Sourcing & Selling in China via Hong Kong 1 Bonnie Shek Director, Australia & New Zealand
Why Hong Kong? Latest development How HKTDC can help? 2
Hong Kong Advantages Resilient Economy Ideal Location Dynamic People 3
Hong Kong Advantages Resilient Economy China s global financial centre Convertible currency, link to US dollar Free flow of capital Strong, well-regulated, banking system Low, simple tax system 4
Hong Kong Advantages Tax Misery Index 180 160 140 34.4 25 Corporate Income 120 100 52.1 45 Personal Income Wealth Tax 80 60 1.8 45 49 35 17 20 Employer Social Security Employee Social Security 5 40 20 % 0 15 23 35 14.5 16.5 20 15 19.6 17 7.7 5 7.7 7 France China USA Singapore Hong Kong VAT/Sales Source: Forbes Magazine 2009
Hong Kong Advantages Resilient Economy China s global financial centre 3rd highest market capitalisation in Asia, 7th in the world 3rd largest foreign exchange market in Asia, 6th in the world World s largest IPO hub in 2010 and Asia s largest venture capital centre in Asia Largest capital-raising hub for Chinese companies (outside the mainland) 6 Moving towards an offshore RMB centre
Hong Kong Advantages Resilient Economy Rule of law Strong, independent legal system Intellectual Property protection Free flows of information, people, goods and capital Open and transparent government 7
Hong Kong Advantages CB Richard Ellis survey (2011): Hong Kong - 68.2% of top global companies are present in the city Followed by: Singapore Tokyo London Shanghai Hong Kong remains a key location as gateway to China and Southeast Asia. Paul Brough, KPMG 8
Hong Kong Advantages Ideal Location Harbin Changchun Delhi Mumbai Chennai Bangalore Colombo Shijiazhuang Beijing Tianjin Taiyuan Zhengzhou Xian Chengdu Wuhan Chongqing Changsha Kunming Guiyang Dhaka Guilin Haikou Hanoi Bangkok Kuala Lumpur Singapore Ho Chi Minh City Jakarta Shenyang Dalian Seoul Jinan Tokyo Nanjing Hefei Osaka Fukuoka Shanghai Hangzhou Nanchang Fuzhou Guangzhou Taipei Hong Kong 4 hours 5 hours Manila All of Asia s key markets within from half the world s population 9
Hong Kong Advantages Ideal Location Infrastructure integration with PRD Growing infrastructure links between Hong Kong and PRD cities Easy and efficient travel Economic integration 45% of China s FDI comes through HK Largest overseas investor in most major Chinese cities Further integration via tri-regional 2020 blueprint 10
Hong Kong Advantages Ideal Location Closer Economic Partnership Arrangement (CEPA) WTO-plus market access for service providers Tariff-free access to the mainland for products Overseas companies can benefit! 11
Hong Kong Advantages Dynamic People Hong Kong is the Chinese city that speaks your language Generations of entrepreneurial spirit Unrivalled China market and international business experience Diverse international workforce 12... the language of international business!
Hong Kong: A hub of creativity Dynamic People Lifestyle trendsetters in Asia 13
Hong Kong Advantages Technology Marketplace Selling and sourcing high-tech products Hong Kong: international experience in technology trade China: Demand for advanced technologies in manufacturing, to meet new environmental standards Hong Kong a partner for foreign technology companies 14
15 Latest Development
The China Opportunity Growing consumer market 859 million mobile phone users More than 457 million internet users Growing demand for imported wine average of 63% p.a. (2006 to 2010) Largest car market in the world One of the world s largest luxury goods markets 100 million Chinese tourists expected by 2020 16 Growing rural consumer market
The China Opportunity Industry moving up the value chain Upgrading industrial processes 7.6 million Mainland Private Enterprises Growing demand for business services and technologies R&D expenditure increased by average of 23% per year from 2003 to 2009 17
18 China s 12 th Five-Year Plan Overview
Key theme: changes in economic development model # Strategic adjustment of economic structure Expand consumption demand Expedite development of service industries Retool and upgrade manufacturing industries # Increase industries core competitiveness - Increase R&D expenditure 19 # More sustainable development strategies - Synchronise industrialisation, urbanisation and modernisation of agriculture - Promote usage of alternative energy and increase energy efficiency - Regional balance
Economic growth will be driven more by domestic demand (private consumption in particular) in the next five years 50 Contribution of private consumption to GDP 45 40 35 30 25 20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: National Bureau of Statistics 20 Building a long-term mechanism to increase consumption rate: Consumer income to increase in line with GDP growth Improve income redistribution system Better social protection to induce less savings Better distribution channels infrastructure Upgrade consumption structure
Technology and innovation will serve as a key of economic restructuring and industry upgrading Increase applications of new technology, new materials, new machinery in traditional manufacturing industries Increase policy incentives and capital investment to nurture the following seven strategic emerging industries: 1. energy-saving and environmental protection 2. new-generation information technology 3. bio-technology 4. high-end equipment manufacturing 5. new energy 6. new materials 7. new energy cars 21
A special focus on Hong Kong # Continue support of Hong Kong high value-added service industry development # Support Hong Kong in developing six competitive industries as new growth areas - Medical services, educational services, cultural and creative industries, innovation and technology, testing and certification, environmental industry # Deepen HK/Mainland and HK/Guangdong economic cooperation - Continue implementation of CEPA - Implement the Framework Agreement on Hong Kong Guangdong Cooperation to form a world class metropolitan cluster - Support Guangdong early and pilot measures ( 先 行 先 試 ) for Hong Kong 22
23 Implications for Hong Kong
IPO 24 More mainland companies will seek listings in Hong Kong in the process of upgrading and going out Hong Foreign companies interested in the Asian market, China in particular, will seek listing in New Kong Hong Kong, e.g. Prada, Franc Franc, Coach Capital raised in major stock markets in 2010 Shanghai York London Total 0 50 100 150 IPOsfund raised 200 US$ billion 250 Source: World Federation of Exchanges
RMB offshore centre Hong Kong is the first and the largest RMB offshore centre, offering an expanding range of RMB products and services - A growing number of RMB bonds and Certificates of Deposit have become available, issuers include mainland banks, Hong Kong banks, the Ministry of Finance, Hong Kong corporations, multinational institutions like McDonald s, Caterpillar and Unilever as well as supranational institutions like Asia Development Bank and World Bank. - In 2010, the total issuance size of RMB bond reached RMB 36 billion, an increase of RMB 20 billion (+125%) from 2009. 25
- Since the debut of pilot RMB cross-border trade settlement scheme (July 2009), the settlement amount reached RMB 682 billion as of end-march 2011. - RMB deposits have surged more than eight times to RMB 450 billion since July 2009. RMB billion 1 4 0 1 2 0 R M B c ro s s -b o rd e r tra d e s e ttle m e n t (m o n th ly) R M B d e p o s its 5 0 0 4 5 0 4 0 0 RMB billion 1 0 0 3 5 0 8 0 3 0 0 2 5 0 6 0 2 0 0 4 0 1 5 0 2 0 1 0 0 5 0 26 Source: HKMA 0 J ul 2 0 1 0 A ug 2 0 1 0 S e p 2 0 1 0 O c t 2 0 1 0 N o v 2 0 1 0 D e c 2 0 1 0 J a n 2 0 1 1 F e b 2 0 1 1 M a r 2 0 1 1 0
Platform for Mainland enterprises going out - Going out to acquire resources, undertake technological R&D cooperation, acquire international distribution networks and brands - Hong Kong as a service platform and a base to manage overseas operations and assets US$ bn 70 60 Outward direct investment by China s non-financial companies 50 40 30 20 10 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Ministry of Commerce 27
28 Hong Kong Trade Development Council
HKTDC Integrated Marketing Solution World-class Trade Fairs Trusted Online Marketplace www.hktdc.com Business Matching Product Magazines Covers 15 Industries 29
World-class Trade Fairs Attract Quality Buyers and Suppliers Community Organised more than 30 world-class trade fairs in Hong Kong, 3 of which are world s largest, and 10 are Asia s largest 10 Asia Largest Trade Fairs Asia s Ranking World s Ranking HKTDC Hong Kong Watch & Clock Fair 1 1 HKTDC Hong Kong Gifts & Premium Fair 1 1 HKTDC Hong Kong Electronics Fair (Autumn Edition) 1 1 HKTDC Hong Kong Electronics Fair (Spring Edition) 1 2 HKTDC Hong Kong Toys & Games Fair 1 2 HKTDC Hong Kong International Lighting Fair (Autumn Edition) 1 2 HKTDC Hong Kong Fashion Week Fall/Winter 1 2 HKTDC Hong Kong Houseware Fair 1 3 HKTDC Hong Kong International Licensing Show 1-30 HKTDC Hong Kong International Film & TV Market (FILMART) 1 -
HKTDC Product Magazines Directly Reach Overseas Buyers - 15 specialised product magazines and dozens of specialised supplements published every year - Over 5,000,000 readership worldwide, reaching international readers from over 200 countries and regions 31
HKTDC Product Magazines Cross-platform Promotion Enhance Effectiveness ipad and iphone Versions: - World s first B2B product magazines app for buyers free download of HKTDC magazines and supplements - Promote to 600,000 quality Hong Kong trade fair buyers proactively and boost publicity in major worldwide trade fairs Search HKTDC in App Store to download for free 32
HKTDC Product Magazines Cross-platform Promotion Enhance Effectiveness ipad and iphone Versions: - Suppliers can present their products more vividly by multi-media functions - Buyers rating reaches 4.4 (5 is the max. score) Buyers click the fair label on the ad. Booth location will be shown on the Hall Plan 33
hktdc.com The Online Marketplace You Can Trust Connect quality buyers and trustworthy suppliers, helping suppliers to promote products and services to overseas markets Provides timely global market intelligence and practical business news to help corporations devise their business strategies 34
hktdc.com The Online Marketplace You Can Trust More than 1,000,000 buyers, including those who frequently join HKTDC s trade fairs and source via hktdc.com throughout the year More than 120,000 quality suppliers, including HKTDC exhibitors and magazine advertisers hktdc.com won the Best International Business Website WebAward in 2010 from the Web Marketing Association in US 35
Business Matching Service 1. hktdc.com Free Sourcing Service Suppliers receive more enquiries by providing buyers with free supplier list that can cater to their sourcing needs 2. hktdc.com Buyer Meetings Arrange meetings with VIP buyers for pre-selected suppliers to effectively finalise business deals 3. Customised Business Matching Service Our professional team provides individual global buyers with customised business matching service to find potential partners in Hong Kong 36
Upcoming trade fairs & events HK Watch & Clock Fair, 7-11 Sept HK Electronics Fair (Autumn Edition), 13 16 October electronicasia, 13 16 October Eco Expo Asia, International Trade Fair on Environmental Protection, 26 29 October HK International Building and Decoration Materials & Hardware Fair, 27 29 October Sports Source Asia, 27 29 October HK International Lighting Fair, 27 30 October HK Optical Fair, 3-5 November HK International Wine & Spirits Fair, 3 5 November Hong Kong Forum, 29 & 30 November 37
38 Contact HKTDC Sydney Office Tel: 02 9261 8911 Email: Sydney.office@hktdc.org