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Hong Kong: Your Profitable Hong Kong: Your Profitable Access to China Access to China March 2007 March 2007 James Mayfield James Mayfield Commercial Consul Commercial Consul U.S. Commercial Service U.S. Commercial Service American Consulate General American Consulate General Hong Kong and Macau Hong Kong and Macau 澳 澳 澳 澳

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Page 1: Hong Kong 1

Hong Kong: Your Profitable Hong Kong: Your Profitable Access to ChinaAccess to China

March 2007March 2007

James MayfieldJames MayfieldCommercial ConsulCommercial Consul

U.S. Commercial ServiceU.S. Commercial ServiceAmerican Consulate GeneralAmerican Consulate General

Hong Kong and MacauHong Kong and Macau

澳門

香港

Page 2: Hong Kong 1

A Great City Built on World A Great City Built on World Trade, Finance & ShippingTrade, Finance & Shipping

Page 3: Hong Kong 1

Hong Kong – Gateway to Asia

Beijing

Shanghai

Page 4: Hong Kong 1

Hong Kong – Gateway to ChinaHong Kong – Gateway to China

Page 5: Hong Kong 1

Hong Kong – Gateway to the Pearl River Delta

Page 6: Hong Kong 1

Hong Kong – A Trade Promotion Hub of Asia

Page 7: Hong Kong 1

Hong Kong – A Rich CultureHong Kong – A Rich Culture• Population:Population: 6.9 million6.9 million• Population Density:6,420 people per square kilometerPopulation Density:6,420 people per square kilometer• Ethnic Groups:Ethnic Groups: Chinese (95%), Others (5%)Chinese (95%), Others (5%)• Languages:Languages: Cantonese, Mandarin, EnglishCantonese, Mandarin, English• Literacy:Literacy: 94.4%94.4%• Education:Education: 75.5% of children finish upper 75.5% of children finish upper

secondary secondary or equivalent vocational or equivalent vocational educationeducation

• Expatriates:Expatriates: 54,000 American residents54,000 American residents• History:History: British colonial rule (1842-1997)British colonial rule (1842-1997)

Sino-British Joint Declaration (1984)Sino-British Joint Declaration (1984)Reversion to Chinese sovereignty Reversion to Chinese sovereignty

(July 1, 1997)(July 1, 1997)One Country, Two SystemsOne Country, Two Systems (1997-(1997-

2047)2047)

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Hong Kong – A Stable PolityHong Kong – A Stable Polity

• Type:Type: Special Administrative Region of Special Administrative Region of China, with its own constitution China, with its own constitution

(The Basic Law)(The Basic Law)• Chief Executive:Chief Executive: Donald TsangDonald Tsang• Branches:Branches: Executive: Chief Executive, Executive: Chief Executive,

Executive Executive Council, AdministrationCouncil, AdministrationLegislative: Legislative Council: 30 Legislative: Legislative Council: 30

of of 60 directly elected in 60 directly elected in September 2004 for 4-year September 2004 for 4-year

termstermsJudicial: Court of Final Appeal; other Judicial: Court of Final Appeal; other

lower courtslower courts• Subdivisions:Subdivisions: Hong Kong, Kowloon, New Hong Kong, Kowloon, New

TerritoriesTerritories• Suffrage:Suffrage: Permanent residents, aged 18 and Permanent residents, aged 18 and

over, over, living in Hong Kong for the past living in Hong Kong for the past seven seven years are eligible to vote.years are eligible to vote.

Page 9: Hong Kong 1

Hong Kong – A Stable PolityHong Kong – A Stable Polity• 1 Country, 2 Systems:1 Country, 2 Systems:

Hong Kong is a Special Administrative Region of the Hong Kong is a Special Administrative Region of the People’s Republic of China, with a high degree of People’s Republic of China, with a high degree of autonomy in all matters except foreign and defense autonomy in all matters except foreign and defense affairs. Hong Kong will retain its political, economic affairs. Hong Kong will retain its political, economic and judicial systems for 50 years after reversion and and judicial systems for 50 years after reversion and will continue to participate in international will continue to participate in international agreements under the name of “Hong Kong, China.”agreements under the name of “Hong Kong, China.”

• Values:Values: Hong Kong is a free and open society, where human Hong Kong is a free and open society, where human

rights are respected; courts are independent of rights are respected; courts are independent of political influence; and there is well-established political influence; and there is well-established respect for the rule of law. The government is respect for the rule of law. The government is relatively small, clean (of corruption); transparent relatively small, clean (of corruption); transparent (operationally) and does not engage in censorship. (operationally) and does not engage in censorship. Taxes tend to be low in Hong Kong.Taxes tend to be low in Hong Kong.

Page 10: Hong Kong 1

Hong Kong – A Dynamic Hong Kong – A Dynamic EconomyEconomy• GDP:GDP: $188.8 billion (2006)$188.8 billion (2006)

• GDP Per Capita:GDP Per Capita: $27,527 (2006)$27,527 (2006)• GDP Growth:GDP Growth: 6.8% (2006)6.8% (2006)• GDP% of Services:GDP% of Services: 90.6% (2005)90.6% (2005)

(cf. 73% in U.S. and 32% in (cf. 73% in U.S. and 32% in PRC)PRC)

• Work Force:Work Force: 3.5 million (2005)3.5 million (2005)• Retail Sales:Retail Sales: $28.2 billion (2006)$28.2 billion (2006)• PRC Tourists:PRC Tourists: 13.6 million (54% of 2006 13.6 million (54% of 2006

total of 25.3 million)total of 25.3 million)• HKG Budget:HKG Budget: $38.6 billion (Apr 2005 - Mar $38.6 billion (Apr 2005 - Mar

2006)2006)• HKG Infrastructure:$3.3 billion (2005-2006)HKG Infrastructure:$3.3 billion (2005-2006)• HK Industry:HK Industry: Textiles, clothing, electronics, Textiles, clothing, electronics,

plastics, plastics, toys, watches, clockstoys, watches, clocks• HK Manufacturers:HK Manufacturers: 15,004 (September 2006)15,004 (September 2006)

Page 11: Hong Kong 1

Hong Kong – A Dynamic Hong Kong – A Dynamic EconomyEconomy• FDI Inbound:FDI Inbound: $520 billion (2005)$520 billion (2005)

• FDI Inbound PRC:FDI Inbound PRC: $163 billion (31% of 2005 total)$163 billion (31% of 2005 total)

• FDI Inbound U.S.:FDI Inbound U.S.: $26 billion (5% of 2005 total) $26 billion (5% of 2005 total)

• PRC Firms in HK:PRC Firms in HK: 717 (including 31 of top 100 PRC firms)717 (including 31 of top 100 PRC firms)

• US Firms in HK:US Firms in HK: 1,2801,280 (including 594 regional offices, (including 594 regional offices, 295 295 regional HQs and 391 local offices)regional HQs and 391 local offices)

• FDI Outbound:FDI Outbound: $468 billion (2005)$468 billion (2005)

• FDI Outbound PRC:FDI Outbound PRC: $189 billion (40.5% of 2005 total)$189 billion (40.5% of 2005 total)

• Venture Capital:Venture Capital: $27 billion$27 billion

• Investment Funds:Investment Funds: 1,998 (Mar 2006)1,998 (Mar 2006)

• Regional Offices:Regional Offices: 3,476, including 1,120 regional HQs 3,476, including 1,120 regional HQs and and

2,359 regional offices (2006)2,359 regional offices (2006)

• HK in PRD:HK in PRD: 83,000 factories employing 12 million 83,000 factories employing 12 million (70% (70% FDI in PRD) (cf. 15,004 manufacturers FDI in PRD) (cf. 15,004 manufacturers in HK)in HK)

Page 12: Hong Kong 1

Hong Kong – A Dynamic Hong Kong – A Dynamic EconomyEconomy• Total Exports:Total Exports: $315.5 billion (2006)$315.5 billion (2006)• HK Exports:HK Exports: Clothing, electronics, textiles, Clothing, electronics, textiles,

watches, watches, clocks, office machineryclocks, office machinery• Total Imports:Total Imports: $333.3 billion (2006)$333.3 billion (2006)• HK Imports:HK Imports:Consumer goods, raw materials, Consumer goods, raw materials,

semi-semi- manufactures, capital goods, manufactures, capital goods, foodstuffs, fuelsfoodstuffs, fuels

• Exchange Rate:Exchange Rate: $US1.00 = $HK7.77 (12-30-$US1.00 = $HK7.77 (12-30-2006) 2006) = currency peg= currency peg

• Strengths:Strengths: Free port, no exchange controls, free flow of Free port, no exchange controls, free flow of

information, strong legal system, sound banking information, strong legal system, sound banking system, efficient capital market, rigorously enforced system, efficient capital market, rigorously enforced anti-corruption regime, accumulated public and private anti-corruption regime, accumulated public and private wealth, virtually no public debt, low taxation, developed wealth, virtually no public debt, low taxation, developed infrastructure, educated workforceinfrastructure, educated workforce

Page 13: Hong Kong 1

Hong Kong – The Local MarketHong Kong – The Local Market• Hong Kong’s local market of 6.9 million people is Hong Kong’s local market of 6.9 million people is

augmented by 25.3 million tourists, including 13.6 augmented by 25.3 million tourists, including 13.6 million from mainland China. Total retail sales are million from mainland China. Total retail sales are $28.2 billion per year.$28.2 billion per year.

• Hong Kong’s local business market is augmented Hong Kong’s local business market is augmented by its large conglomerates, which include 11 of the by its large conglomerates, which include 11 of the top 50 transnational companies in emerging top 50 transnational companies in emerging markets. markets.

• These firms include: Hutchison Whampoa, Jardine These firms include: Hutchison Whampoa, Jardine Matheson Holdings, Li & Fung, First Pacific Matheson Holdings, Li & Fung, First Pacific Company, Citic Pacific, Orient Overseas Company, Citic Pacific, Orient Overseas International, Swire Pacific, Guangdong Investment, International, Swire Pacific, Guangdong Investment, Shangri-La Asia, Hong Kong & Shanghai Hotels, and Shangri-La Asia, Hong Kong & Shanghai Hotels, and China Light & Power Holdings. These 11 firms have China Light & Power Holdings. These 11 firms have combined sales of $24.2 billioncombined sales of $24.2 billion

Page 14: Hong Kong 1

Hong Kong – The Local MarketHong Kong – The Local Market• Hong Kong has 268,000 SME’s, e.g., the Hong Kong Hong Kong has 268,000 SME’s, e.g., the Hong Kong

General Chamber of Commerce’s membership of General Chamber of Commerce’s membership of 4,000 includes 60% or 2,400 SME’s.4,000 includes 60% or 2,400 SME’s.

• A foreign-owned firm that establishes itself in Hong A foreign-owned firm that establishes itself in Hong Kong is considered by the Hong Kong Government as Kong is considered by the Hong Kong Government as a Hong Kong firm.a Hong Kong firm.

• U.S. firms have 38% or 46 of Hong Kong’s 132 U.S. firms have 38% or 46 of Hong Kong’s 132 franchises (2007).franchises (2007).

• The U.S. Consulate General in Hong Kong issued over The U.S. Consulate General in Hong Kong issued over 7,000 student visas to Hong Kong residents in 2006. 7,000 student visas to Hong Kong residents in 2006. The Hong Kong Census & Statistics Department The Hong Kong Census & Statistics Department estimates that 70,000 Hong Kong students study estimates that 70,000 Hong Kong students study abroad and over 15,000 new Hong Kong students abroad and over 15,000 new Hong Kong students chose to study overseas in 2006.chose to study overseas in 2006.

Page 15: Hong Kong 1

Hong Kong – Major Projects ListHong Kong – Major Projects ListExpansion of HK International Airport at Chek Lap Kok: Expansion of HK International Airport at Chek Lap Kok:

$582 Mn$582 Mn

(upgrade passenger terminal – USD200 Million (upgrade passenger terminal – USD200 Million

airfield improvement USD388 million) airfield improvement USD388 million)

Stadium (45,000-seat) for Kai Tak Airport site:Stadium (45,000-seat) for Kai Tak Airport site: $647 Mn $647 Mn

Cruise Terminal (2-berth) for Kai Tak Airport site:Cruise Terminal (2-berth) for Kai Tak Airport site: $1 Bn $1 Bn

West Kowloon Cultural Hub:West Kowloon Cultural Hub: $5 Bn $5 Bn

Ocean Park Revamp Plan:Ocean Park Revamp Plan: $705 Mn $705 Mn

Harbor Area Treatment Scheme (HATS) Stage 2Harbor Area Treatment Scheme (HATS) Stage 2 $2.5 Bn$2.5 Bn

Waste Reduction Framework Plan (WRFP):Waste Reduction Framework Plan (WRFP): $1.4 Bn $1.4 Bn

Logistics Park (USD194 million govt infrastructure work):Logistics Park (USD194 million govt infrastructure work): $400 Mn$400 Mn

Hong Kong Government Headquarters:Hong Kong Government Headquarters: $513 Mn $513 Mn

Hong Kong – Macau - Zhuhai Bridge:Hong Kong – Macau - Zhuhai Bridge: $2.2 Bn $2.2 Bn

Page 16: Hong Kong 1

Macau – Major Projects ListMacau – Major Projects List

Venetian’s Cotai Strip Development:Venetian’s Cotai Strip Development: $12-15 $12-15 BnBn

> The Venetian Macau Resort Hotel:> The Venetian Macau Resort Hotel: $2.2 Bn$2.2 Bn

> 8 Hotel, Plus Massive Retail &> 8 Hotel, Plus Massive Retail & Casino Projects: Casino Projects: $9 Bn$9 Bn

City of Dreams Underwater Casino:City of Dreams Underwater Casino: $2.1 Bn$2.1 Bn

Galaxy Cotai Mega Resort: Galaxy Cotai Mega Resort: $375 Mn$375 Mn

East TV/Macau Studio City:East TV/Macau Studio City: $2 Bn$2 Bn

MGM Grand:MGM Grand: $1.1Bn$1.1Bn

Other Residential Projects:Other Residential Projects: $3 Bn$3 Bn

Page 17: Hong Kong 1

US Exports to Hong KongUS Exports to Hong Kong

0

2

4

6

8

10

12

14

16

18

2002 2003 2004 2005 2006

12.6 Bn13.5 Bn

15.8 Bn 16.3 Bn17.8 Bn$US Billion

Page 18: Hong Kong 1

U.S. Exports to Hong KongU.S. Exports to Hong Kong

• Electrical machinery and electronics partsElectrical machinery and electronics parts

• Machinery and parts for nuclear power plantsMachinery and parts for nuclear power plants

• Precious metals and stonesPrecious metals and stones

• Medical and photographic equipmentMedical and photographic equipment

• PlasticsPlastics

• LeatherLeather

• Meat and fruitMeat and fruit

• Toys and gamesToys and games

• Paper and wood itemsPaper and wood items

• Aircraft partsAircraft parts

Page 19: Hong Kong 1

U.S. Merchandise Exports to U.S. Merchandise Exports to MacauMacau(in millions of U.S. dollars)(in millions of U.S. dollars)Product 2003 2004 2005

Jan-Sep 2006

Nuclear Reactor Parts 8.333 18.208 24.055 38.578

Special Classification Provisions

10.439 14.630 20.932 25.791

Toys, Games & Sport Equipment

1.297 6.661 14.570 18.740

Electrical Machinery 12.573 12.314 14.337 18.952

Aircraft and Spacecraft 5.620 14.457 11.404 10.652

Other 16.304 19.266 16.218 30.272

TOTAL 54.566 85.536 101.516 142.985

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Hong Kong and Hong Kong and The Pearl River Delta (PRD)The Pearl River Delta (PRD)

• 46.5 million people - 2.1% of China’s population 46.5 million people - 2.1% of China’s population (2005)(2005)

• PRD is the “richest” region of ChinaPRD is the “richest” region of China• 9.9% of China’s GDP9.9% of China’s GDP• Per capita GDP in Shenzhen > US$5,127Per capita GDP in Shenzhen > US$5,127• 19.2% of foreign direct investment (FDI)19.2% of foreign direct investment (FDI)• 27.8% of China’s exports27.8% of China’s exports

• Hong Kong is the source for 70% of PRD’s FDIHong Kong is the source for 70% of PRD’s FDI• US companies’ growing presence -- P&G, Walmart US companies’ growing presence -- P&G, Walmart • Substantial and diverse business opportunitiesSubstantial and diverse business opportunities