TNAG-1876-FCO40-2667-Relations-between-Hong-Kong-and-Japan-1989 — Page 52

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Background

4 Japan is Hong Kong's third largest trading partner after China

and the US accounting for 19% of total imports and 6% of total

exports (domestic and re-exports) in 1988.

5 There are 160 banks with full licences in Hong Kong and of the

120 incorporated overseas 28 are Japanese, the largest country

presence. The Japanese banking community maintains a high level

of activity in Hong Kong accounting for 13% (HK$12.9 bn) of total

liabilities to banks outside Hong Kong and nearly 8% (HK$14.7 bn)

of total claims on banks and non-banks outside Hong Kong at end March 1989. In December 1988 Mitsubishi Corporation announced plans to establish a wholly-owned deposit-taking subsidiary and in February 1989 the Hong Kong Government gave permission to Iyo Bank

and Kinki Sogo Bank to open representative offices.

6

There are also 29 subsidiaries of Japanese securities houses and 5 Japanese securities houses with representative offices in

Hong Kong. This compares with 16 subsidiaries and

4 representative offices at end-1986.

7 Japanese direct foreign investment has also risen

substantially in recent years - 163 cases equivalent to US$502 mn

(2.2% of total Japanese direct investment) in FY1986 to 335 cases equivalent to US$1162 mn (3.5% of total Japanese direct

investment) in FY1988. One example is Yaohan, the stores group, which has recently announced plans to move its headquarters to Hong Kong. This sort of move is particularly helpful in engendering confidence.

8

Japanese visitors to Hong Kong form the colony's single largest tourist group and source of tourist receipts. Receipts from Japanese visitors increased from HK$3.6 bn (20% of total receipts) in 1986 to HK$9.1 bn (28% of total receipts) in 1988.