香港 Hong Kong & Macau: Your Profitable Access to China April 2008 Stewart J. Ballard Chief Commercial Consul U.S. Commercial Service American Consulate General Hong Kong and Macau 澳門 1 Hong Kong - A Great City Built on World Trade, Finance & Shipping 2 Hong Kong – Gateway to Asia Beijing Shanghai 3 Hong Kong – Gateway to China 4 Hong Kong – Gateway to the Pearl River Delta Hong Kong – A Trade Promotion Hub of Asia 6 Hong Kong – A Rich Culture • Population: 6.9 million • Population Density:6,410 people per square kilometer • Ethnic Groups: Chinese (95%), Others (5%) • Languages: Cantonese, Mandarin, English • Literacy: 94.4% • Education: 75.5% of children finish upper secondary or equivalent vocational education • Expatriates: 60,000 American residents • History: British colonial rule (1842-1997) Sino-British Joint Declaration (1984) Reversion to Chinese sovereignty (July 1, 1997) One Country, Two Systems (1997-2047) 7 Hong Kong – A Stable Polity • Type: Special Administrative Region of China, with its own constitution (The Basic Law) • Chief Executive: Donald Tsang • Branches: Executive: Chief Executive, Executive Council, Administration Legislative: Legislative Council: 30 of 60 directly elected in September 2004 for 4-year terms Judicial: Court of Final Appeal; other lower courts • Subdivisions: Hong Kong, Kowloon, New Territories • Suffrage: Permanent residents, aged 18 and over, living in Hong Kong for the past seven years are eligible to vote. 8 Hong Kong – A Stable Polity • 1 Country, 2 Systems: ¾ Hong Kong is a Special Administrative Region of the People’s Republic of China, with a high degree of autonomy in all matters except foreign and defense affairs. Hong Kong will retain its political, economic and judicial systems for 50 years after reversion and will continue to participate in international agreements under the name of “Hong Kong, China.” • Values: ¾ Hong Kong is a free and open society, where human rights are respected; courts are independent of political influence; and there is well-established respect for the rule of law. The government is relatively small, clean (of corruption); transparent (operationally) and does not engage in censorship. Taxes tend to be low in Hong Kong. 9 Hong Kong – A Dynamic Economy • GDP: $209.4 billion (2007) • GDP Per Capita: $30,238 (2007) • GDP Growth: 4.8% (2007) • GDP% of Services: 91.2% (2006) (cf. 73% in U.S. and 34% in PRC) • Work Force: 3.6 million (2007) • Retail Sales: $32.2 billion (2007) • PRC Tourists: 15.5 million (55% of 2007 total visitor of 28.2 million) • HKG Budget: $27.8 billion (planned expenditure) (Apr 2007 - Mar 2008) • HKG Infrastructure: $4.5 billion (2007-2008) • HK Industry: Textiles, clothing, electronics, plastics, toys, watches, clocks, logistics • HK Manufacturers: 15,004 (September 2006) 10 Hong Kong – A Dynamic Economy • FDI Inbound: $740 billion (2006) • FDI Inbound PRC: $260 billion (35.1% of 2006 total) • FDI Inbound U.S.: $35.5 billion (48% of 2006 total) • PRC Firms in HK: 2,200 (367 listed in Hong Kong) • US Firms in HK: 1,285 (including 593 regional offices, 298 regional HQs and 394 local offices) • FDI Outbound: $675 billion (2006) • FDI Outbound PRC: $271 billion (40.2% of 2006 total) • Venture Capital: $40 billion • Investment Funds: 1,980 (Mar 2006) • Regional Offices: 3,890, including 1,246 regional HQs and 2,644 regional offices (2007) • HK in PRD: About 80,000 factories with 11 million employees (70% FDI in PRD) (cf. 15,004 manufacturers in HK) 11 Hong Kong – A Dynamic Economy • Total Exports: $349 billion (2007) • HK Exports: Clothing, electronics, textiles, watches, clocks, office machinery • Total Imports: $372.5 billion (2007) • HK Imports: Consumer goods, raw materials, semi- manufactures, capital goods, foodstuffs, fuels • Exchange Rate: $US1.00 = $HK7.77 (12-30-2006) = currency peg • Strengths: ¾ Free port, no exchange controls, free flow of information, strong legal system, sound banking system, efficient capital market, rigorously enforced anti-corruption regime, accumulated public and private wealth, virtually no public debt, low taxation, developed infrastructure, educated workforce 12 Hong Kong – The Local Market • Hong Kong’s local market of 6.9 million people is augmented by 28.2 million tourists, including 15.5 million from mainland China. Total retail sales are $32.2 billion per year. • Hong Kong’s local business market is augmented by its large conglomerates, which include 11 of the top 50 transnational companies in emerging markets. • These firms include: Hutchison Whampoa, Jardine Matheson Holdings, Li & Fung, First Pacific Company, Citic Pacific, Orient Overseas International, Swire Pacific, Guangdong Investment, Shangri-La Asia, Hong Kong & Shanghai Hotels, and China Light & Power Holdings. These 11 firms have combined sales of $24.2 billion 13 Hong Kong – The Local Market • Hong Kong has 268,000 SME’s, e.g., the Hong Kong General Chamber of Commerce’s membership of 4,000 includes 60% or 2,400 SME’s. • A foreign-owned firm that establishes itself in Hong Kong is considered by the Hong Kong Government as a Hong Kong firm. • U.S. firms have 38% or 46 of Hong Kong’s 132 franchises (2007). 14 Hong Kong – American Brands In the Market Kenneth Cole, Tommy Hilfiger, See’s Candies, Ben & Jerry’s, Polo Jeans, Rockport, Estee Lauder,15 Haagen-Dazs, Anne Klein, McDonald’s, California Pizza Kitchen, Theory, Starbucks, KFC, 7-11 Hong Kong Major Projects Hong Kong Int’l. Airport $582 Mn (Upgrade passenger terminal $200 Mn Harbour Area Airfield improvement $388 Mn) Treatment (Main Plant) $2.5 Bn West Kowloon Cultural Hub $2.8 Bn (earmarked) Stadium at Kai Tak $647 Mn Cruise Terminal at Kai Tak $308 Mn HK Govn’t. HQ HK-Macau-Zhuhai $633 Mn Ocean Park 16 Bridge $5.7 Bn $705 Mn Hong Kong-Macau-Zhuhai Bridge • US$5.7 billion • Share between the three governments: – Hong Kong: 50.2% – Guangdong: 35.1% – Macau: 14.7% • Invite private developer to bid for the project 17 Major Projects in Hong Kong USD • Additional Mass Transit $12 Bn – South Island line $1.2 Bn – Shatin to Central link $4 Bn – Guangzhou-Shenzhen-Hong Kong Express rail link $1.9 Bn – Tuen Mun-Chek Lap Kok rail link $2.6 Bn • West Kowloon Cultural Hub (earmarked) $2.8 Bn • Hong Kong-Macau-Zhuhai bridge $5.7 Bn • Hong Kong Government Headquarters $633 Mn • Cruise Terminal at Kai Tak old airport site $308 Mn • Possible 3rd airport runway • Additional university campus buildings and residence 18 US Exports to Hong Kong USD Billion 25 20.1 Bn 17.8 Bn 16.3 Bn 20 15.8 Bn 13.5 Bn 15 10 5 0 2003 2004 2005 2006 2007 19 U.S. Exports to Hong Kong • Electrical machinery and electronics parts • Machinery & Mechanical Appliances • Precious metals and stones • Medical and photographic equipment • Plastics • Leather • Meat and fruit • Toys and games • Paper and wood items • Aircraft parts 20 Hong Kong and The Pearl River Delta (PRD) • 46.5 million people - 2.8% of China’s population (2005) • PRD is the “richest” region of China • 9.9% of China’s GDP • Per capita GDP in Shenzhen > US$5,127 • 19.2% of China’s foreign direct investment (FDI) • 27.8% of China’s exports • Hong Kong is the source for 70% of PRD’s FDI • US companies’ growing presence -- P&G, Walmart, Dell, IBM • Substantial and diverse business opportunities 21 Closer Economic Partnership Agreement (CEPA) • Enhanced access for Hong Kong products & service providers • Starting from January 1, 2005, most types of products made in HK can be exported to China with zero tariff • Made in HK = 30% value-added • Preferential access to HK service suppliers in 27 sectors • Foreign companies that acquire majority shares of HK companies for 1 year = HK companies 22 Closer Economic Partnership Agreement (CEPA) Examples of goods covered are: • fisheries products • food and beverages • chemical products • pharmaceutical products • cosmetics • plastic and rubber products • leather and fur products • textiles and clothing • metal products • jewelry • mechanical, electrical and electronic products • clocks and watches 23 Hong Kong – The Regional Market • Within six hours’ flying time of Hong Kong, you can sell to 2/3 of humanity! • 94% of Hong Kong’s exports are reexports of third-country goods • Hong Kong has 3,890 foreign firms’ Asian regional offices and headquarters. In 2007, U.S. had 1,285 regional and local offices, including 298 regional headquarters and 593 regional and 394 local offices. 24 Hong Kong – The Regional Market • 31 of the top 100 PRC firms have Hong Kong offices • 2,200 PRC firms have Hong Kong offices • Hong Kong firms own about 80,000 factories and employ 11 million people in nearby Guangdong province, PRC, the heart of the Pearl River Delta, China’s richest region that is responsible for one- third of China’s exports to the world 25 Hong Kong – 2007 Re-exports by Destination: Statistics ($US Billion) P.R.C. - $164.6 U.S.A. – $44.7 Japan - $15.2 Germany - $10.1 United Kingdom - $9 Korea - $6.7 Taiwan - $6.3 Others - $78.3 Total: $334.9 Source: Trade & Industry Department, the Government of HKSAR 26 Hong Kong – 2007 Re-exports by Origin: Statistics ($US Billion) P.R.C. - $207.5 Japan - $27.2 Taiwan - $24.6 Korea - $12.6 United States - $9.7 Malaysia - $7.1 Thailand - $6.1 Others - $40.1 Total: $334.9 Source: Trade & Industry Department, the Government of HKSAR 27 Hong Kong – A Global Financial Hub 28 Hong Kong – The Global Financial Market Among global exchanges, Hong Kong ranks #1 in derivative warrants trading in Asia #1 in stock options trading market in Asia #5 in capital funds raised worldwide #7 in market capitalization worldwide #10 in equity turnover worldwide • USD$2.67 Trillion market capitalization in 2007 (up 55% from 2006) 29 Hong Kong – The Global Financial Market • 181 foreign banks; more than 90 foreign insurers; 234 investment companies; 185 venture capital funds • Of Asia’s $100 billion in private equity, Hong Kong firms manage $27 billion.