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The Eastern Harbour Crossing is a few months from completion and plans are already being discussed for a Western Harbour Crossing. There is a plan for a tunnel under the Peak and a light rail system connecting Central and Aberdeen. Great efforts are being made to improve the environment: to combat water pollution and to find better ways of disposing of waste and so on. Obviously projects like these can offer opportunities to companies of all sizes.
Incidentally there are projects also in Macao across the Pearl River Estuary and the whole of the estuary and delta up as far as Canton is becoming a focus of development.
So you can see, there is a lot going on here. Hong Kong offers a domestic market and a gateway into China. Trade between Hong Kong and China has increased tenfold since China introduced its policy of "opening to the outside world". Ten percent of British sales in Hong Kong go on to China. Hong Kong companies are China's largest source of direct external investment (about 60 percent) and China earns more than a third of its foreign exchange through the territory. Hong Kong is China's largest market. It has its largest foreign investments in Hong Kong, in banking, property, retailing, trading and manufacturing.
In all, China has about 80 commercial offices in the territory, representing local authorities and trade organisations, and they are constantly on the look out for equipment and technology and they place orders for it. Hong Kong companies own or have an interest in 2000 factories in Guangdong Province and it is estimated that a million people in Southern China are working on orders from Hong Kong.
Many people thought the introduction of China's open policy and the encouragement given to Chinese organisations to establish direct trading links with foreign counterparts would mean that Hong Kong would in time be squeezed out of its traditional middle-man role. In fact the reverse has happened and Hong Kong has come to play a much larger role in China's external economic relations. About 20 percent of British sales to China are routed through Hong Kong. Many British companies are represented in Peking of course, and for some this is necessary, though expensive. For others, representation through a London-based trading organisation is a good route. But we also recommend that smaller firms interested in doing business in China should consider using the agency facilities available here in Hong Kong. The banks in Hong Kong including the British banks, most of whom are represented can also offer valuable advice and services. All in all, Hong Kong can provide a good base and also a realistic view of doing business in China especially the southern part of China.
This realistic view is important because for all the undoubted potential of China, the enthusiasm and judgement of the foreign businessman needs to be based on a sound appreciation of all the factors involved. China can be a complicated place in which to do business and foreign exchange is not always immediately available. The China traders in Hong Kong have a lot of experience. One important point to bear in mind is that Hong Kong companies will generally not waste their time pursuing projects that have little chance of getting off the ground and from which they will not, therefore, make a profit.
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