SCED's speech at HKTDC business luncheon in Paris
Following is the speech entitled "Hong Kong – A Business Hub in Asia and a Premier Gateway to China" by the Secretary for Commerce and Economic Development, Mr Gregory So, at the Hong Kong Trade Development Council (HKTDC) business luncheon in Paris, France, on May 29 (Paris time):
Distinguished guests, ladies and gentlemen:
Bonjour! C'est un plaisir de vous rencontrer. (English translation: Hello! I am pleased to meet you.)
I am delighted to be back here in the spectacular city of Paris.
Not only is this a chance to practice my French, which I must confess is limited, it is also a chance to speak about the unlimited business opportunities in Hong Kong for French companies.
It is no secret that more and more French people and French companies are coming to Hong Kong. We welcome you all with open arms. According to the French Consulate, the number of expatriates from France has doubled since 2006 to around 16 000 making Hong Kong's French community the largest in Asia.
The big question is, why?
First, no doubt the prolonged economic downturn in Europe coupled with relatively bright economic prospects in Asia is one reason for French entrepreneurs looking East and to Hong Kong for their business expansion.
The second, and I believe more important reason, are the strong bilateral relations between Hong Kong and France that go back more than 150 years. During this long period, our communities have built up a great deal of mutual trust, understanding and respect for each other.
All these translate into attractive business opportunities today.
Third, Hong Kong is an ideal showcase for French firms to promote their high-quality goods and services across Asia, and especially in the Mainland of China.
Many of our shops are stocked with the latest fashion designs and fragrances and the biggest brands from France. Equally popular is the variety of French food and wine available across our city.
On its own, Hong Kong is a relatively small market of some seven million people. But when you consider that we received more than 48 million visitors last year, including almost 35 million from the Mainland of China, Hong Kong is a great platform for the "Made in France" label to reach a wide audience in our part of the world.
The fourth reason for Hong Kong's magnetic appeal to French businesses is the city's institutional strengths. Our city has undergone many substantial changes since Hong Kong and France first established consular relations back in 1862. The biggest single change in living memory has been Hong Kong's successful return to China in 1997 under the principle of "One Country, Two Systems".
Under "One Country, Two Systems", Hong Kong continues to be a free and open business hub and a very unique corner of China. We continue to maintain our own currency. The Hong Kong Dollar is fully convertible. We have no restrictions on the flow of capital. We also maintain our own tried and trusted common law system with an independent judiciary. And we have our own low and simple tax regime and a clean and efficient government.
As we prepare to celebrate the 16th anniversary of the establishment of the Hong Kong Special Administrative Region of China on July 1, it is business as usual for Hong Kong, and that also means "business as usual" for our French companies.
I say "business as usual" because Hong Kong continues to be rated as the world's freest economy. We have been ranked number one by the Heritage Foundation in the US (United States) and the Fraser Institute in Canada for each of the past 19 years – before, during and after our city's return to China.
We are also one of the most business-friendly cities in the world, rated as the second easiest place to do business by the 2013 World Bank's Doing Business Report.
A high level of economic freedom combined with low and simple taxes is a formula that continues to work for Hong Kong's small and open economy. It is also a formula that works for over 7 200 Mainland and overseas companies in Hong Kong, more than half (3 883) of which have their regional base in our city.
Low taxes include profits tax of no more than 16.5 per cent and salaries tax capped at 15 per cent. There is no capital gains tax, no inheritance tax and no VAT (value added tax) or GST (goods and services tax) in Hong Kong. And because we maintain a level playing field for business, international firms, including French firms, enjoy the same low tax rates as local companies.
We also have zero tariffs on wine imports too. It probably won't surprise anyone here that France has been our largest source of fine wine for many years. Since eliminating tariffs on wine in 2008, the value of our French wine imports has increased by about three times to €468 million last year. Again, low taxes – or in the case of wine, no taxes – combined with our open economy is a recipe for success.
French companies can also take advantage of our unique free trade pact with the Mainland, what we call the Closer Economic Partnership Arrangement, or CEPA. Under CEPA, products made in Hong Kong that comply with CEPA rules of origin criteria enjoy tariff-free entry to the Mainland.
CEPA also provides preferential access to Mainland markets for companies in 48 services sectors. These include key sectors such as financial services, legal, tourism, information technology and trade and logistics services, just to name a few.
Importantly for our friends here in France, CEPA is nationality neutral. In other words, overseas firms that are incorporated in Hong Kong, including French firms, can enjoy the same benefits of CEPA as local companies in reaching the China market.
This brings me to my fifth reason for Hong Kong's growing French connection – our city's role as a global financial centre.
Of the increasing number of French people and French firms in our city, a large portion of them are involved in financial services.
Hong Kong is a leading asset management centre with combined fund management business of over HK$9 trillion (€900 billion) at the end of 2011. Our stock market is the second largest in Asia and sixth largest in the world with market capitalisation of over US$2.8 trillion.
Leading fashion brands from France have successfully launched initial public offerings in Hong Kong in the past few years. We welcome more French businesses to take advantage of Hong Kong's potential as a capital-raising centre. Listing in Hong Kong is also a great way to gain more exposure for your brands in Mainland China and across our region.
Another exciting opportunity for us is Hong Kong's role as China's global financial centre. In particular, we are the primary testing ground and launch pad for the internationalisation of the Mainland currency, the Renminbi. The liberalisation of the Renminbi is probably the single most important financial development globally today. French firms can be part of the action by using Hong Kong as their offshore centre for Renminbi business. Hong Kong was the first place outside Mainland China to provide Renminbi banking services in 2004, the first place to issue offshore Renminbi bonds in 2007, and in 2009 we were the first place to conduct offshore Renminbi trade settlement. Today we have the largest pool of Renminbi capital outside the Mainland and we are keen to share our experience and opportunities for offshore Renminbi business with our partners here in France.
Ladies and gentlemen, I have mentioned five reasons why I believe Hong Kong is becoming an even more popular base for French businesses to reach markets in the Mainland of China and across Asia. No doubt, our luncheon hosts, the Hong Kong Trade Development Council will be happy to offer many more reasons for Hong Kong being an excellent business hub in Asia.
I began my remarks with a question, "why choose to come to Hong Kong?".
I hope that I have answered this question in terms of business opportunities and, after all, this is a business luncheon. However, we also know that when people and families choose to move to a different place, especially in a different part of the world, there is more to consider than the financial bottom line.
Hong Kong is well known as a safe and welcoming city for all the family. Similar to Paris, our city is famous for its shopping, extraordinary cuisine and lively nightlife. Education is perhaps the highest priority for every parent setting up home in a new place. In Hong Kong, the French International School is one of over 50 members in our international school sector. Other schools also offer a French stream for students and a world-class education. As well as being exposed to the Asian culture in Hong Kong, youngsters enjoy a full range of sports and arts activities, not to mention theme parks, country parks and beaches.
And because we are Asia's world city, you will also find Hong Kong to be a familiar home-away-from-home. As I speak the largest French arts festival in Asia is underway in Hong Kong, Le French May. Each year for more than two decades, Le French May has brought a taste of France to our city in everything from cinema, to dance, cabaret and much more.
The point is that Hong Kong is not just a great place for business, it is also a wonderful city to live, learn and enjoy a quality lifestyle.
As an international city, we welcome people from around the world. You certainly don't have to be a leading French brand or a start-up full of French flair and ambition to make it in Hong Kong. You don't have to be French, but judging from our growing French community, it probably helps!
Thank you and "A votre santé". (English translation: Cheers!)
Thursday, May 30, 2013