection and quarantine institutions and may be sold or
used only after they are found to have met these standards through
re-inspection. If the parties concerned apply to the exit and entry inspection
and quarantine institutions for certification, these institutions should issue
certificates in a timely manner.
If the exit and entry inspection and quarantine institutions find that complete
sets of imported equipment and related materials fail to pass inspection, they
shall issue a notice to forbid their installation and use. Only goods that have
been technically treated and have passed re-inspection by the exit and entry
inspection and quarantine institutions may be installed and used.]
[2 Article 27 If the export commodities subject to mandatory inspection fail to
pass inspection by the exit and entry inspection and quarantine institutions or
the port-based exit and entry inspection and quarantine institutions, technical
treatment may be carried under the supervision of the exit and entry inspection
and quarantine institutions. Only the export commodities that pass re-inspection
shall be allowed to be exported; if the export commodities cannot be treated
technically or fail to pass re-inspection after treatment, they shall not be
allowed to be exported.]
July 19, 2006
Over 10,000 titles on show at Book Fair
Over 10,000 titles are on show at the 17th Hong Kong Book Fair which opens from
today (July 19) until next Monday (July 24) at the Hong Kong Convention and
Exhibition Centre. The fair is bigger and more enticing than ever, with over
10,000 titles showcased by 434 exhibitors, a 11 per cent more than last year.
According to the organizer, Hong Kong Trade Development Council (TDC), religious
books top the book fair's website online entries of new titles, followed by
popular readings, children books, social science, literature, finance/business,
travel guides, history, spiritual and arts/music.
TDC, a strong believer that books enrich lives, educate, as well as entertain,
has donated 30,000 admission tickets to the Hong Kong Council of Social Service
to distribute to its members. The attraction-packed fair also features an
"International Cultural Village" at which books from 15 countries and regions
are available in their respective languages. New "villagers" this year include
New Zealand, Mexico, Nepal, Pakistan and India. They are showcasing their titles
next to France, Spain, Eqypt, Singapore, Thailand, Poland, Belgium, Malaysia,
the Philippines and Vietnam.
Famous writer and VIPs such as swordsman fiction writer Louis Cha (Jin Ronge),
science fiction author Ni Kuang (٦J), Hong Kong literature historian Professor
Lo Wai Luen (Xiao Si p), as well as Hong Kong's Chief Executive Donald Tsang
come to share their writing and reading experience respectively. Writers from
Hong Kong, Taiwan and the Chinese mainland will attend a forum entitled: "In
Search of Humanity in the 21st Century", which is co-organized by TDC, Yazhou
Zhoukan and the Hong Kong Arts Development Council to discuss cultural matters
related to their regions.
They include Liu Xin Wu (BߪZ)BHong Ying(iv)BChu An Min (w)BSu Wei Zhen (Ĭs) and
Xiao Si (p). These five writes, together with Yu Hua are scheduled to host their
individual meet-the-readers sessions after the Forum. The Fair also features a
panel display on the renowned 20th Century Chinese mainland writers' activities
in Hong Kong.
To better prepare students who plan to meet with famed authors taking part in
these sessions, the Education and Manpower Bureau is providing schools and
students with materials on writers' backgrounds and their works. The Fair this
year stays open until 10:00 pm each day from July 19 to 21. It is further
extended on Saturday (July 22) to 2:00 am on Sunday (July 23) to serve midnight
visitors. Local bus companies will arrange special routes to serve readers. Last
day of the fair (July 24) will close at 6:00pm.
Visitors from outside Hong Kong can purchase half-price tickets on presentation
of their travel documents/visas. The Fair attracted near to 640,000 visitors
last year. Hong Kong's printed matters exports amounted to US$ 1,979 million in
2005, up 12% from 2004.
July 14, 2006
Hawaii Governor Linda Lingle Signs Bill to
Improve Language Access for Immigrants with Limited English Proficiency - "The
state has taken a long-awaited and critical first step toward narrowing a
civil-rights gap that has separated our immigrant population from the government
help it deserves and needs." - Honolulu Advertiser editorial, "Language-access
law sets key agenda." Governor Lingle signed into law a key bill designed to
improve state and state-funded services to immigrants with limited English
proficiency. The Language Access Law requires the state, as well as state-funded
programs, to develop plans to provide interpretation services and translated
documents to immigrants and residents who have limited ability to read or speak
English. "This bill will help a silent minority in our community - those who are
not getting services they are entitled to," Governor Lingle said. "Language
should not be a barrier to basic needs such as housing, food and health care."
July 12, 2006
Proposed Changes to U.S.
Export Control Regulations Applying to U.S.-China Trade
The U.S. Department of Commerce's Bureau of Industry and Security (“BIS”) has
published a proposed rule amending export and re-export controls for the
People's Republic of China (“China”). BIS is responsible for administering U.S.
export control laws regarding so-called "dual-use" items, which are items with
both commercial and military applications. This long-anticipated proposed rule
may significantly affect companies that export or re-export U.S. -origin goods,
software and technology to China.
There are three components to the new rule:
Military End-Use Control: The proposed rule would establish a new control policy
based on an exporter's knowledge of a military end-use for certain dual-use
items. Specifically, the proposed rule would impose a new licensing requirement
for certain items controlled on the Commerce Control List (“CCL”), but which do
not currently require a license for export to China, if the exporter has
knowledge, or reason to know, that such items are destined for a military
end-use in China. (This would principally affect certain items that are
currently controlled only for anti-terrorism reasons.) The proposed rule defines
“military end-use” as "incorporation into, or use for the production, design,
development, maintenance, operation, installation, or deployment, repair,
overhaul, or refurbishing of items" listed on the U.S. Munitions List, the
International Munitions List, or covered by Export Control Classification
Numbers ending in “A018” on the CCL. Exporters seeking licenses for items to be
used for a military end-use in China will need to explain why the proposed
export should be approved despite U.S. concerns about the capabilities of the
Chinese military. In a recent speech on U.S.-China high-technology trade, U.S.
Commerce Department Under-Secretary for Industry and Security David McCormick
defended the proposed measure, stating that the rule: “is not a wide-ranging
'catch-all regulation' that subjects everything from fountain pens to office
furniture to government scrutiny. Rather, these changes carefully target certain
technologies that, while unrestricted until now, have the potential to
materially enhance China's military capabilities.”
Validated End-User Authorization: The proposed rule creates a new authorization
for validated end-users located in certain destinations, including China, to
whom controlled items may be exported license-free. This program will permit
expedited shipments to a published list of end-users that have been vetted and
determined to have no ties to the Chinese military or other activities of
concern (for example, nuclear proliferation). Under-Secretary McCormick extolled
the benefits of this program: “U.S. exporters seeking to grow market share in
critical sectors such as semiconductor equipment and electronics will be spared
the need to apply for licenses for potentially hundreds of millions of dollars
worth of sales to these companies in China.”
Expanded End-User Certificate Requirements: BIS proposes to expand the
requirement that exporters obtain an End-User Certificate from the Chinese
Ministry of Commerce ("MOFCOM") for items that both require a license to China
for any reason and exceed a total value of $5,000. Currently, only items
controlled for national security purposes require such certificates.
The impact of the proposed rule (once adopted) will depend on the nature of a
company's products and its customers. A copy of the proposed rule is attached.
[PDF] Any interested party may submit comments to BIS regarding these proposed
revisions of U.S. export and re-export controls to China by November 3, 2006.
Following its consideration of the comments, BIS will publish a final rule.
July 7, 2006
Success in world trade's
pearl of the orient
Pearl trader Rene Hodel identified Hong Kong as the best base for his business,
and has never looked back - Exquisite, branded pearl jewellery by Hodel of Hong
Kong is in demand around the world.
Swiss luxury pearl brand Hodel has leveraged Hong Kong's trading strengths to
develop as a pioneer in the pearl industry, with a worldwide export business.
Originally a behind-the-scenes wholesaler, Hodel (Hong Kong) Ltd now has teams
operating globally from Tahiti to Western Australia. The business is rapidly
expanding across Asia, with offices in Hong Kong (its global headquarters),
Taiwan, Singapore, Indonesia and Kuala Lumpur.
Managing Director Rene Hodel says Hong Kong's competitive advantages have been
critical to his success. Could he have achieved so much if he had set up his
business anywhere else but Hong Kong?"Never, impossible," Mr. Hodel replied. Mr.
Hodel was sent to Hong Kong in 1981 to run the pearl department of his then
employer, a Swiss jewellery company. A few years later, he approached Schoeffel,
the largest pearl company in Europe, and proposed a partnership in Hong
Kong."This is what we did, and the company (Schoeffel HK Ltd) grew over 20 years
to one of the most respected pearl specialists in Asia," Mr. Hodel said. In
September 2005, Mr. Hodel bought out Schoeffel Stuttgart's 50 per cent share and
the company was rebranded as Hodel.
Mr Hodel said choosing Hong Kong made economic sense. "Hong Kong, with its
laissez faire attitude, is the greatest trading place on earth. You buy a
company in the morning and can be doing business in the afternoon. There is no
other place like that. On top, Hong Kong allows you to build up a business. We
pay only 17 per cent tax, so profits can be re-invested and companies have a
chance to grow. This is not possible in Europe, America or Australia, where you
pay hefty taxes."
Mr. Hodel also used his own connections to help grow the company."Having been in
the industry for more than 25 years, of course I know all the important
suppliers as well as competitors," he said. "Pearl business is a people's
business and has a lot to do with personal relationships. Thanks to these
connections, we were able to establish offices Asia-wide, and we have very close
associates worldwide who are selling our branded products."
In addition, he cites Hong Kong's world-class trade shows as an effective
business tool. "We have attended the Hong Kong International Jewellery Show
since day one," he said. "I started to exhibit in 1981 and have supported all
jewellery shows since." Over time, Mr. Hodel has seen many changes. "When I
started in the business, Kobe, Japan was the pearl city of the world. This has
changed over the past 10 years, and nowadays, all pearl producing countries hold
their major auctions here, in the Hong Kong Convention and Exhibition Centre."
He is also regarded as an industry pioneer. While working with Schoeffel HK, Mr.
Hodel helped establish the first Chinese Akoya processing company in Hong Kong.
Some time later, the firm pioneered the first freshwater pearl company in China
specialising in pearls sized from 9 mm up. He participated in the first South
Seas pearl auction held in Darwin in 1989, and was among the first to import
black pearls directly from Tahiti.
Hodel produces jewellery in Hong Kong, China and Thailand, and sells it in Hong
Kong, Europe and Asia. "The US (market) is fast growing, but so is China," Mr.
Hodel said."China will be our market of the future." The firm's biggest growth
area is branded jewellery, which is overseen by Mr. Hodel's wife, Linda. Mr.
Hodel says there is no question where the hub of his business will remain. "Hong
Kong is the centre of the world (or so we think). It's a vibrant and bustling
place, where people come to buy and do business."
July 4, 2006
China Soon to Allow Limited
Liability Partnerships - HKTDC
China is currently reviewing the draft of the revised Partnership Enterprise
Law, marking the first round of revisions since the law was promulgated in 1997
and covering new rules on doing business in China in the form of partnership.
Currently, Hong Kong companies are prohibited from establishing
independently-run operations and must team up with mainland partners in certain
business sectors (especially key industries). Hence, Hong Kong companies should
take note of these imminent changes.
According to Zhu Shaoping, director of the National People's Congress financial
and economic committee bills office, the present round of revisions submitted
for deliberation primarily contains changes in the following areas: two new
forms of partnership, namely limited partnership (LP) and limited liability
partnership (LLP) are introduced, and legal persons can take part in
According to Zhu, the existing Partnership Enterprise Law was formulated at a
time when the planned economy was shifting gear to the market economy and
partnership was only narrowly defined as general partnership. As time changes,
the old law can no longer cope with the current needs for building an innovative
nation and promoting private investment. One of the major considerations for
revising the Partnership Enterprise Law is to introduce LP as a new enterprise
form, paving the way for attracting venture capital and promoting the input of
technology and innovation.
An LP is a form of enterprise that allows partners assuming limited liability to
join on the basis of one or more partners assuming unlimited liability.
This type of partnership has several advantages. First, as a partnership
enterprise, no corporate income tax has to be paid and the investors concerned
will not be subject to double taxation. Second, investment risk can be reduced
as some of the investors and investing institutions concerned may assume limited
liability. For those partners who assume unlimited liability, this type of
partnership offers the capital enlargement effect as they may raise a massive
amount of capital based on a relatively small sum backed by good reputation. In
other words, it offers the benefits of low operating cost and high efficiency.
LP is an internationally adopted form of enterprise especially suited to
investment in the form of venture capital. Partners with limited liability are
usually the major venture capital contributors. They only assume limited
liability for their share of capital and are not involved in the management and
operation of the venture capital funds. Meanwhile, general partners are
responsible for managing the venture capital. They are entrusted with the
management of the partnership enterprise because of their higher management
capability. They may make a smaller capital contribution but assume unlimited
liability. The parties concerned enter into an agreement which clearly sets out
the contractual rights and obligations of the respective parties. As a form of
enterprise, LP offers various advantages over limited company for venture
capital investments, including the operation scale of the capital, the level of
professionalism in investing, and the cost of management.
In fact, the issue of LP was discussed during the legislative process of the
existing Partnership Enterprise Law. In the year following the formulation of
the Partnership Enterprise Law, a group spearheaded by the chairman of China
Democratic National Construction Association Cheng Siwei tabled a proposal at
the CPPCC (Chinese People's Political Consultative Conference) annual meeting to
promote venture capital with full force.
Subsequently, some local authorities experimented with venture capital
investment in the form of LP but limited progress was made because LP was not
covered in the law.
According to Zhu, more than 250 venture capital firms are currently operating in
China involving over Rmb50 billion worth of venture capital funds. These funds
are being invested in 3,000-4,000 projects where the investment amount accounts
for about one-third of the total capitalization. The relatively low ratio is
attributable to the absence of free flow of capital into and out of China.
Although the introduction of LP is the right move, law professor Gan Peizhong of
Peking University who participated in drafting the existing Partnership
Enterprise Law cautioned that, "LP also involves high risks because partners
with limited liability are not involved in management and they have to take into
consideration the credentials and trustworthiness of their partners with
unlimited liability, as well as supervision and control over them".
"Legal persons participating in partnerships is an issue that warrants
prudence," said Gan. This is because legal person shareholders cannot exert
control over partners with unlimited liability, and in-between there is also the
presence of the management staff of the legal person. Hence, in many countries
and regions the law will require the consent of all or the majority of
shareholders for admitting legal person partners.
While the existing Partnership Enterprise Law consists of 78 articles under nine
chapters, the revised draft law adds 26 new articles, deletes two articles and
combines four articles to form 11 chapters with a total of 100 articles. Major
1) The draft contains a new chapter on "Special Provisions on Limited
Partnership" which sets out the rights and obligations of the partners with
limited liability, how the affairs of the limited partnership are to be managed,
as well as special rules governing limited partnership as opposed to general
2) The draft also contains a new chapter on "Special Provisions on Limited
Liability Partnership" which covers the definition of limited liability
partnership, the responsibilities of professional services providers, and the
professional risk fund etc.
3) The draft provides for the participation of legal persons in partnerships.
Wholly state-owned enterprises and listed companies should participate in
partnerships via their subsidiaries or other holding companies.
China's First Food Recall
Rule to Take Effect in Shanghai in August - HKTDC
Starting from 1 August, "problematic food" will be recalled in Shanghai.
According to the Shanghai food and drug administration, food manufacturers are
required to recall within 72 hours food products that have already caused, or
there is evidence they may cause, serious health hazard or even death. The
manufacturer concerned must also report the progress of the recall to the
Shanghai food and drug administration once every 24 hours. If the manufacturer
concerned does not recall the problematic food voluntarily, the government will
issue a recall order and seal up the problematic food if the manufacturer still
refuses to take any action.
Before, Shanghai would only punish the food manufacturer after a food hazard
incident had occurred. Now the new food recall rule puts people¡¦s health first
by recalling problematic food once it is found.
In future, there will be unified standards for defining problematic food, which
is classified into three levels:
Level 1 problematic food products refer to those that have already caused, or
there is evidence they may cause, serious health hazard or even death.
Level 2 problematic food products are those that have caused or may cause
temporary health hazard but the hazard is curable, or food products that are
less likely to lead to serious health hazard.
Level 3 problematic food products are those that do not cause obvious health
hazard after eating.
Relevant recall measures will be taken according to the seriousness of the
problem. There are two major categories of problematic food. One is food items
that fail to conform to national standards; the other is food items with no
unified standards for the time being, such as Sudan Red, but may pose health
hazard and need risk evaluation by experts.
Under the new regulation, a food manufacturer should voluntarily recall its
products upon discovering through self-examination or through reports or
complaints by distributors or consumers that the food products pose safety
hazard. At the same time, the food manufacturer should report to the government
department concerned, draw up a recall plan, promptly notify consumers, and
recall the products from the market and from consumers. The whole recall process
will be monitored by the government department concerned. If it is discovered
that the food manufacturer fails to make a voluntary recall, a recall order will
be issued by the government department concerned.
The food and drug administration will only mete out lenient punishment if an
enterprise voluntarily recalls its problematic products and the recall is
effectively implemented. Otherwise it will be subject to severe administrative
penalty whereby the problematic products will be sealed up and its food
production licence may be quashed.
After the issuance of a Level 2 recall order, the food manufacturer should also
announce the recall notice to the public and recall its products from all
consumers. The recall must be completed within seven days, and the progress of
the recall should be reported to the food and drug administration once every
Once the "Red Alert" for Level 1 problematic food recall is raised, the Shanghai
food and drug administration will announce to the public details of the problem,
emergency measures to be taken to avoid hazards, as well as other relevant
information. The manufacturer will issue a recall notice and have the products
recalled from consumers and users. The recall must be completed within 72 hours
and the manufacturer must report the progress of the recall to the food and drug
administration once every 24 hours.
For Level 3 problematic food products, the recall may be extended to wholesalers
or retailers if necessary.
June 21, 2006 - by
Yan Weilu and Xu Jing
market for Hetian jade
Hetian jade has a history of at least 7,000 years in China. According to
experts, the "Jade Road" existed long before the "Silk Road", and Chinese
emperors all through the ages had their imperial seals carved out of the jade
from Hetian. Opening in August 2005, the classic-looking Hetian Jade Trading
Centre is located at Renmin Road in the prime area of Urumqi, Xinjiang's
capital. With its pleasant shopping environment, it is an ideal place to
appreciate and purchase jade. Renmin Road is basically the financial district of
Urumqi - so the jade centre could not have picked a better location.
According to Wu Gang, manager of the centre, Hetian jade mostly comes from the
northern slopes of Xinjiang's Kunlun Mountains. It is semi-translucent and fine,
with a greasy kind of gloss after polishing. Its hardness is between 5.5 and 6.5
degrees. Hetian jade comes in white, green, blue-green, black, yellow and
yellow-green, depending on the type of trace minerals it contains. The most
expensive white jade is called "mutton-fat" jade. At present, 1 kg of
"mutton-fat" jade is worth more than Rmb100,000 (HK$97,500).
The Xinjiang Hetian Jade Trading Centre is housed in a three-storey building
with a floor area of over 3,000 sqm. It now has more than 50 shops, each with a
business area of 10 to 70 sqm. Using the "shops in front and factory at the
back" model of operation, the front of the centre is lined with shops while the
Xinjiang Jade Carving Factory lies at the back. It is one of the rare Hetian
jade trading centres where jade carving, sales and appraisals all take place
under one roof.
The centre mainly sells mid-to-top-end Hetian jade, so it has attracted some
pre-eminent names in the production and sale of Hetian jade, including
Furunmantang, Sanyang Jade Garden, Minghe Jade, Jiufeng Jade, Boyu Gallery,
Yawan Gallery, Ziyu Gallery and Baoyu Gallery. Among these, Minghe Jade was
first produced by famous Xinjiang jade carver Zhou Yanming, while the Yawan
Gallery was brought on the market by Li Shaoen, the largest jade producer and
dealer in Bayinguoleng, Mongolia.
Boyu Gallery jade is run by Ke Changlin who has mined for precious materials for
more than 20 years. These shops mainly deal in jade pendants, bangles, belt
buckles and accessories, with pendants accounting for 80% of total sales. Aside
from local jade traders, dealers from Suzhou and the northeastern provinces have
also set up business in this trading centre. Most of them carry on wholesale and
retail businesses at the same time. In addition to Hetian jade, they also sell
small quantities of jade from Qinghai and Russia. The future direction of the
centre appears to be aimed at providing the purest of the pure Hetian jade from
Shop space at the trading centre is for lease only. The daily rent is Rmb7
(HK$6.7) per sqm for ground-floor shops facing the street, Rmb5 (HK$4.8) per sqm
for ground-floor shops inside, and Rmb1.5 (HK$1.4) to Rmb2 (HK$1.9) per sqm for
first-floor shops. Rental includes water charges but tenants have to pay Rmb6
(HK$5.8) per sqm a month for electricity, heating and management fees.
Ms Li, owner of Ziyu Gallery, has been in the jade business for nearly six
years. She is satisfied with the centre's shopping environment and thinks that
it is well-managed and adheres to proper contract terms. In view of the centre's
market size and customer flow, she is thinking of leasing a larger shop to
expand her business.
Jade is a specialised collectible and pricing for jade is more complicated than
for diamonds and gold, with only experienced experts able to vouch for the
authenticity and grade of Hetian jade. The centre has taken some protective
measures to give consumers a sense of reassurance. Since it opened for business,
tenants have formed a disciplinary committee, have worked out relevant standard
business guidelines and made assurances to the public that it would strictly
enforce the Product Quality Law to ensure that goods sold are genuine and
These practices have earned the centre a positive reputation among consumers.
The Xinjiang Mineral Products Quality Inspection Station offers an appraisal and
enquiry service at the centre. It provides free jade testing and appraisal to
monitor the quality of products sold, so that unscrupulous businesses cannot
offer fakes. In order to further promote Hetian jade from Xinjiang and attract
buyers, the centre plans to host an exhibition and an auction in conjunction
with the Gemmological Association of Xinjiang this year. It will also invite top
Xinjiang jade carver Ma Jingui as image ambassador, to build up the Hetian jade
The centre is monitored by infrared, video and other security alarm systems. It
has also reached agreements with the industry and commerce administration and
taxation departments to open offices at the centre for the convenience of
occupants in paying taxes and fees. The centre has also established an online
trading platform with commercial banks in Urumqi. Point-of-sale (POS) machines
are in use so customers can make purchases with credit cards and save themselves
the trouble of having to carry a lot of cash.
All shops at the centre are broadband-connected so staff can follow market
movements and make business deals without having to go out. It is understood
that the centre also intends to establish an online trading platform for Hetian
jade with the Gemmological Association of Xinjiang and other units so customers
and enterprises can make use of the network to conduct business more
The trading centre is next to Urumqi's busiest Erdaoqiao shopping area so that
there is a large and consistent customer flow and good public transport.
According to traders, Hetian jade has seen soaring sales in recent years and the
prospects are good. As a non-renewable resource, it is becoming more and more
valuable to collectors. Also, as people become more health-conscious, the
traditional saying that jade nourishes people as much as people nourish jade is
played up, so making jade items more popular than ever, with Hetian being the
Hetian jade products could be among the hottest collectible items on the
mainland in the next 10 years. For the many local and overseas tourists visiting
Xinjiang on sight-seeing trips or for short stays, Hetian jade certainly makes
for memorable souvenirs.
The fact that the official seal for the Beijing Olympics 2008 is carved out of
Hetian jade has affirmed its excellent reputation.
June 19, 2006
Mainland China's training
needs on the rise - By HKTDC
The buzz is loud and clear: the Chinese Mainland is short of talent and skilled
labor - and needs help. "Training business" is deemed to be one of the highest
profitable margin businesses in the Chinese mainland. Clients in the mainland
are willing to pay training consultants RMB30,000-50,000 per day for customized
courses. This is the finding of a TDC study released today which says Hong Kong
is in a profitable position to help.
The Mainland is eager to modernize its industrial structure, upgrade its
workforce, and to build a knowledge-based economy with quality people to stay
competitive in the rapidly changing business landscape. Many mainland companies
are now seeing the value of training their own people, the TDC report says.
Mainland talents have higher expectations now. Companies need to provide not
just training, but also secure talent at an early stage, for instance,
attracting fresh graduates. Industry surveys also indicate that mainland
university graduates rate highly the prospects and training offered by a company
when choosing their jobs.
An overwhelming majority (96%) of the Hong Kong training companies sees
promising prospects for their mainland training business over the next 1-3
The most lucrative segment is soft skills related training (like managerial
skills, negotiation skills, presentation skills, interpersonal skills and
problem solving/decision making) for managerial staff and executives, which
accounts for the bulk of users' training budgets.
Users have a strong preference for foreign consultants given their perception
that local training companies still lack international exposure and vision.
There is a growing demand for non-management related training courses, for
instance, customer services, sales and marketing.
Up to 78% of Hong Kong's training companies are already providing services there
- mainly to Hong Kong and other foreign companies. But mainland firms are now
becoming the best targets. Many training consultants in China are "checking the
temperature" of local mainland companies as they believe business opportunities
Companies on the mainland in need of personnel training include those in the
manufacturing, trading, Hotel, Restaurant, Travel Related Services and financial
services sectors, as well as government.
Mainland users find Hong Kong companies well suited to offer them training in
financial, telecommunications and logistics services because of Hong Kong's deep
foundation of know-how in these fields and because of its international
According to the survey, Shenzhen, Guangzhou and Shanghai are currently the
biggest beneficiaries of Hong Kong's training services. But training companies
see the potential for bigger growth is in Shanghai and Beijing over the next 1-3
Training companies can also meet Mainland China's training needs by bringing
staff of mainland companies overseas for training. More and more mainland China
companies and institutions such as government departments and hospitals are
sending their staff to Hong Kong to gain working experience and foreign
exposure. They opt for training in Hong Kong rather than the US/Europe because
of Hong Kong's advantages in professional experience, business culture and
Training programs provided by foreign firms in the Mainland are usually drawn up
by consultancy firms to suit individual needs. But these firms are not yet
allowed to be wholly-owned, whereas Hong Kong companies can set up wholly-owned
consultancy firms under the Closer Economic Partnership Arrangement (CEPA) with
This gives Hong Kong firms added advantage in what is becoming a big business.
Training is one of the few business areas that are not dominated by big players.
Most training providers on the mainland are small in size. According to industry
surveys, 50-60% of training providers employed less than 20 people. In terms of
annual revenue, about 70% of the companies earned an annual revenue of less than
RMB 2.5 million (US$310,000).
June 16, 2006
AmCham Shanghai's Fast
Facts on Section 911: How Changes in the U.S. Tax Code Will Affect You
On May 17, President Bush signed into law the Tax Increase
Prevention and Reconciliation Act of 2005 (TIPRA), bringing a number of last
minute changes to the foreign income exclusion provisions of the U.S. tax code
that have taken A! merican expatriates by surprise.
The new law stipulates significant changes to Section 911 of the U.S. tax code,
which previously granted Americans living overseas an exemption from paying
personal income tax for the first US$80,000 earned. These changes include:
The US$80,000 compensation exclusion is indexed for inflation starting in 2006,
instead of 2008, bringing the exclusion for this year to US$82,400.
The amount of income that is not excluded is now taxed at the marginal rates
that would apply without the exclusion-- meaning an increased tax rate for many
The housing cost exclusion (or deduction) is now capped at 30% of the taxpayer's
maximum compensation exclusion. The U.S. Treasury Department may issue guidance
for non-U.S. cities with expensive housing, but without such a ruling, the
housing exclusion for 2006 is US$11,536 ?¡ìC bringing the total exclusion
allowable for 2006 to US$93,936.
For many expatriates living in China, the effect of the new law may be limited,
because U.S. tax law allows for a foreign tax credit to offset payments to the
IRS. Since the mainland Chinese tax rates are already quite high many Americans
living in China already receive credit with the IRS for payments made here and
thus do not pay U.S. income taxes.
Some view the change in the tax law as a warning of what may come in the future:
elimination of the foreign-income exclusion altogether. AmCham Shanghai
encourages Americans living overseas to contact their elected representatives
and explain the benefits of the foreign-earned income exclusion to the U.S.
economy ?¡ìC especially in promoting American business interests and
strengthening U.S. companies around the globe.
For a look at the Background Fact Sheet on Section 911, prepared by Chair of the
Senate Finance Committee Chuck Grassley's staff, visit
June 15, 2006
McDonald's food center to overlook quality in 35 markets
(From left) McDonald's President for
Asia-Pacific, Middle East and Africa (APMEA), Tim Fenton; InvestHK's Mike Rowse;
and Managing Director of McDonald's Restaurants (Hong Kong) Ltd, Joseph Lau, at
the opening press conference
chain McDonalds recently opened its Food Studio and Quality Centre in North
Point, Hong Kong. The new facility is the centre for quality and food standards
operations for over 35 markets and the development of new foods for the Asia,
Pacific, Middle East and Africa (APMEA) region. Another demonstration of the
company's commitment to Asia is the relocation to Hong Kong of Tim Fenton,
McDonald's President for Asia-Pacific, Middle East and Africa (APMEA). He has
also brought with him key members of his management team.
Mr Fenton said: Hong Kong is a trading city, with excellent transportation and
logistics infrastructure. This allows us to send food items in and out of Hong
Kong efficiently and conveniently for quality assurance. At the same time, Hong
Kongs central location makes it a great place to meet and train. China is one of
the fastest growing and most important markets for McDonald's. By basing
ourselves in Hong Kong - one of the international cities of China we can stay
close to the rapidly expanding market.
Third global location - According to Mr Fenton, Hong Kong is the third global
location chosen by McDonalds for its Food and Quality Assurance Studios. Similar
facilities are located near Chicago (US) and Paris. The Studios in Hong Kong
will cover 35 countries across 16 time zones including all of Asia-Pacific,
South Africa and the Middle East.
McDonalds APMEA markets will continue to develop ideas for different products.
The food studio in Hong Kong will be where those ideas can be brought to life,
producing new products that can be introduced across international markets.
Initially, at least 12 full-time staff will be employed to operate the studios.
They will include a chef to help develop new foods and tastes, and a
nutritionist to ensure the proper dietary balance of the foods.
The Director-General of Investment Promotion at Invest Hong Kong, Mike Rowse,
welcomed McDonalds expansion in Hong Kong. He said, Long-term investors like
McDonalds do not just create employment opportunities for our workforce. By
choosing Hong Kong as their regional base, these investors bring new ideas and
knowledge from different markets to our city helping make Hong Kong a centre for
Shanghai World Expo shifts gear
Shanghai party secretary Chen Liangyu pointed out at the executive committee of
Shanghai World Expo 2010 that preparations for the Expo have entered a new stage
marked by three main elements, involving a shift from partial to full
implementation following construction. The project has moved on from conceptual
thinking to concrete embodiment in theme interpretation, and from preliminary
contacts to gradual implementation in investor and exhibitor recruitment.
The first issue is about how local people will adapt to the Expo. In Shanghai,
people like to go to the Bund and lean against the railings on the banks of the
Huangpu River, watching the flowing water and the boats in the river. However,
they can only do so from the top of the embankment and cannot get close to the
water. At the International Conference on Ecocity Planning on 12th May, chief
planner for the Shanghai World Expo, Wu Zhiqiang, said the World Expo intends to
build a three km central greenbelt on the expo site, part of which will be built
on the banks of the Huangpu River so people can have closer contact with the
According to Wu, this central greenbelt will be the centre of the Expo Park. On
the banks of the Huangppu River, aquatic plants such as reeds are going to be
planted in large quantities. Special grass or trees may also be planted using
the latest eco-friendly cultivation techniques to prevent plants from being
damaged. The grass must also be resistant to trampling so that people can play
on the lawn and walk close to the water.
Xia Nankai, executive vice president of the Shanghai Tongji Urban Planning and
Design Institute, said the green slope is just one of the proposed designs for
the riverside greenbelt. Another proposal is a "terrace design" under which
layers of terraces will be built leading down to the embankment. Since the lower
terraces will often be inundated, aquatic plants can grow there whereas
trample-resistant plants can be planted on the higher terraces. According to
Xia, they are also considering building elevated pedestrian walkways over the
wetlands so people can appreciate the wetland plants.
When visitors need to find out where they want to go in the Expo park, signs of
different colors will be very important in distinguishing the various areas. For
example, different colors will be used for different countries and regions. When
different colors are put together, they look like a rainbow. Wu disclosed that
they plan to use the rainbow to decorate the Lupu Bridge during the period of
the World Expo so that the bridge will also become a tourist attraction.
The Aichi World Expo in Japan in 2005 also used different colors to decorate the
floor. At the Shanghai World Expo, the colors of the rainbow will be used to
decorate rain shelters, sun shelters and street lamps, turning the sky into a
In the blueprint for the underground spaces at the World Expo site, there are
going to be not only small shops and underground access but also plants and
bamboos. Special energy-saving techniques will be used to bring sunlight
directly into the underground space, making it warm in winter and cool in
summer. Energy consumption is anyway going to be very low at the Expo, by
June 14, 2006
Stephen Roach, chief economist of Morgan
Stanley, said in his latest economic review that although China is more
influential than any other economy in the world in terms of pushing up global
demand for bulk commodities, the new policy made by the Chinese leadership
indicates a major shift of the country's growth model --- from high-resources
consumption manner to low-resources consumption. He believes this strategy would
not only facilitate China's sustainable development, but also well serve the
Statistics show astonishing proportion of China's contribution to the increase
in world's industrial material consumption. Among which, consumption of aluminum
increased by 50%, iron ore by 84%, steel by 108%, cement 115%, zinc 120%, and
copper and nickel even by triple. China has become the largest consumer of
copper, nickel and zinc. Apparently the Chinese economy is mainly based on bulk
commodities consuming industrial production and driven by fixed investment and
When many think this trend will go on limitless, the Chinese leaders have wisely
made the new growth guideline. Stephen Roach expects that the new strategy would
bring significant effect to China's economic growth features, and even influence
the financial market and global economy.
Stephen Roach also interpreted the newly promulgated 11th Five-year Plan, and
found that China would focus more on boosting its domestic consumption and
reduce its reliance on investment and export.
In his forecast, in the future 5 years, China will maintain annual GDP growth of
7.5% and reduce its resource consumption by 20% per GDP by 2010.
He regards all of this as an implication that the process of China's economic
re-balancing has begun.
June 14, 2006
Eight out of 10 mainlanders say they are
satisfied with the way things are going in China, according to a survey, in
a sign that robust economic growth is outweighing social tensions over the
income gap between rich and poor. The 81 percent satisfaction rate is an
increase from the 72 percent recorded last year, the Pew Global Attitudes
Project said in a public opinion poll of 15 countries.
Those mainlanders who were unhappy with the state of the nation dropped to 13
percent, from 19 percent a year ago, according to survey results released
Aside from China, citizens of only two other countries - Egypt and Jordan - were
content with national conditions, said the survey, which covered a range of
topics, from national attitudes to global warming, bird flu and the Iran nuclear
Contentment at home also reflected well in mainlanders' opinions of foreign
countries, except Japan, whose relations with China have deteriorated from
disputes over territory and wartime history. Only 21 percent held a favorable
opinion of Japan, the survey said, while views of the United States, France and
Germany grew more positive.
The survey has a 2 percent margin of error. It interviewed 2,180 people between
the ages of 18 and 60 and was skewed toward urban China, with the interviews
mostly conducted in the cities of Beijing, Shanghai, Guangzhou, Xinxiang,
Jinzhong and Luzhou.
Years of nearly double-digit or higher economic growth have favored cities,
creating more comfortable lives for many. In rural China, authorities face
increasingly violent protests by the poor over official corruption and land
seizures for development. In response they have promised to increase funding for
rural areas to address a yawning income gap.
June 7, 2006
The lesson of Japanese
A pair of brand name sports shoes are made at the cost of 12 dollars in China
but sold at 120 dollars a pair on the US market. Only two dollars goes to
That makes some people believe that a suspension of trade with China would
immediately push the US inflation rate up by two percentage points as China
enjoys unparalleled labor cost advantage.
They are also assured by the fact that China has invested 300 billion US dollars
on the overseas market while receiving 500 billion US dollars of foreign stakes.
But an expert on finance at Beijing Normal University warns against the "over
optimism" about the risks of China's international account imbalance and the
exchange rate issue and reminds of the lessons from the tragedy of the Japanese
economy and Japanese currency yen in history.
The Japanese yen exchange rate has gone through three stages. During the first
stage between 1949 and 1971, Japan achieved a 10 percent economic growth
annually through its export-oriented strategy based on fixed exchange rate
system with 380 yen against a dollar. Such a growth outraced Britain and France
and modeled after by other East Asian economies.
A dramatic change occurred in December, 1971, when finance ministers of ten
Western countries reached the Smithsonian Agreement in Washington requiring a
precise yen appreciation of 16.88 percent and floating band of 2.25 percent
around the newly agreed par value. That ended yen's 12-year old pegged rate
system and the yen began to float since then.
The second stage since then lasted till 1985, during which the Japanese currency
inflated from 315 yen against a dollar to 200 yen against a dollar with an
annual growth of 5.2 percent. The upward yen did not seem to hinder Japan's
prosperity. The huge trade surplus and capital influx pushed Japan's foreign
exchange reserve up sharply.
However, nobody realized at that time that the yen's constant, moderate
appreciation was leading to buddle economy which was injuring the dynamics of
the Japanese economy.
That was followed by the third stage till 1989. On Sept. 22, 1985, the Group7,
under the proposal of the United States, initiated the Plaza Accord maintaining
the dollar's dominance and shrinking the value of other major currencies in the
world by 30 percent in two years.
Then there was Louvre Accord dragging yen into uncontrollable uptick. The media
reported that the land prices of the 23 districts of Tokyo could buy the whole
But the bubble of the Japanese economy went burst in 1989.
Recalling the history is to learn from it so that the same thing would not
happen in the future. There are similarities in the two economies which both
depend on foreign trade and capital. Comparing China in 2004 and Japan in 1967,
we can see a lot of parities in terms of per capita GDP, per capita power
consumption, the urban Engel's coefficient, industrial structure, and even the
hosting of the World Expo and the Olympics.
The Chinese currency yuan, like yen, also was pushed into a period of slight
appreciation after 22 years of fixed exchange rate system from 1983 to 2005. And
China's foreign trade mix currently is nearly repeating Japan's when yen was
going up slightly. Both began with textiles, evolved into electromechanical
products and upgraded into automobiles.
Back to the issues of China's exchange rate and trade conflicts, how can a pair
of 12-dollar Chinese shoes exported to the US for insignificant processing
profits affect a pair of 120-dollar shoes significantly? How can we dare to say
that the US orders would not shift to India or Indonesia where there is labor as
smart and diligent as that in China so as to bring same economic miracle?
The difference between Japan's past and today's China does not lie in the way
they go down, but on how far they have been on the way.
May 17, 2006
US firms hit visa and tech `handicap' - US
policies on visa approvals and technology exports are hindering American
companies' efforts to develop markets in the mainland, the American Chamber of
Commerce in China said.
US policies on visa approvals and technology exports are hindering American
companies' efforts to develop markets in the mainland, the American Chamber of
Commerce in China said. Visa procedures deter mainland businessmen from visiting
potential trading partners in the United States, it said in an annual white
paper, released Tuesday. Many technology products barred from US export are
already "readily available" within China or from other exporters, it said.
The US is sometimes "handicapping itself" in correcting the problem that defines
the two countries' relationship - the American trade deficit - said chamber
president Charles Martin. That deficit swelled to US$201.6 billion (HK$1.57
trillion) last year, with some US lawmakers blaming an artificially weak yuan.
A survey of 55 chamber members showed 44 percent lost "significant" sales or
business relationships because of visa issues. Mainland officials buying for
large state-owned enterprises saw the US visa application process as lengthy and
personally humiliating, with no guarantee of success, it said. Most European
Union visa applications can be processed within a week and, unlike US
procedures, do not require fingerprinting.
It was the first time the chamber reported on visa policy, though companies have
complained regularly about the tighter scrutiny imposed after the September 11,
2001, terror attacks.
The huge volume of US-Chinese trade means the rules hit businesses harder in
China even though they might be applied the same way in other countries, said
Donald Forest, executive director of the financial firm, Sierra Asia Partners,
who helped to oversee the survey.
"Relative to competing nations, visa policy remains a significant deterrent to
buying American goods," he said. A lack of US government programs to promote
exports to China is also causing companies to lose market share to exporters in
countries like Germany and Japan. The chamber cited Japan as an example of a
country with a smaller economy than the US that spent more on promotion and had
a larger slice of China's imports. Japan's 15 percent share was double that of
Martin said China, for its part, is still doing too little to fight growing
product piracy despite repeated crackdowns, causing mounting damage to
legitimate producers of movies, music and other goods. "The problem is growing
faster than the enforcement efforts," he said, calling on Beijing to increase
criminal penalties and enforcement efforts for piracy.
The report, based on a survey of more than 200 US companies in China, listed
other obstacles to foreign businesses such as bureaucracy and unclear
But Martin said Beijing has made steady progress in those areas - much of it
mandated by its World Trade Organization commitments - while product piracy is
China is widely regarded as the world's top source of illegal copies of products
ranging from pop music and Hollywood movies to designer clothes and even heart
medicines. Pirated goods are still widely available in China despite repeated
The chamber said 41 percent of companies in its survey reported seeing more
counterfeiting of their products, while 49 percent were dissatisfied with
Also Tuesday, the China Daily newspaper reported that 13 people were sentenced
to up to seven years in prison for pirating liquor, auto parts, DVDs and other
May 3, 2006
Asian Lunar New Year
becomes official Day of Commemoration in U.S. State of Maryland
Maryland Governor Robert L. Ehrlich signed a bill on Tuesday that makes the
Asian Lunar New Year, which falls in late January or early February each year, a
Day of Commemoration in the east U.S. state.
"Through hard work, talent, and industry, Asian Americans have helped make
Maryland top in science, technology, sports and the arts," said State Delegate
Susan C. Lee, the lead sponsor of the bill in the House of Delegates.
Lee introduced the bill in the House early this year, followed by the
introduction of a similar bill in the state Senate by Senator Brian E. Frosh.
Both bills were passed in the state legislature with overwhelming support.
Under the new law, the governor of Maryland shall annually proclaim the Lunar
New Year on the Asian Lunar Calendar as "Lunar New Year Day," in recognition of
the economic and cultural contributions of the many Marylanders for whom the
Lunar New Year holds special significance.
"It is important that we highlight and recognize their many contributions and
achievements by commemorating this important Asian American holiday," said Lee,
a Chinese American.
Currently there are over 250,000 Asian Americans living in the state of
"We can be proud that Maryland has one of the highest percentages of Asian
American residents of any state in the nation. It's only fitting that we
dedicate the Lunar New Year in our state to celebrate their extraordinary
accomplishments," said Frosh, the lead sponsor of the bill in the state Senate.
The designation of the Lunar New Year as a Day of Commemoration in Maryland is
the result of the efforts made by the Chinese and other Asian communities during
the past year, said Stan Tsai, chairman of the Maryland-based Chinese Culture
and Community Service Center.
The move will surely help to promote cultural exchanges between China and the
United States, he added.
Tsai expressed the hope that more U.S. states would pass legislation to make the
Lunar New Year a Day of Commemoration.
The Chinese community and other Asian communities, including the Koreans and the
Vietnamese, have been working over the past one and a half years for the state
legislature to pass the legislation. The Chinese community has been hosting
Chinese New Year celebrations over the past several years in Washington, D.C.,
and at a Washington suburban shopping mall in Maryland, as an effort to
introduce traditional Chinese culture to the American society.
Prior to Maryland, the state of New York and the New York City have already
passed legislation that designates the Lunar New Year as a Day of Commemoration.
April 24, 2006
local film's Golden Age
- The Standard Hong Kong
Famed movie director Tsui Siu-ming seems to
be getting in on the financial and creative action at just the right time. Hong
Kong filmmaking took a nose dive during and after the Asian financial crisis,
but Tsui says he can turn around the decline in filmmaking and restore the glory
days of its golden era in just two years.
Tsui, president of Sundream Motion Pictures, a production company launched in
March 2003, plans to make in- house movie production - the crafting of a film
almost exclusively from start to finish-- a hallmark of Hong Kong moviemaking.
The first thing Tsui's public relations manager, James Chick, shows off before
the interview is the office of i-Cable Satellite Television, where Tsui wears
his second hat as chief operating officer.
This is Tsui's attempt to develop the first Rupert Murdoch-type institution for
making, marketing and distributing major motion pictures in a territory that
used to be the pinnacle of the industry but has seen a total slump in the past
10 years. The industry famous for producing about 200 films a year in the 1970s
and 80s only managed about 90 a year in the late 90s due to the Asian financial
crisis. Moviegoers could not afford to visit theaters. Producers refused to back
risky ideas and did not financially support a movie unless it promised a big
profit. So movies started to decline in quality as the industry became mired in
It was not until January 2004 that Hong Kong moviemakers saw the potential to
lift the industry out of its morass. When the SAR and mainland governments
signed the Closer Economic Partnership Arrangement in that year, Hong Kong
directors working in China earned the "domestic" trademark. They now no longer
take on seven mainland talents for every three Hong Kong ones. The ratio is now
5:5. And propagandistic nationalist mainland topics are no longer the focus.
Big problem. That near-10 year gap in movie production left Hong Kong woefully
lacking in gifted writers, costumers, cinematographers and willing directors.
Hong Kong's movie moguls are obsessed with finding the next Crouching Tiger,
Hidden Dragon and Seven Swords, says Tsui, who counts the latter's director Tsui
Hark and star Jet Li, as close friends.
But instead of blockbusters, Tsui Siu-ming wants small and medium- sized films
from young and independently minded creators. He wants to grow an idea and to do
it in the same office, together. Tsui plans to produce an expected 15 films in
two years. To do that, he has joined i-Cable Satellite Television, arguing that
satellite will launch the careers of future great names in Hong Kong movies at a
cheaper price and to wider North American, European and mainland audiences.
Tsui sits at a table in his velvet- paneled screening room in Cable TV Tower in
Tsuen Wan, flipping through PDA e-mails while Jeffrey Chick, his translator,
explains what makes Tsui so special. Back in the 1980s, when tensions between
China and Taiwan were at a high, Tsui directed two films, The Holy Robe of
Shaolin Temple and Mirage, despite the risk of damaging his relations with
Taiwan. Because of the sensitive political climate, the Taiwanese told Tsui they
"would ban him forever" from visiting the island.
"I love China, and I love movies," Tsui interjects in English, when asked why he
wanted to risk losing out on a career that could span to Taiwan, a famous
destination for moviemakers. He smiles, arranges his tie and nods.
He understands, Chick says, but Tsui is in the vanguard. He knows where to go to
find something successful. And six years later, buoyed by a surging domestic
film industry and desperate to tap into what proved to be a growing market in
China, the Taiwanese invited Tsui to speak about his role in breaking through
the regulatory walls created in post-Mao China.
"It was a brave thing," Tsui says. His cherubic cheeks puff out in a smile. He
no longer resembles the guy who orchestrated the kung fu moves in several 1980s
movies. Instead, wearing glasses, he looks more like a pudgy academic. Learning
from that experience, Tsui decided two years ago that Hong Kong must nurture its
young talent as there was no one yet willing or able to fill the shoes of former
television actors-turned movie stars such as Tony Leung, Andy Lau and Maggie
Cheung, all of whom feature in internationally released movies. Lau has just
signed on to act in his first film for Sundream, A Battle of Wits.
He and his peers all learned how to act in small television studios in a close
community of equals who shared a vision, who communicated their ideas together
and who grew in a cohesive, harmonious environment. Only two years into CEPA,
Hong Kong still draws excessively on China's film world for writers, costume
designers and directors.
Tsui believes that producers and actors in the Hong Kong movie industry focus on
profit and big budgets. "Movies now are not realistic. They use gimmicks to make
a story, they don't think of core elements," Tsui says. China does a much better
job in producing the young talent that makes it into great films, he says. "We
need to follow their trend to get into the market."
In the 1970s, when Bruce Lee went international with kung fu, and the late 80s
in movies such as Sun, Moon and Star, and Island of Greed, a 1997 film starring
Leung and directed by Michael Mak, who works with Tsui, Hong Kong movies
actually made it big in the world.
Tsui thinks that tradition can be revived, but that ideas have to start small
and must focus on local industry players.
Working with a team of 15 creative workers, Sundream plans to pour US$400
million (HK$3.12 billion) into small and medium-sized Hong Kong films - some
with international backing - in the next three years.
Fist of Love, a new movie set to begin filming on location in April, already has
a US$16 million price tag. Its executive producer, Mak, who brought to Hong Kong
the Asian version of the US television hit Charlie's Angels, says people have to
adjust their perceptions of what a good film is to something beyond movies such
as Crouching Tiger, Hidden Dragon.
"We cannot just stick with this kind of topic," Mak says.
But life has not been easy. During a meeting in late March a brainstorming
session on new movie ideas came up short. "We cannot find one you need to film,"
Mak says. "Different companies [already] produce a certain kind of movie." Mak,
who used to work for Rupert Murdoch's son James says he heard one piece of
advice that still makes sense to him. "I always remember one sentence from James
Murdoch: `Where is the money?"' Mak says. "Because making movies is a business.
The key now is to make small movies. The smaller, the better. Make a trailer,
put it on satellite, and snap! "The budget is so low, it's a success," Mak says.
April 19, 2006
Hong Kong stores give life
to Nanjing's retail
Recently, Hong Kong's leading high-end department store operators have taken
premium sites in Nanjing's Xinjiekou district. Together with overseas Chinese
funded stores, they will be competing on price, profits and quality. Even
traditional local players are eagerly hoping to pick up a share of the
Hang Lung, a department store owned and operated by Hong Kong interests with an
international network, is reportedly eyeing the street-facing site of the Xinhua
News Agency. Observers believe it will not be long before Hang Lung sets its
footprint on Nanjing.
As one of the few remaining prime sites in the Xinjiekou district, the Xinhua
site currently has an area of between 10,000 and 30,000 sqm. When completed, the
shopping centre will have a floor area of between 50,000 and 60,000 sqm.
Earlier, the site of the former Times Square at the northeastern corner of
Xinjiekou was taken by Hong Kong's Pat Davie Ltd, despite the fact that the
place used to be known locally as the "dead end" of Xinjiekou, having changed
hands many times. All previous development plans were aborted halfway and
In fact, it was not until 2004 when Pat Davie took over the site, which was Deji
Plaza, that the industry began to see its prospects differently.
Since then, the Deji Plaza has become a feasible prospect. It is a seven-storey
building with a business floor area of 20,000 sqm. In addition to clothing
brands, it is also home to restaurants, five-star cinemas and children's
amusement venues. Only Phase 1 of the project is now open for business, although
Phase 2 will have another 200,000 sqm business area.
The up-and-coming Xinjiekou district, There seems more to high-end department
stores in Xinjiekou than Deji Plaza and the Hang Lung Shopping Centre, the
latter of which is still in preliminary development.
According to the urban development plan for Xuanwu district, the northeastern
corner of Xinjiekou will be developed into a top-end shopping area. The goal is
to have Xinjiekou rise in glory again within three to five years.
Six mega property developments in north eastern Xinjiekou, each involving an
investment of over Rmb1 billion (HK$833 million), have piling work under way.
They include Deji Plaza, Landmark Plaza, Kairun Jincheng and Dengfuhang Trade
City, all of which are to be modern shopping and business venues, with what's
expected to be top-rated facilities.
When completed in 2008, these commercial developments will provide a total
business area of one million or more square metres and are expected to generate
revenues of between Rmb10 billion and Rmb20 billion (HK$8 billion and HK$16
billion), equivalent to yet another Xinjiekou.
As Hong Kong department stores make their inroads, existing high-end department
stores in Xinjiekou are also hastening their renovation.
The Jinling Hotel Shopping Centre, built in 1983, has already been renovated and
the management is looking for new tenants. So far it has attracted international
catering and leisure brands like Haagen-Dazs and Yosemite.
Another newcomer, Jinling Department Store, started a call for investment in
2005 in a bid to look for partners for equity or cooperative joint ventures. It
is also looking at possible chain operations to develop brands and maximize
available resources and capital.
With Deji Plaza and the Hang Lung Group dominating the northeastern end of the
re-born retail area, locally managed Golden Eagle and the Jinling Department
Store are in the west while Oriental Shopping Centre is in the south.
Together with Golden Wheel Plaza Shopping Centre (still under construction),
these high-end department stores are arranged in a "diamond" pattern between
Zhongshan Road East and Hanzhong Road in Xinjiekou, making competition intense.
The entry of Hong Kong capital into Nanjing's Xinjiekou has certainly ushered
Nanjing's commercial dealings into an era of fierce corporate contests.
Large Hong Kong companies like Henderson Land Development, Hang Lung
Development, Swire Properties, Hongkong Land and New World China started
investing in the commercial property development sector on the mainland in the
1990s in the form of "property plus commercial development".
These big property developers are all venturing into the retail sector at the
same time. For example, Sun Hung Kai is the controlling shareholder of Grand
Ocean Department Store, New World owns the New World Department Store chain,
Hutchison Whampoa operates Park'n Shop and Watson's, while Hang Lung Development
has invested in the Hang Lung Shopping Centre.
Nanjing's Central Plaza recently indicated its intention to bring in high-end
consumption by opening a luxury brand section. This may herald the upgrade of
traditional department stores in the city.
April 13, 2006
property in China - Litigation is no substitute for strategy.
By Meagan C. Dietz, Sarena Shao-Tin Lin, and Lei Yang
Many multinational companies in China are losing the battle to protect their
intellectual property, largely because they rely too heavily on legal tactics
and fail to factor IP properly into their strategic and operational decisions.
When we studied the Chinese operations of ten multinationals competing in
IP-sensitive industries (including consumer electronics, medical equipment,
pharmaceuticals, semiconductors, and software), we found that many executives
think of protecting IP solely in legal terms—and sometimes only after property
has been stolen. The most successful companies, however, take strategic and
operational action to protect their IP before that happens, thus lowering their
litigation costs and improving the odds that their IP will remain safe.
Companies should of course register their trademarks and patents with local
authorities and prosecute violators with appropriate vigor (and prudence). The
recent passage in China of a stronger statute on IP rights should better protect
companies that take these measures. But litigation is no substitute for
strategy. The best companies reduce the chance that competitors will steal their
IP, by carefully selecting which products and technologies to sell and
manufacture in China. For fear of IP theft, one pharmaceutical company we
studied withholds its most innovative, high-margin drugs from the Chinese market
altogether. The company is willing to introduce lower-margin products, such as
mature, off-patent drugs that are sold over the counter.
One large equipment manufacturer designs and develops hardware in China but
produces the related software (in this case, the most valuable IP) abroad. The
software, with its source code hidden, is delivered to Chinese engineers ready
to plug into the system. By separating functions and keeping technological
details secret in this way, the manufacturer significantly reduces the
possibility of an IP leak.
Developing software in a country with better IP protection and then transporting
it to China adds time, costs, and complexity to the process. In the long term,
however, the manufacturer estimates that the ability to protect its critical IP
and to lower its litigation costs makes the trade-off worthwhile. In our
experience, some executives are so caught up in the rush to reach the Chinese
market that they share technological and business secrets too readily with
partners, which subsequently use the information to become competitors.
Operational action is also critical. While most companies implement the
necessary security measures, such as the use of surveillance equipment or
firewalls, to prevent large file transfers, the best companies go further.
Indeed, we found that these exceptional performers cultivate an awareness of IP
and screen all job candidates for high ethical standards.
One global company, for example, prefers employees with international work and
educational experience, which it hopes will foster a healthy respect for IP. A
vast majority of the company's R&D scientists (who are, for the most part,
Chinese nationals) have foreign PhDs and have worked outside China. The company
reinforces IP awareness by requiring non-compete clauses (which prevent
employees from serving competitors for up to three years after leaving) in
employment contracts for all positions. Despite high attrition levels—the
company is an excellent training ground, so its employees are often poached—it
estimates that it has saved a good deal of money and market share by
successfully minimizing IP leakage and theft. Poorly performing companies, by
contrast, tend to neglect employment contracts, and even background checks, in
their haste to hire.
Executives from the companies that best protect their IP frequently monitor the
activities of their Chinese business partners—even long-term, trusted ones—for
potential leaks. A leading high-tech components manufacturer, for instance,
closely scrutinizes its business partners to ensure that parts aren't illegally
copied and resold. It routinely verifies that the number of components delivered
to its customers matches the number in products subsequently sold. This level of
scrutiny is uncommon, however. Of the ten companies we studied, a majority fail
to audit the compliance of their partners frequently or rigorously.
The law alone isn't enough to protect intellectual assets. A company should
assign explicit responsibility for its IP to senior managers who are familiar
with all aspects of the business and able to focus their energies on those
elements of IP protection it can control. Achieving the right mix of legal,
operational, and strategic considerations is difficult (exhibit), and companies
certainly can't protect all of their IP all of the time. Yet those that get it
right are more likely to build successful businesses in China.
April 11, 2006
Hong Kong Tycoons grab shares in Bank of China
- Tim LeeMaster
The US$6 billion (HK$46.8 billion) initial
public offering of Bank of China, one of the most eagerly awaited share sales of
the year, has already been covered as Hong Kong tycoons scramble to become
cornerstone investors, market sources said.
The US$6 billion (HK$46.8 billion) initial public offering of Bank of China, one
of the most eagerly awaited share sales of the year, has already been covered as
Hong Kong tycoons scramble to become cornerstone investors, market sources said.
Hutchison Whampoa's Li Ka-shing, Henderson Land's Lee Shau-kee, and
Cheng Yu-tung of New World Development have succeeded with others in getting
shares in the bank, the mainland's second-largest lender.
"It's attracted US$6 billion," a person familiar with the matter said. "We had
to turn a lot of people away." Orders ranged from a few hundred million US
dollars to US$1 billion.
Investors are flocking to Bank of China after seeing shares in its mainland
rivals China Construction Bank and Bank of Communication surge after the lenders
listed in Hong Kong.
The banks are raising funds in advance of China fully opening to overseas banks
at the end of this year.
Bank of China was likely to be priced around two times book value, a source
close to the bank said.
"That's very much within the market consensus and is actually at the lower end,"
a fund manager said. "With the price gains of China Construction Bank and Bank
of Communication I don't think any of the upcoming Chinese bank IPOs will go
below two times book value."
The top end of the valuation range for mainland banks coming to market was
likely to be 2.3 times, he added.
Shares of CCB have risen 26 percent this year and at present trade at 2.8 times
At the time of its US$9.2 billion IPO in October, the world's largest in 2005,
CCB, the third largest mainland bank, was valued at 1.96 times book.
Bank of Communications, China's fifth-largest bank and first to sell shares
overseas, has leaped 38 percent since December and trades at 2.7 times book
value. The Hang Seng Index has risen 11 percent this year.
BOC will face the Hong Kong stock exchange listing committee April 27, complete
its IPO near the end of May and start trading around that time or in early June,
market sources said. BOCI, Goldman Sachs and UBS are arranging the sale.
An IPO worth more than US$1.3 billion from China Merchants Bank may follow in
the second quarter and Industrial and Commercial Bank of China may raise more
than US$10 billion in the last three months of the year. A planned listing by
Minsheng Bank this year has faltered as shareholders cannot agree on how to
proceed on some issues, including whether to bring in additional strategic
A consortium led by Royal bank of Scotland, the world's sixth-largest bank, paid
US$3.1 billion for 10 percent of Bank of China in August. RBS holds 5 percent
while Li Ka-shing and investment bank Merrill Lynch took up the rest. Merrill
later sold its stake to two US hedge funds, Oak Tree Capital Management and Och-Ziff
Capital Management. RBS maintains control of the consortium's 10 percent stake.
Singapore government investment arm Temasek tried to take a 10 percent stake in
Bank of China but was forced to settle for 5 percent in the face of a mainland
backlash against foreign ownership of Chinese banks. The National Council for
Social Security, which manages China's seriously underfunded pension plan,
picked up the remaining 5 percent for 10 billion yuan (HK$96.83 billion).
Banks such as HSBC and Citigroup seeking to benefit from China's surging economy
have bought stakes in mainland lenders and have launched credit card ventures.
Citigroup also wants to grow its wealth management business with partner
Shanghai Pudong Development Bank.
BOC, with the mainland's second- largest branch network behind ICBC, and RBS
have targeted the same niche. The two have opened 100 wealth management centers
Mainland banks want to attract foreign strategic partners to raise the
confidence level of overseas investors, wary of China's scandal-ridden financial
sector, in the run-up to IPOs.
Foreign banks, for their part, hope to penetrate the mainland market more
quickly than they could on their own by using the larger branch networks that
local banks have on the ground.
Bank of America spent US$3 billion acquiring a 9 percent stake in CCB. Goldman
Sachs, with partners Allianz Group and American Express, paid US$3.8 billion for
10 percent of ICBC earlier this year, while US private equity fund Newbridge
Capital owns a controlling 17.98 percent of Shenzhen Development Bank. HSBC owns
19.9 percent of Bank of Communications.
Bank of China uncovered 52 cases of fraud after an investigation into more than
11,000 branches, according to a statement posted Monday on the bank's Web site.
The bank did not disclose the amount of money involved.
Ocean Park opens new
jellyfish aquarium - Wendy Lam
Ocean Park has unveiled a jellyfish aquarium.
And in what is seen as a preview of things to come, with a HK$5.5 billion
refurbishment due to begin in September, the park opened two restaurants with
stunning sea views, the first new additions to the park in 20 years.
The HK$6 million aquarium will house more than 1,000 jellyfish, some of which
are never seen in Hong Kong waters. About 10 are said to be rare species.
Park chairman Allan Zeman, dressed in a jellyfish costume, told guests at the
opening ceremony Monday the aquarium will help teach people about the importance
of clean oceans. The park previously exhibited jellyfish in another aquarium
and, noting the intensity of public interest, decided to build a second aquarium
especially for the delicate creatures.
"We noticed that people stood and watched them for long, long time, so we
decided to help people get a better understanding of jellyfish and their place
in marine ecology," Zeman said.
The newly opened aquarium and restaurants are next to the upper cable car
station and cost HK$28 million.
The aquarium has 3,000 square feet of display area and a 1,500 sq ft
"conservation room" to breed jellyfish.
"The design of the theater-like display rooms with music and special lights is
unique, compared to ones in the United States and Japan," Ocean Park curator
David Lai Yiu-nam said.
About 60 percent of the jellyfish come from overseas, 30 percent are bred here
and the rest obtained from local waters.
There is an interactive zone for children to play "touch and go" with jellyfish
which move away when a screen is touched.
"Jellyfish are fragile and very difficult to keep," Lai said.
The life cycle of a jellyfish is about six months so the park must breed 400 to
500 jellyfish a month.
April 6, 2006
The debate on Hong Kong
being marginalized by the rapid development across the border has gained new
impetus, with Premier Wen Jiabao saying it will not happen.
" I don't think the economic development of Hong Kong will be marginalized ... I
have sufficient confidence in the future economic development of Hong Kong," he
said Wednesday in an interview with Asia Television and Phoenix Satellite
Television. ATV chief executive Chan Wing-kee is a member of the Chinese
People's Political Consultative Conference Standing Committee while Phoenix
Satellite Television chairman Liu Changle, is the majority shareholder of ATV.
Wen was quoted as saying that Hong Kong enjoys "the freest economy in the world,
the most comprehensive legal system, a group of entrepreneurs with international
experience and a wide economic network with different countries and regions."
Because of this, Hong Kong has been able to maintain its edge as a trading
center, a financial center and an international metropolis.
"Its position is irreplaceable," Wen said.
He said the future of Hong Kong, with "the support of the mainland at its back
and the world [market] in front," is very promising.
He also spoke about the potential of the mainland market. "Hong Kong's economic
development has contributed a lot to the mainland's economic development over
the past 30 years.
"Hong Kong and the mainland have now established the Closer Economic Partnership
Arrangement, so the mainland's future economic development will also have a huge
impact on Hong Kong," he said.
Wen noted that about 40 percent of the more than 600 billion yuan (HK$580.74
billion) of foreign investment in China comes from Hong Kong.
"Hong Kong citizens should have the spirit of self-reliance and be strong and
united to make Hong Kong better, not simply to implement the directives of `one
country, two systems,' Hong Kong people ruling Hong Kong, and a high degree of
autonomy, but also to lift up the internal vitality of Hong Kong's economic
development," Wen said.
"Only by doing this can the future of Hong Kong's economic development be
Wen's remark contradicts a warning by Chief Secretary for Administration Rafael
Hui who two weeks ago said the city faced being marginalized by rapid
developments on the mainland and especially the Pearl River Delta.
Hong Kong Monetary Authority chief executive Joseph Yam last week also warned
that Hong Kong must reinforce its role as a financial intermediary between the
mainland and overseas to avoid marginalization.
In response to the warning, National People's Congress Standing Committee vice
chairman Xu Jialu said Hong Kong was an international city and would not be
marginalized by the development of the mainland cities.
Last Tuesday, National Development and Reform Commission deputy chief Xu Li
reaffirmed that Hong Kong's status as an international financial center was
However, a report commissioned by the Corporation of London released last
November said New York and London are clear leaders as global financial centers,
but views on a third center, in Asia, are split.
"Most people agree that if a third global financial center develops, it is most
likely to be in China, and probably in Shanghai."
April 5, 2006
60 national firms have
Sixty Chinese companies are set to become global players over the next decade,
according to a paper released yesterday by the IBM Institute for Business Value.
The 60 companies, 47 State owned and the rest privately owned, were selected by
IBM after passing three tests relating to their global potential.
Among the firms, there are relatively well-known players such as telecom
equipment maker Huawei, and oil firms CNPC and CNOOC.
There were also less well-known companies, such as Galanz, the Wanxiang Group,
the Midea Group, Chery, Lifan and Ningbo Bird.
"We used three filters, company size, industry characteristics and company
characteristics, to select Chinese companies. "These were primarily in
manufacturing and natural resources industries, and all had strong globalization
potential," said Alan Beebe, research director at the IBM Institute for Business
Value in China. Most Chinese companies remain small by global standards. Among
China's top 500 enterprises, only 290 companies met the initial filter of annual
revenue over US$1 billion.
The second filter identified Chinese industries with strong globalization
potential based on criteria such as industry size as a percentage of GDP, degree
of industry concentration, export intensity and government support. For
instance, the result included the home appliances industry, where Chinese
companies are the largest global manufacturers in 28 out of 32 product
categories. Air conditioners and refrigerators made in China accounted for 67
per cent and 34 per cent respectively of global production in 2005. A total of
12 industries met the second filter criteria, including consumer electronics,
computer products and components, telecommunications equipment, cars, steel,
logistics and petrochemicals. This narrowed the list to 124 companies, including
105 State-owned enterprises and 19 privately-owned firms.
The final filter identified companies that met additional criteria, such as a
leading market position in China, over 15 per cent of revenue from either
exports or foreign operations, and a strong global vision. Chinese companies
will undoubtedly accelerate their global activities in line with China's ascent
as a major economic power. IT firm Lenovo's recent purchase of IBM's personal
computer division, SAIC's 50.6 per cent acquisition of South Korea's Ssangyong,
CNPC's US$4.2 billion acquisition of PetroKazakhstan and Haier's unsuccessful
bid for Maytag in 2005 highlighted Chinese companies' global expansion plans.
"It is primarily among these 60 companies that China's global leaders are likely
to emerge, but in our view only those with a clear management vision, strategy
and strong execution capabilities are likely to succeed," said Beebe.
Overcoming a lack of qualified workers and building global brands were
overwhelmingly identified as the top key challenges. Companies can recruit
overseas Chinese or foreigners, but it is often difficult to integrate these
experienced managers into the culture and daily operations of the parent
"We are still students trying to learn global management," said Tong Haibin from
Shanghai Machine Tool Group. "Our overseas workforce is sometimes qualified to
be our teachers in this area. But it is very difficult for 'students' to manage
'teachers' as we go global."
The paper also said many Chinese companies consider brand ownership critical to
their success overseas, but they may not fully appreciate the sustained
investment required for brand building and management.
April 3, 2006
China Vice Premier Wu Yi lead a business
delegation of over 100 members representing the Major Agriculture Sectors,
Aerospace, Automobile, Electronics, Petroleum, Petro-chemical and Heavy Machinery, stopped by Hawaii for 2
days to meet with Hawaii Business Leaders and Government Representatives. A
Memorandum of Understanding and Cooperation was signed between Hawaii Governor
Linda Lingle and Chairman Shao Qiwei of the China National Tourism
Administration at a reception hosted by Governor Lingle at the Washington Place.
Beijing is to seal agreements to purchase US
agricultural products, software, passenger aircraft, cars, automotive spare
parts and electrical products ahead of President Hu Jintao's US visit later this
month, Xinhua reported yesterday. Representatives of 111 mainland companies
would soon begin negotiations with authorities, commerce associations and
companies in 13 US states, it said. It is the first time the official media has
confirmed widespread speculation about the likelihood of big-ticket purchases.
In recent years, Beijing has usually sent a delegation of businessmen to place
orders for US goods worth billions of US dollars ahead of a Chinese leader's
visit to Washington. Although the size and other details of Beijing's planned
purchases remain unclear, the cost could easily run into billions of US dollars,
judging from the shopping list. It has agreed to purchase 80 Boeing passenger
aircraft, and earlier reports indicate officials plan to lift the ban on imports
of US beef and have agreed to buy more American soya beans. President Hu is due
to visit the United States from April 18 to April 22. At his first stop, in
Seattle, he is scheduled to visit the Boeing company and have dinner with
Microsoft chairman Bill Gates at his palatial home. As computer software is on
the shopping list, it is possible that Beijing could promise to purchase more
Microsoft Windows operating systems and other US-made software as part of
efforts to crack down on the widespread use of pirated computer software on the
mainland, which costs US software makers billions of dollars in lost revenue
Vice-Premier Wu Yi who paid a stopover visit to Hawaii on Monday, is responsible
for overseeing the purchases in the United States. She was on her way to
Washington for the China-US Joint Commission on Commerce and Trade. While in
Hawaii, she oversaw the signing of an agreement that will boost the number of
mainland visitors to the island. The agreement "helps us to continue to spread
the word in China about Hawaii", the Pacific state's Governor Linda Lingle said.
The number of mainland visitors to Hawaii has been rising - up 34.5 per cent in
2004 from the year earlier to 34,216 travelers. But it captured just a tiny
fraction of the about 27 million mainlanders who traveled to overseas
destinations that year. Ms Wu said Hawaii had expertise in tourism planning,
management and personnel training which could "serve as a valuable reference for
the Chinese tourism industry".
March 30, 2006
A realistic view into the
US Secretary of Commerce Carlos Gutierrez is in Beijing for his second China
visit with a focus on intellectual property rights protection.
The nuclear stand-offs in the Korean Peninsula and Iran, as well as the Taiwan
issue, are also the major concerns of China and the United States. The trade
issue, however, is particularly imminent in recent days. The Capitol Hill, which
is frustrated by the trade deficit with China, is trying to pressure on two
aspects: the RMB exchange rate and the intellectual property rights.
The first issue was the focus of the visit by two American senators, Charles
Schumer and Lindsey Graham, a few days ago asking for higher tariffs on Chinese
products while Mr. Gutierrez immediately shifted people's attention to the
The IPR protection has become one of the most important issues between China and
the US. The implication is that the Sino-US relations are entering a definitely
different stage which is described by some experts as "problem solving" stage.
The trade issue is underpinned by several reasons. The closer exchanges and more
understanding between the two sides also lead to frictions concerning interests
which have direct bearings. Conflict of interest also emerges in some sectors
when China's economy is growing very fast.
In addition, the trade issue has a much more direct bearing on people's
livelihood and is easier to draw people's attention than ideological or
strategic issues. And trade issue is relatively easier to be solved. In fact,
the two sides have established a mechanism for that.
The disputes over the IPR reflect the difference between the two countries on
economic structure, development stage and interests. The IPR disagreement is
actually a question of how the US thinks of China's development.
When the developing world began to deliberate seriously on how to "transplant"
the concept of the intellectual property rights at the end of last century,
developed countries, led by the US, had fenced know-how which they develop but
is urgently needed by many developing countries.
Developing countries, in the process of industrialization, have been
increasingly aware of the importance of respecting the IPR and kept learning and
introducing advanced knowledge. In the meantime, they have no choice but
following the "game rule" set by developed countries and facing formidable IPR
Given that, China has been making unremittng efforts on building an IPR
protection system which complies the international standard on the one hand and
exploring an IPR protection regime which is in accordance with China's situation
and helps promote a rational international trade order on the other.
It is fair to say that China has made rapid progress on the IPR protection
although it took a somewhat late start on it. An objective, impartial view on
the global and China's IPR protection is always based on the future perspective.
Tactics of bulldozing never works and has the risk of politicizing the trade
issue. That is especially alarming this year when the US Congress will have its
History always goes with ups and downs. Frictions are unavoidable in the
scale-up of the China-US trade. As the US deputy trade representative Karan K
Bhatia said in Shanghai last week, " Trade frictions arise even among the
closest of partners. In a mature international relationship, those frictions are
dealt with on their own terms, while the broader relationship continues to
March 28, 2006
business hotels splash out
It was two years ago when Home Inn opened its
first budget business hotel in Fuzhou on Hualin Road in Fujian Province, with a
modest investment but big ideas for the future.
In February 2006, those plans are being fast taken up, as regional general
manager for southern China, Wu Wei, inspected a 5,000 sqm property in the city's
Drum Tower District.
With an eye to just how successful the "budget" concept can be, Fuzhou general
manager Yuan Xiaogu explains how the first Home Inn at Hualin currently has an
occupancy rate of over 90% - with an average occupancy rate of 78% and 88% for
2004 and 2005 respectively.
In view of Home Inn's plan for a second hotel, the rival Super 8 hotel chain and
locally-founded chain Jinjishan Hotels are both also stepping up efforts to
select sites in the city.
Super 8's new hotel in Fujian (its first) is scheduled to open for business in
the Xiamen district this month or next, with local hostelry New Era Garden
becoming a partner. New Era Garden general manager Xu Deqing reported that Super
8 is currently looking for a suitable site.
Super 8 indeed is quite pleased with the prospects in Fujian and expects to have
at least nine new hotels established throughout the province by 2008.
Jinjishan Hotel's chairman Yan Kewu believes his chain's hotel in Fuzhou is
right on course, with site selection for its second hotel well under way.
Budget hotels tend to be small and clean, with simple check-in formalities and
room rates ranging from between Rmb100 and Rmb200 (HK$96-HK$192).
An increase in the number of these budget establishments is expected to pose a
serious threat to two- and three-star hotels, which would have to increase their
value-added by offering more and better facilities.
February 1, 2006
- The World's freest economy draws record foreign business ventures
Chief Executive Donald Tsang
receives the Heritage Foundation's 2006 Index of Economic Freedom - which votes
Hong Kong as the world's freest economy - from its President, Dr Edwin Feulner
The Year of the Dog got off to a
roaring start with Hong Kong being voted the world's freest economy for the 12th
consecutive year by the Heritage Foundation. The 2006 Index of Economic Freedom
Study found that out of 161 economies worldwide, Hong Kong ranked first in six
broad factors, namely trade, monetary policy, foreign investment, banking,
finance, property rights, and regulation.
Hong Kong also had one of its best years for attracting foreign companies to set
up operations in the city, with investors putting in nearly HK$9 billion
(US$1.15 million) last year. Invest Hong Kong, the government's investment
promotion arm, assisted 232 foreign companies to establish or expand their
presence in Hong Kong in 2005, a rise of 13 per cent compared to 2004, itself a
Invest Hong Kong's director-general Mike Rowse noted that foreign investments
were made in different sectors including consumer products, sourcing, financial
services, tourism, IT, multimedia, professional services, transportation and
Hong Kong's Mike Rowse believes 2006 will be another bumper year for foreign
investors setting up in Hong Kong
Foreign companies such as UK home improvement
retailer B&Q expects to invest HK$200 million (US$26 million) to open its first
store in the city in 2007. Global restaurant chain KFC plans an additional
HK$150 million (US$19 million) to expand its number of outlets from 52 to 90 by
2009. Mr. Rowse is confident that 2006 will be another year of growth for
investment promotion in Hong Kong. "We are targeting to assist between 240 and
250 companies this year. The target is challenging but we are confident."
Upbeat sentiments were also reflected in the recent Business Outlook Survey
conducted by the American Chamber of Commerce (AmCham) in Hong Kong. The
ACNielsen survey found an overwhelming majority of AmCham member companies
strongly believe in the strength of Hong Kong's economy and business environment
conditions, with the majority planning for growth for the next three years. "The
positive feedback can be credited to Hong Kong's ability to provide an excellent
platform for conducting business and a world-class commercial hub for the
region," the survey noted.
Banking sector strong - Hong Kong's banking system was in good condition in 2005
and will continue to show healthy growth despite keen competition and an
uncertain interest rate environment, said Monetary Authority (HKMA) Deputy Chief
William Ryback. He expects interest margins to continue to do well and their
earnings in the first half of this year to show "reasonable growth" given the
strong underlying economy.
Other positive indicators included record figures for passenger throughput,
aircraft movements and cargo at Hong Kong International Airport (HKIA) last
year. Due to a surge in transit passengers and visitors, passenger throughput
rose nearly 10 per cent to 40.74 million in 2005 when compared to 2004. Robust
demand for intra-regional trade and trade with the US and Europe saw cargo
rising 9.9 per cent over 2004 to 3.4 million tons, while aircraft movements rose
11 per cent to more than 263,400.
January 6, 2006
Interview Professor Bill
Fischer (An Internationally Recognized China Expert) - China's economic
development can be a huge opportunity
As China celebrates its progress over the past five years and looks forward to
further economic and social development in its next five year plan period
starting from 2006, some countries in both developed and developing world are
still preaching so-called "China threat". But many others think differently.
Reporter Chen Xuefei has recently had a written interview with Bill Fischer,
Professor of Business Administration, IMD, and former-President Sino-European
International Business School in Shanghai. Mr.Fischer thinks China's development
can be a huge opportunity for the world.
Q: Professor Fischer, how do you comment on China's economic growth and
social development? What's the great challenge ahead?
Mr. Fischer: I think that China's economic growth, since 1979, has been
extraordinary; certainly one of the great stories of the 20th century and likely
to be one of the biggest in the 21st century, as well.
It has not been without some serious dislocations, of course, but that has been
true for most great economic successes, and China is no exception. I believe
that there are several major challenges ahead, but let's not forget that overall
the quality of life in China is better, and for more people than it probably has
been at any other point in recent history. Among the challenges, I'd include:
China needs to be sensitive to the growing disparities between the rich and the
poor. There has been a lot of comment recently both within the Chinese and
foreign press about China's "gini" coefficient reaching levels that some might
consider alarming. This also somewhat, but not entirely, an urban-rural
difference, but could be a source of continuing social problems if not addressed
more effectively than it has been. Feelings of inequity particularly within the
countryside neighboring some of China's largest and most prosperous cities are
indications of the seriousness of this problem.
A second great challenge is in keeping the already-high level of unemployment in
check. China has had high levels un- and underemployment for some time, but this
is a chronic problem in that seems not to go away, and it is extremely serious.
A third challenge will be to continue to assure China's integration into the
world economy. Over time, this will mean that China will have to accept an
increased foreign economic presence in its domestic economy; it will have to
support the social infrastructure that leads to Chinese domestic firms becoming
better-prepared for international business activities, and it will have to
support the development of internationally-acceptable governance frameworks for
business ownership/management, investment, and for intellectual property.
Q. As you know the Fifth Plenary Session of the 16th CPC Central Committee
has issued new strategies on a more sustainable way of developing its economy by
a great shifting of emphasis. From now on, GDP will not be the only measurement
for achievements, environment impact and social equality should also be under
consideration. What do you think of this?
Fischer: This is, of course important, especially given what I've noted above,
but it is much easier to announce such action than it is to administer and
enforce it. The story of China, like many developing countries, is that when
faced with choices between ecological and social responsibility on the one hand,
and employment and wealth-creation on the other, they inevitably choose the
latter, and who can blame them? The further one moves from Beijing and the
richer areas, the more difficult it is to ensure that such policies will be
Q. What do you think of Chinese workers, employment and the impact of
urbanization in China?
Fischer: I think much of the attraction of urban areas for migrant
workers is the hope of gaining wealth that would be otherwise unavailable in the
interior and rural areas. However, the continued construction of China's urban
areas is today dependent upon these same migrant workers. They have become
"institutionalized" into the saga of China's modern growth. This creates a bit
of a conundrum, as these same migrant workers are probably the most
socially-vulnerable group to dissatisfaction over wealth inequities, since every
morning they wake up in places where there is considerably more wealth and
opportunity than is available to their families back home, They also live on the
margins of these same urban societies that they are building and they are
concentrated spatially and socially in ways they would not have been if they had
remained at home. So, they pose a possible threat to social security, but they
are essential if China is to continue to deliver on its promise of prosperity to
the upwardly mobile urban population.
Q: Many people blame China of grabbing the jobs not just from Europe or
America, but also that of Jakarta and even Africa, is it fair to China to have
such kind of comment?
Fischer: The reality is that with globalization has come the opportunity
for foreign buyers to source products from China, where they are cheaper than
from local factories, from which they had previously bought. As a result, jobs
are lost, and those jobs reappear in China. Should China be "blamed"?
I think, actually, that the market preference for goods that are more affordable
and at the same quality is the real culprit; and these products are increasingly
being made in China. In other words, the reasons that jobs are being in lost in
Europe and North America is that we European and North American shoppers are
expressing a preference for those products which happen to be made in China. We,
the European and North American shoppers are the real cause of these job losses.
If European and North American factories could make the same products for a
lower price, we'd return to buy locally. It's not that we're buying Chinese or
local, but that we're trying to maximize the value we receive for the dollar or
Swiss franc or pound that we spend and lately that means buying products that
are Chinese made.
Q. What's your comment on so-called "China threat", Is China's development
really a threat to the world, or a contribution to the world in terms of poverty
alleviation and maintaining stability?
Fischer: We live at a geopolitical time when "fear" seems to be the
dominant reflex, but whatever happened to "opportunity"? Despite all of its
historical disappointments, China is one of the few places that actually has the
potential to become a true ElDorado market: the numbers, the demographics, and
increasingly the disposable income, are compelling; the opportunities are great.
Besides, what really is at risk here?
Seventy-to-eighty percent of China's high-technology imports and exports are
accounted for by foreign-invested enterprises. It is not "the Chinese" who are
responsible for this intellectual property being in China, but the foreign IP
owners. Assuming that these are bright people, not engaging in lemming-like
behavior, they must see more opportunities than risks. Additionally, most of
this technology involves assembly components rather than the "family jewels."
Yes, there is counterfeiting; yes, there is copying; yes there are surprising
new regulations [wireless communications, retailing]; but such behavior alone,
while locally troublesome, should not be a reason for "fear" on the global
The real competitive advantage that modern complex organizations have is the
knowledge about doing business, running a large, global corporation. This sort
of IP is tough to copy. Managing a modern, global competitor is an extremely
The truth is that nearly a quarter of the world's population is building a new
future for themselves, and by default for the rest of us as well. We should want
to be a part of that. Fear only keeps us out of the game.
January 3, 2006
WTO roadmap shows the way ahead
(Right) WTO director-general Pascal
Lamy and John Tsang, chairman of the Hong Kong WTO, shake hands at the end of
six days of intense trade talks
David Eldon, chairman of the Hong Kong
General Chamber of commerce says Hong Kong has done its bit for the global
Hong Kong, voted the world's freest economy
and often described as "a bastion of free trade" hosted the WTO Sixth
Ministerial Conference which ended on December 19. After six days and nearly 100
hours of intense negotiations, the 150 member countries endorsed a compromise
deal that clears the way for an international trade pact by the end of 2006.
WTO director-general Pascal Lamy said participants had put the Doha Development
Agenda "back on track, gave it a new sense of urgency, (and) made quantitative
improvements". "We have political fuel to make cruising speed by 2006," Mr Lamy
said. Delegates had agreed to eliminate farm export subsidies on agricultural
goods by the end of 2013, and to grant duty-free and quota-free privileges to at
least 97 per cent of least developed countries' exports by 2008.
Trade ministers left hard decisions on agriculture, industrial goods and market
liberalisation in service industries for the new year, giving themselves a
deadline of April 30 to fill in the blanks left from Hong Kong. No date or place
was set for the next ministerial meeting. Secretary for Commerce, Industry &
Technology John Tsang, who chaired the WTO meeting in his capacity as host
minister, said of the "modest outcome": "There is now a roadmap for the way
ahead, and this meeting had come much further than seemed possible even two
Role model of free trade - Hong Kong's openness to trade was held as a glowing
example of the world trading system. The South China Morning Post reported that
the banana-loving Mr Lamy said in his popular blog that someone had asked where
his bananas came from. "I have been told they come from anywhere in the world
because trade in Hong Kong is so open - but that these most likely come from the
Philippines at this time of the year."
Mr Lamy was effusive in his praise of
Hong Kong as host and thanked the city for its "impeccable organisation". The
world may have seen violent clashes between demonstrators and the Hong Kong
police force on their TV screens, but there are many who're convinced that Hong
Kong did the right thing in staging the conference. David Eldon, chairman of the
Hong Kong General Chamber of Commerce (HKGCC), said there are times when people
who are members of a world community must contribute.
"Hong Kong has done its bit for the global community. Yes, a lot of money was
spent on the WTO conference but I think when the world sees what Hong Kong has
done, the cost will be justified." HKGCC senior director for business policy W.K
Chan was quoted in The South China Morning Post as saying: "Hong Kong should
look at the WTO really in its macro and global context. If an agreement can be
reached then that will increase global trade and Hong Kong would stand to
benefit from that as a major logistics centre."
Double digit growth seals bumper year of
David O’Rear, chief economist at the Hong Kong General Chamber of Commerce,
describes Hong Kong’s economic performance as “extraordinary”. Hong Kong's
economy has chalked up some important milestones while firing on all cylinders
during 2005. And there is good cause for optimism about the prospects for 2006,
Hong Kong should post stunning growth in gross domestic product of about 7.5 per
cent, said David O'Rear, chief economist of the city's General Chamber of
Commerce. That is only down slightly from last year's 8.2 per cent. The dynamic
performance is in large part due to Hong Kong continuing to do what it does best
- trade. "This is the best international trade environment we have ever seen. It
has been absolutely extraordinary. There is very little that would qualify as a
normal year," Mr O'Rear said. "We have had a fourth year of double digit growth
in trade. That is the first time that has happened since the late 1970s." At the
heart of the story is Hong Kong's important function in facilitating the
sourcing and movement of goods from China's super-efficient factories to Western
markets. Hong Kong International Airport has been playing a leading role, with
319,000 tonnes of cargo moving through it in November, the third straight
Record port activity - Trade, tourism, retail sales and the stock market peaked
in Hong Kong in 2005, with the momentum continuing to build. Port activity also
looks on course for another record year having recorded throughput of 20.5
million 20-foot equivalent units in the first 11 months. But the more invisible
aspects of trade such as banking, insurance and supply chain management play
just as an important part in Hong Kong's ongoing economic success story. Besides
handling greater volumes of goods, the growth in GDP is partly coming from
increasing efficiencies in Hong Kong's economy.
"It is hard to imagine any productivity gains when (Hong Kong's) manufacturing
as a share of GDP has been on a secular decline," said Enoch Fung, an economist
with Goldman Sachs. "(But) the fact is we believe Hong Kong is reaping the
benefits from being the servicemen to China's rapid growth through its
integration with the mainland economy."
Beyond the numbers, Hong Kong has completed a number of important projects in
2005 that should help keep the growth bandwagon rolling. Hong Kong now has the
only Disneyland in Asia outside Japan after the city's park opened in September.
It has already attracted more than one million tourists in its first 100 days of
Events hub shines - And last month (December) Asia-World Expo, a cavernous
exhibition centre adjoining the airport, opened its doors. It already has a
packed events calendar for 2006 and will help alleviate a shortage of space for
trade shows which play an important part in cementing orders for Chinese
manufacturers from Western markets. Global corporations have continued to find a
home in Hong Kong, thanks to the city's low taxes, free port status and
efficient infrastructure. The government's annual survey of the private sector
found a record 3,798 companies have regional headquarters or regional offices in
Hong Kong, up 5.2 per cent from last year.
Hong Kong's stock market has also had a record year in terms of fund-raising
activities, with an estimated US$150 billion raised by dozens of new listings,
including China Construction Bank, whose US$8 billion IPO was the world's
biggest since 2001. That didn't stop the blue chip Hang Seng Index from reaching
four-year highs in 2005, reflecting on how the robust economy is resulting in
bumper corporate profits. The year 2005 will also go down as the year when China
began the reform of its foreign exchange regime with July's 2.1 per cent
revaluation of the yuan. Economists believe the move will just be the start of a
gradual rise by the yuan against other currencies, which should be an overall
benefit for Hong Kong by lifting the spending power of mainland tourists and
Stock market strong - "Yuan appreciation is going to continue to help the Hong
Kong (stock) market and the inflow of funds," said Kenny Tang, associate
director of Tung Tai Securities and well-known stock commentator. Besides trade,
big growth in tourism receipts has been an important driver for the economy as
China relaxes restrictions on individual travel. "Tourism keeps booming and that
is helping create a record number of jobs," Mr O'Rear said. October was another
record month for tourists with 2.1 million visiting Hong Kong. In the 10 months
to October the city has already played host to 19 million tourists, up 7.5 per
cent on last year.
The strong performance of the tourism and trade sectors plus renewed confidence
among Hongkongers reflected in robust retail sales has helped the unemployment
fall to a four-year low of 5.3 per cent in the third quarter.
Hong Kong is still only at the mid-point of an economic up cycle and should
enjoy another strong year in 2006 with GDP growing at a 5 per cent pace, said
Goldman's Ms Fung. "We believe the potential demand from mainland private
enterprises for Hong Kong's services is significant and therefore we remain
optimistic on the long-term economic outlook for Hong Kong," said Goldman's Ms
Fung. Much will depend on whether US economy experiences a slowdown as
financially overstretched consumers finally shut their wallets, said the General
Chamber's Mr O'Rear. He believes Hong Kong's growth will slow to 3.5 to 4 per
cent next year reflecting the likely knock-on effect of a softer US economy.
"The first half should certainly be better than the second half," he said.
venue off to a flying start
Hong Kong's HK$18.3 billion (US$2.35 billion)
AsiaWorld-Expo, one of Asia's biggest exhibition centres, opened on schedule on
December 21 in a move warmly welcomed by the trade fair industry. The city's
Chief Executive, Donald Tsang, cut the ribbon to launch the gleaming new
facility adjoining Hong Kong International Airport. It features 70,000 square
metres of rental exhibition space - equal to 10 soccer pitches - and the
13,500-seat AsiaWorld-Arena, the biggest purpose-built indoor-seated
entertainment arena in Hong Kong. The new centre, a joint venture between the
government and private investors, is fully integrated with the airport and even
has its own stop on the Airport Express railway that runs to the city centre.
"It is an important step forward," said Paul Woodward, regional manager of UFI,
the global association for the exhibition industry. "At the peak times of the
year, the current facilities have been pretty full so this opens opportunities
for people to expand existing events or add new ones." Mr Woodward described the
response from the industry as "very positive". He said the number of events on
the venue's calendar "is a clear indication of that".
30 shows lined up - AsiaWorld-Expo should get off to a flying start. It has
already lined up 30 major international exhibitions and events for next year,
which are estimated to bring HK$4 billion (US$0.5 billion) in economic benefits
to Hong Kong over the 12 months.
One of AsiaWorld-Expo's biggest coups was to lure the ITU Telecom World event
away from Geneva where it has been held for three decades. The calendar features
trade shows across a wide range of product types from fashion to auto parts.
"These events are virtually all firsts to Hong Kong and the majority of them are
recurring events for subsequent years," said Nicolas Borit, chief executive
officer of AsiaWorld-Expo Management, the privately owned company which will run
the venue. Opening AsiaWorld-Expo was another plank in Hong Kong's strategy of
positioning itself as "Asia's world city", Mr Tsang said in his speech at the
Springboard to China - Hong Kong has a role "to serve as a two-way springboard:
for companies from around the world wishing to access the Chinese mainland, in
particular the Pearl River Delta, and for mainland companies to launch
themselves into the international marketplace," Mr Tsang said. "It is no
coincidence that many of the exhibitions to be held here in the coming years are
to show off Chinese goods and services to the world. Others will show the
world's best products to an increasingly sophisticated and substantial market in
the mainland." Hong Kong already has its Convention and Exhibition Centre (HKCEC),
a signature building in the downtown cityscape, but the new building is intended
to provide a complementary venue amid rapidly growing demand for exhibition
Some trade fair organisers may eventually split their events between the two
venues, said UFI's Mr Woodward. "Some people in the industry will welcome
(competition) but it won't be competition in any kind of damaging way," he said.
Added incentive - The new venue will also give trade fair organisers the option
to add incentive by coupling their event with a concert or sporting tournament
at the AsiaWorld-Arena. AsiaWorld-Expo is intended to specialise in some of the
larger products manufacturers want to showcase, while the HKCEC is focused more
on trade fairs featuring light manufactured goods. The HKCEC is planning to
build a 19,400 square metre extension to come on stream in 2009. But the rapid
growth of the trade show industry in Hong Kong means there should still be
plenty of business for both venues even then.
HKCEC Director of Business Development Monica Lee-Muller welcomed the opening of
AsiaWorld-Expo (AWE). "We hope that AWE can further enhance Hong Kong's
exhibition industry development and bring more new shows to Hong Kong," she
said. "The two centres represent two different products, however both sharing
the same economic and political environment. We do not view the two centers as
competitive. Our major recurrent clients have expressed their strong desire to
continue their existing international exhibitions at the HKCEC." There were many
considerations for trade show organisers when selecting a venue, including
convenience of moving freight to the site, proximity and availability of hotel
rooms and the availability of other ancillary services such as shops,
restaurants and banks, said Ms Lee-Muller.
Long track record - "HKCEC has 17-year track record of hosting successful
international exhibitions which have built a strong reputation for quality,
presentation and product. Our current portfolio is headed by the world's biggest
trade fair for watches and clocks, and its second-largest for electronics," she
To some extent the new venue and an enlarged HKCEC will generate their own
business, with trade show organizers wanting to stage their events in the best
possible environment. Having the Chinese mainland, the world's outsourced
manufacturer, in its backyard is an irresistible draw card for Hong Kong. The
number of visitors to the city's trade shows reached 3.6 million in 2004, a 29
per cent rise over the 2.8 million two years earlier, according to the most
recent day from the Hong Kong Exhibition and Convention Industry Association.