Hong Kong Chief Executive, Donald Tsang, tells Australia China Connections why Australian companies should consider Hong Kong as their gateway to the Mainland. Sophie Loras reports.
In June, Hong Kong’s Chief Executive Donald Tsang visited Australia, taking time to meet and greet politicians and industry representatives in Melbourne, Perth, Canberra and Sydney to strengthen and promote ties between Hong Kong and Australia, as well as encourage more Australian companies, particularly those in the resources sector, to list in Hong Kong.
Australia is not new to the Chief Executive. He has a great respect and affection for Australia, its people, its culture and the symbiotic relationship he believes Australia and Hong Kong share.
“In many ways, the way we look at life here [in Hong Kong], how we conduct our business in Hong Kong, is somewhat different from our neighbours in East Asia, but very similar to Australia, and for that reason I believe there are a lot of ties,” Mr Tsang says.
“We are on similar levels of economic development. The Australian and Hong Kong people share a very similar set of values, and they also recognise certain areas like the environment and our outlook on social responsibility,” he says.
Those similarities, says Mr Tsang, have borne fruit throughout the years, manifesting in terms of trade, people flow, capital flow and investment.
He says the opening up of China – particularly the pivotal position that Hong Kong occupies in the growth of the nation as a whole, impresses upon China’s Special Administrative Region that it work ever harder in strengthening international ties to enhance its ability as an international gateway between China and the world.
Mr Tsang’s last visit down under was in 2007, but mention the word Australia, and he will divulge his great love for Henschke’s Hill of Grace Shiraz and the delights of southern Australia’s mouth-watering marron freshwater crayfish. He’ll also tell you how Hong Kong is home to more than 12,000 Australians, an Australian international school, an Australian Chamber of Commerce (Hong Kong’s second biggest international chamber) and 150 Australian firms – some making Hong Kong their regional headquarters.
The Hong Kong Economic and Trade Office put total trade between Hong Kong and Australia at US$6.9 billion last year, making Hong Kong Australia’s 20th biggest trading partner. The significance Hong Kong plays in Australia’s trade relationship with China is highlighted by the US$3.9 billion worth of trade that passed between the two countries through Hong Kong last year – representing 4.4 percent of Australia’s total trade with the Mainland.
Mr Tsang says his government has made Australian engagement a priority ensuring Australia is up to speed on Hong Kong’s achievements and the opportunities and challenges the island faces.
Many of those opportunities and challenges for Hong Kong stem from the rapid opening up and exponential growth of the Mainland, and the role Hong Kong is forging for itself as China’s and Asia’s international financial capital – ensuring the international community, including countries like Australia, continue to view Hong Kong as a major gateway for trade and investment with Mainland China.
Mr Tsang emphasises Hong Kong’s convenience credentials; the logistical advantages of the city with easy access by rail and air to most cities in China, its common law legal infrastructure, the physical infrastructure, and the luxury of a living environment of a cosmopolitan city.
“Most import, is the legal system, the law,” says Mr Tsang. “If there is a commercial dispute it will be settled in a court.”
“We like freedom,” the Chief Executive says passionately. “We treasure that –freedom of movement, freedom of expression – we absolutely adhere to the rule of law here and we also adopt a very free trade stance in whatever we do here.”
Hong Kong also has the benefit of several duty free infrastructures including CEPA – Closer Economic Partnership Arrangement – Hong Kong’s free trade agreement with the Mainland which gives companies based out of Hong Kong privileged positions for duty free for the purpose of import into China and some services.
“The speed of growth in the Chinese nation is phenomenal, it is across a whole spectrum of commodity trade to service trade ranging from education and environmental industries and so on – a lot of things I believe Australia is particularly strong.“
Mr Tsang says Hong Kong has the advantage of close proximity to the mainland, both in terms of geography as well as established contacts and relationships.
“Here in Hong Kong, because of our long-term investment into the Mainland, our knowledge of the Mainland market and our network in Australia, seems to us to be a very important asset that we should continue to develop and nurture,” he says.
Since Mr Tsang’s last visit to Australia, the biggest financial implication for Hong Kong in its role as an international financial centre has been the increase in trade being conducted in Renminbi – marking Hong Kong as the world’s most significant offshore Renminbi centre.
“Indeed over 80 percent of Renminbi in Chinese trade denominated in Renminbi is done through Hong Kong,” Mr Tsang says emphatically.
Mr Tsang says this opens opportunities for Australian firms wanting to raise funds in the Hong Kong market, in any form – into the Mainland.
Mr Tsang says while the resources sector continues to expand with the purchase of metals such as gold and copper, iron ore and coal, of which there is an abundant supply in Australia, the growing services sector in China is an area which Australia can contribute to as it is channelled through Hong Kong and into the Mainland market.
“Environmental engineering, educational services, professional services of all kinds including legal firms and so on, which may wish to use Hong Kong as a leveraging point, because in here we conduct all our trade and business in English, we have a very similar judicial legal system, we are totally free, we have no import duty, a very low tax portfolio, so this is the most comfortable part of China through which Australian firms and companies may wish to do business with the Mainland.”
He says that as Chinese firms continue to globalise, increased opportunities will arise as they seek access to professional services such as legal, accounting, due diligence and mergers and acquisitions negotiations.
Hong Kong has more than 600 Mainland firms listed on the Hong Kong stock market, some of them the largest in the world.
“Thousands of them have established a base here in Hong Kong for doing business in other parts of the world,” Mr Tsang says.
“If these firms want to invest or do things in Australia they need support. And in [Hong Kong], the Australian services industry can find them Australian lawyers, accounting firms can help them and if they are based here, they have immediately another pool of clients here. So I can see lots and lots of opportunities,” he says.
“In Hong Kong… you will find a very critical and growing amount of established Chinese firms positioning here – so Australians wanting to do business with the Mainland will find that they will have lots of contacts, lots of opportunities, right here in Hong Kong itself.”
