HONG KONG Turning China into Opportunity Peter Woo Chairman Hong Kong Trade Development Council January 2006.

HONG KONGTurning China into Opportunity

HONG KONGTurning China into Opportunity

Peter WooChairmanHong Kong Trade Development Council

Peter WooChairmanHong Kong Trade Development Council

January 2006

I. WHY CHINA?

II. WHY HONG KONG?

III. A TALE OF 3 CITIES

IV. TIME FOR ACTION

I. WHY CHINA?

II. WHY HONG KONG?

III. A TALE OF 3 CITIES

IV. TIME FOR ACTION

I. Why should you go to China?

Fast Growing Economy:• Out performed expectations in past 25 years

• GDP growth at 8.5% over 10 years

• GDP at US$2,000 billion - will double in next 10 years

• Out performed expectations in past 25 years

• GDP growth at 8.5% over 10 years

• GDP at US$2,000 billion - will double in next 10 years

The China story

Expanding Consumption Power

• Total retail sales at US$760 billion a year

• 250 million people in the “middle-class” (20% of population)

• This group will increase to 25% by 2010

• Total retail sales at US$760 billion a year

• 250 million people in the “middle-class” (20% of population)

• This group will increase to 25% by 2010

Expanding Luxury Market

The China story

• Huge consumption power of the new rich

• US$ 2 billion on luxury items in 2004

• 29% of the world's luxury market by 2015

• Huge consumption power of the new rich

• US$ 2 billion on luxury items in 2004

• 29% of the world's luxury market by 2015

Diverse China Markets

BEIJING

SHANGHAI

HONG KONG

The China story

• Beijing and Bohai Area

• Shanghai and Yangtze River Delta

• Greater Pearl River Delta

• Beijing and Bohai Area

• Shanghai and Yangtze River Delta

• Greater Pearl River Delta

China’s future direction:

• Balanced growth among different regions

• Further urbanization to lift living standards

• Move 200 million rural dwellers to cities in next 20-30 years

• Build/Expand 200 cities of 3 million people each

• Balanced growth among different regions

• Further urbanization to lift living standards

• Move 200 million rural dwellers to cities in next 20-30 years

• Build/Expand 200 cities of 3 million people each

II. Why Hong Kong?

Why should you go to Hong Kong for China business?

The Hong Kong Connectivity:

• Connectivity with the world markets

• Connectivity with the China markets

The Hong Kong Connectivity:

• Connectivity with the world markets

• Connectivity with the China markets

60 years ago, Hong Kong was nobody

Now, we are No. 11 in world trade

60 years ago, Hong Kong was nobody

Now, we are No. 11 in world trade

The Hong Kong Connectivity

Hong Kong’s core business – International Trade and Commerce

• Finance

• Trade and business services

• Transportation and logistics

• Finance

• Trade and business services

• Transportation and logistics

The Hong Kong Connectivity

Hong Kong – the international platform for:

Hong Kong – the marketplace for goods and services

The Hong Kong Connectivity

• Close to 100 international trade fairs a year

• Eight of them going for world No. 1

• Over 250,000 out of town buyers in 2005 (only TDC’s trade fair), half of them from Chinese mainland

• Close to 100 international trade fairs a year

• Eight of them going for world No. 1

• Over 250,000 out of town buyers in 2005 (only TDC’s trade fair), half of them from Chinese mainland

Hong Kong – the unrivalled platform for China business

The Hong Kong Connectivity

• First-mover advantage

• 50% FDI came from/through HK into China

• Experiences and business connections

• Risk management

• First-mover advantage

• 50% FDI came from/through HK into China

• Experiences and business connections

• Risk management

Mainland Private Enterprises – an added reason for foreign businesses to come to Hong Kong

The Hong Kong Connectivity

• 4 million MPEs and growing.

• 30% growth in their number p.a. – compounded over last 10 years

• Hong Kong is their platform under the “going out” policy

• 4 million MPEs and growing.

• 30% growth in their number p.a. – compounded over last 10 years

• Hong Kong is their platform under the “going out” policy

Hong Kong = Location, location, location

The Hong Kong Connectivity

• At the heart of Asia

• Three-hour flight to key mainland cities

• Air routes connect with 150 world cities + 45 cities in mainland

• At the heart of Asia

• Three-hour flight to key mainland cities

• Air routes connect with 150 world cities + 45 cities in mainland

Hong Kong – the ideal regional base

The Hong Kong Connectivity

• About 6,300 international businesses have set up offices in HK, up 5.5% in 2005

• Of these, 3,800 are regional headquarters or regional offices

• Number of Italian companies – 300 (53 are RHQs or ROs)

• All adopting the “Hong Kong Business Model” !

• About 6,300 international businesses have set up offices in HK, up 5.5% in 2005

• Of these, 3,800 are regional headquarters or regional offices

• Number of Italian companies – 300 (53 are RHQs or ROs)

• All adopting the “Hong Kong Business Model” !

The Hong Kong Connectivity

The Hong Kong Business Model

• Low cost and effective

• High value-added processes maintained in Hong Kong

• Other processes moved into the mainland

• 60,000 Hong Kong-controlled factories in the PRD

• Low cost and effective

• High value-added processes maintained in Hong Kong

• Other processes moved into the mainland

• 60,000 Hong Kong-controlled factories in the PRD

A tale of three cities:

Hong Kong + Shenzhen + Dongguan

III. A tale of three cities – HK Plus

= A regional economic powerhouse

= The best entry point to China's markets

= Combined consumer market of 25 million people

= A regional economic powerhouse

= The best entry point to China's markets

= Combined consumer market of 25 million people

China’s innovation & technology centre

New “Silicon Valley” – IT + R&D

Manufacturing base

China’s innovation & technology centre

New “Silicon Valley” – IT + R&D

Manufacturing base

A tale of three cities – HK Plus

Shenzhen

Dongguan

Quality and competitive production base

Clusters of all kinds of manufacturing

Ample supply of low cost labour

Quality and competitive production base

Clusters of all kinds of manufacturing

Ample supply of low cost labour

A tale of three cities – HK Plus

Average real GDP growth, 2000 - 2004

Compared with

Shanghai 11.5%

Compared with

Shanghai 11.5%

Shenzhen 15.8%

Dongguan 18.7%

Shenzhen 15.8%

Dongguan 18.7%

A tale of three cities – HK Plus

GDP per capita 2004 (US$)

Shenzhen 7,160

Dongguan 8,698

Shenzhen 7,160

Dongguan 8,698

A tale of three cities – HK Plus

Compared with

Shanghai 6,682

Compared with

Shanghai 6,682

PRD's Export Strength

Compared with

Shanghai 73.5

Compared with

Shanghai 73.5

  US$ billion (2004)

Shenzhen 77.8Dongguan 35.2

  US$ billion (2004)

Shenzhen 77.8Dongguan 35.2

A tale of three cities – HK Plus

• "Wait-and-see" no longer a viable strategy

• Now is the opportune moment

• China’s markets will be further open under WTO commitments

• Your competitors are going, what about you?

• "Wait-and-see" no longer a viable strategy

• Now is the opportune moment

• China’s markets will be further open under WTO commitments

• Your competitors are going, what about you?

Hong Kong

PRDPRD

IV. Time for Action!

• HKTDC is the conduit

• We match-make businesses the world over, specially SMEs

• HKTDC is the conduit

• We match-make businesses the world over, specially SMEs

Time for Action!

Time for Action!

• Find business partners

• Participate in 20 international trade fairs

• Log onto tdctrade.com

• Find business partners

• Participate in 20 international trade fairs

• Log onto tdctrade.com

HKTDC Services

HKTDC Credo :

“Anyone using the Hong Kong platform ~ is our client”

We are at your service !

“Anyone using the Hong Kong platform ~ is our client”

We are at your service !

Via Orefici, 2, 20123 Milan, Italy

Tel 39-(02)-865405

Fax 39-(02)-860304

Email: [email protected]

Via Orefici, 2, 20123 Milan, Italy

Tel 39-(02)-865405

Fax 39-(02)-860304

Email: [email protected]

Contact us at our Milan Office :

Thank You!Thank You!