TNAG-2478-FCO40-3608-Trade-relations-between-Hong-Kong--the-UK-and-other-countrie-1992 — Page 8

Government

for the

for the implementation of a

number of industrial support projects where the services involved are expected to become financially self-sufficient.

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The company would have a proper equity structure, but would initially refrain from distributing profits. Government and the Institute would each have two seats on

each have two seats on the Board of Directors, with the remaining six seats being filled by other private sector participants. In drawing up

.

up the company's Memorandum and Articles of Association, it would be necessary to define the contributions from Government, The Institute and other private sector participants, set out the membership of the Board of Directors, and reach an understanding on profit and loss sharing. These detailed arrangements will be determined following negotiation.

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- Our target is to establish the company and its Toronto office by June 1991, and to launch IPM-Net in September. The Toronto office would cover operations in the Toronto/Ontario area and, through the use of distance marketing such as direct mail and toll-free incoming telephone lines, handle the market in Vancouver. On the basis of operating experience and the viability of the Toronto operation, it is intended that a second office be established in Vancouver, probably in the second year.

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As

Assuming that the Canadian operation is successful, it should be possible to expand IPM-Net to other countries, such as Australia and the USA.

The Institute has already established a network of contacts in Australia. Its research indicates that a sizeable market exists there, and that the cost of entry would be lower than

than for other markets. regards the USA, operations on the East and West Coasts can be developed from the Toronto and Vancouver offices respectively. The concentration of Hong Kong emigrants, students and technologists, particularly on the West Coast, is sufficient to make the market attractive. These opportunities, however, would require further examination by the company after it is established.

FINANCIAL IMPLICATIONS

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Government is expected to provide $3 million as its contribution to the equity of the joint venture. The extent of Government's future financial participation will be decided in the light of further developments. The necessary funds for this equity contribution, and for further annual contributions of the same amount should this be required to finance expansion, have been secured against recurrent savings of the same order identified, by the Secretary for Education and Manpower.