TNAG-2126-FCO40-3036-Investment-in-Hong-Kong-1990 — Page 177

VUZZ VOS

The Importance of Hong Kong to the United Kingdom March 1990

The United Kingdom's link with Hong Kong has continued for 150 years; the relationship chang

changes in 1997 but does not

come to an end.

Hong Kong is of strategic and commercial importance to the United Kingdom :

in its own right

as a springboard to China

as a centre in high growth East Asia as an important link in the chain of international financial centres

British revenue from Hong Kong (1989) :

*

Direct exports Invisible earnings

Total

(LM) L1100

L1200

(estimate)

L2300

Hong Kong is Britain largest market in Asia after Japan, it's 19th largest market worldwide and it's 3rd in the world outside Europe and North America.

The invisible earnings are less easy to quantify than exports but the above figure of L1,200 million comprises an estimate of net earnings from affiliates, dividends, tourism, banking, insurance and other financial services, professional services, transport and cargo revenue etc.

British imports from Hong Kong were L2,000 million in 1989, which includes L770m of China-origin products. It must be remembered that if Hong Kong was no longer prosperous and stable, the L2,300 million would rapidly vanish, while the L2,000 million would be supplied from elsewhere, if Hong Kong ceased to be a force in the export trade.

British companies in Hong Kong :

There are more than 400 British companies in Hong Kong. addition, there are many companies not wholly owned from Britain but in which there is significant British investment or management. In all, there is British involvement through direct control, investment or management in close to 1000 companies in Hong Kong. Additionally, 2500 British companies have agents.

British investment in Hong Kong :

1

In

The gross stock market value of British owned, controlled, or managed companies in Hong Kong is over L20 billion, which is 40% of the total market capitalisation.

There are many groups in Hong Kong that remain clearly British (Standard Chartered, Inchcape, BAT, Shell, ICI, etc.), but are not quoted in Hong Kong.

It is believed that British portfolio investment accounts for 30% of the total market

capitalisation of listed companies in Hong Kong.

Conclusion :

There is no doubt that British commercial involvement in Hong Kong is extensive, complicated and touches almost every sector of the economy. It is also clear that British investment and management involvement remains the major overseas influence in Hong Kong business.