In finance to crib from Conrad Hilton there are three prerequisites for success. The first is location. The second is location. The third is location.
Hong Kong has the advantage not only of its own economic potential, its own economic strength, entrepreneurial dynamism, human resources and physical infrastructure. It also has the advantage of China.
Dynamic changes are underway in China's economy. Real growth has averaged 9 percent per annum over the last decade. Exports have almost tripled in the same period. China is an increasingly important part of the global trading economy.
Modernisation continues. Quietly, often without fanfare, market reform is being extended. According to some estimates, as much as two-thirds of China's economic output now originates from non-state enterprises. That is roughly the same level as in France or Italy. All this creates business opportunities for
banks.
My Bank has had a branch in Shanghai for more than 70 years. We helped put together China's first foreign joint-venture company in Beijing more than 11 years ago. We founded the first joint-
venture merchant banks to be established both inside and outside China's Special Economic Zones. We also launched China's first credit card and were one of the first banks to provide mortgage financing for the purchase of property in China.
More recently, we worked with Avon Products to establish China's first direct sales joint venture. Today, there are more than 4,000 "Avon Ladies" selling Avon products door-to-door in Guangzhou, the capital of the southern Province of Guangdong, and Avon has asked us to help them expand to Shanghai.
The Avon joint venture shows not only what co-operation among foreign, Hong Kong and Chinese interests can achieve. It also demonstrates the extent of economic reform in China as well as the increasing maturity of its key markets.
The economy of South China in particular is evolving rapidly. It is expanding its role as a manufacturing platform, moving to higher technology and higher value-added goods. One of my Bank's clients, Lafe Electronics, which makes components for companies such as Seagate and DEC, last month opened a new "Class 100" cleanroom at its manufacturing plant near Guangzhou That puts it on a par with all but the most advanced factories in Japan, the United States or Europe.
Smith New Court plc Conference