CONFIDENTIAL & COMMERCIAL-IN-CONFIDENCE
To:
MR MEADWAY
OT2
From:
TIM SOANE
EEE2
Room 1/111
151 Buckingham Palace Road
Tel: 071-215 1796
Fax: 071-215 4189
17 March 1993
copy: Mr Rumbelow
Mr Hall
EEE/ME PEP
IMPLICATIONS OF HONG KONG's ECONOMIC AND FINANCIAL POSITION
7
112.
Your minute of 4 March invited contributions to an exercise being coordinated by Treasury on negative scenarios for developments in Hong Kong. I am replying for EEE and ME divisions.
2. I will leave it to PEP to provide you with material on the companies which you have identified specifically. Your list covers the main players in power generation, railways and cables. I would just add that Pirelli Cables, which has a significant UK operation claims to be the major supplier of optical fibre to China and is actively looking at joint ventures there. In the unlikely printed circuit board sector, KAM Circuits have invested in China | showd and have a production facility there. Without talking to the think company, we cannot say authoritively how important the Chinese connection is. If it were confiscated, it would be unlikely to bring down the group of which it forms part, but it may be quite significant to the group's PCB activities.
3.
4.
There are however two further points.
First, whilst no one particular company is, on the basis of our current knowledge without consulting firms, as exposed as any of those on your list, a number of our sectors see the Chinese market as particularly important to their success overseas in the next few years. In construction equipment, JCB and Caterpillar have a significant interest in the considerable and growing number of construction projects in Hong Kong and China, mainly as a subcontractor. In machine tools, the Japanese market is a growing one and Cincinnati Milacron and Flexible Manufacturing Technology have both won significant business recently. In mining machinery, though exports to date have been negligible, the China Coal Corporation is planning considerable expansion and
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