CONFIDENTIAL
026226 MDHIAN 9745
(G) ONE OF BRITAIN'S LARGEST INVESTMENTS IN HONG KONG IS CABLE AND WIRELESS'S MAJORITY STAKE IN HONG KONG TELECOM. CABLE AND WIRELESS, AND WITH THEM MERCURY, COULD BARELY SURVIVE WITHOUT THEIR EARNINGS FROM HONG KONG. IN RETURN THEY GIVE HONG KONG WHAT MANY DESCRIBE AS THE BEST TELEPHONE SERVICE IN THE WORLD. THE WINDS OF CHANGE ARE BLOWING HARD AROUND THEM IN HONG KONG. THEIR MANOPOLY POSITION, GUARANTEED UNTIL 1996 FOR DOMESTIC CALLS AND TO 2006 FOR INTERNATIONAL CALLS, IS UNDER THREAT, PROBABLY EVEN BEFORE THE GUARANTEES RUN OUT. COMPETING TELEPHONE SYSTEMS, WHICH IS AN OPTION NOW BEING CONSIDERED, ARE NOT NECESSARILY THE ANSWER IN A PLACE SO SMALL. IT IS AMERICAN TELEPHONE COMPANIES WHO LEAD THE SNIPING AT HONG KONG TELECOM, AND ARE NOT AVERSE TO THE USE OF DIRTY TRICKS, AND IT IS THEY WHO WOULD LIKELY BENEFIT FROM AN EROSION OF CABLE AND WIRELESS'S POSITION. IT IS THE UK WHO WOULD LOSE.
(H) OUT INVESTMENT IN HONG KONG IS VAST, MUCH BIGGER THAN OFFICIAL FIGURES SUGGEST SINCE THEY OFTEN EXCLUDE ENTITIES SUCH AS SWIRES, JARDINES AND THE HONG KONG AND SHANGHAI BANK. OUR INVISIBLE EARNINGS FROM THESE, AND FROM EG OUR ENGINEERING CONSULTANTS, LAW AND ACCOUNTANCY FIRMS ETC PROBABLY AT LEAST MATCH OUR EARNINGS FROM VISIBLE TRADE.
(I) HONG KONG IS A MAJOR MARKET FOR THE UK. IT IS PERHAPS THE MOST BUSINESS ORIENTATED PLACE IN THE WORLD. IT DESERVES OUR FULL ATTENTION, AND ALL OUR EFFORTS, ON THE COMMERCIAL NO LESS (WELL NOT MUCH LESS) THAN THE POLITICAL FRONT. IF THE PRIME MINISTER CAN STRESS WHILE HERE THE IMPORTANCE WE ATTACH TO OUR TRADE WITH HONG KONG THE MESSAGE WILL BE HEARD BY THOSE BEST PLACED TO RESPOND WITH DEEDS.
HEAP
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ΜΑΙΝ
81
PRIME MINISTER'S VISIT TO
(CHINA AND HONG KONG)
LIMITED
FED
DISTRIBUTION
87
PLANNERS
PROTOCOL D
RAD
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CONFIDENTIAL
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