Economics & Finance
• 4 minute read
Hong Kong’s Position in Qianhai: A Win-Win Game
Hong Kong SMEs should collaborate with Qianhai to gain access to the mainland market and establish a bigger role in the Belt and Road Initiative, Regina Ip urges
By Fang Ying, Senior Writer, China Business Knowledge @ CUHK
Hong Kong should strengthen the collaboration with Qianhai, which not only helps Hong Kong enterprises, particularly the small and medium sized enterprises (SMEs), to enter into the mainland China market, but can also facilitate the mainland enterprises to go out to overseas markets, achieving a win-win outcome, according to Regina Ip, co-chair of the Maritime Silk Road Society.
“Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (Qianhai) is the first of its kind. It is the ‘special economic zone’ within the Shenzhen Special Economic Zone, which is very innovative in terms of policy, technology and financial service,” Ip said in her speech at a conference co-organized by Qianhai International Liaison Services Limited and Hong Kong General Chamber of Commerce in August, 2017.
“Hong Kong would benefit a lot from the collaboration, particularly in terms of innovation and technology, and other modern service industries.”
With an attendance of over 200 professionals, the conference focused on China’s Belt and Road Initiative and the opportunities in Qianhai for professionals.
Explaining the background of Qianhai, Ip said that Qianhai aims to promote greater openness, experiment with further market reform, and promote the development of higher value-added professional services in Shenzhen, Hong Kong and the wider region.
Launched in August 2010, the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone is a pilot area for innovative cooperation between Guangdong and Hong Kong in terms of modern industries, such as financial services, logistics, technology and start-ups.
According to Wang Yanxia, deputy director general of Shenzhen Qianhai Authority, Qianhai has become the most innovative and open national development zone in China, adopting lots of pilot policies that are more special than many special economic zones in terms of finance, tax, human resources and education. There are four pillar industries in Qianhai, namely, finance, modern logistics, information services and technology innovation.
Ip noted that many large Hong Kong corporations, such as HSBC, MTR Corporation and Chow Tai Fook, have already established operations there, but some SMEs may still find it difficult to set up their branches in Qianhai owing to tight qualification requirements.
Ip believes Qianhai has its potential and resources to facilitate Hong Kong’s enterprises, particularly for SMEs to enter into a greater market in China. To achieve that, “Qianhai and Hong Kong would need to work closely together to overcome the hurdle of market access and achieve greater synergies,” she urged.
Some Hong Kong SMEs have expressed concerns that they cannot meet the necessary capital requirements to establish offices in Qianhai. In light of that, Witman Hung, chief liaison officer for Hong Kong for the Shenzhen Qianhai Authority, clarified by saying the capital requirement has been lowered.
“Some SMEs may not know about this change, but actually they can set up an office in Qianhai with a lower amount of capital now,” Hung said.
Hung said the Qianhai authority would work with the Hong Kong government on how to further reduce barriers for Hong Kong SMEs to develop their businesses in Qianhai.
“Qianhai and Hong Kong are important strategic points of China’s One Belt One Road Initiative, and Hong Kong professionals should seize the opportunity and offer their expertise for mainland companies to enter the global market.” – Witman Hung, Hong Kong Liaison Office, Shenzhen Qianhai Authority
According to China Daily, the number of Hong Kong-funded enterprises had reached 4,494 by the end of April 2017, with a registered capital of 388.9 billion yuan. Hong Kong companies only accounted for 4 percent of registered enterprises in Qianhai but contributed 22 percent of the total added value generated in the zone and 27 percent of tax revenue in the first quarter of 2017.
Hung said that both Qianhai and Hong Kong are important strategic points of China’s One Belt One Road Initiative, and Hong Kong professionals should seize the opportunity to set up footholds in Qianhai and offer their expertise for mainland companies to enter the global market.
“Utilizing the geographical advantage of its close proximity with Hong Kong, Qianhai plays an important role in strengthening the partnership between Hong Kong and Shenzhen,” said Hung. “In particular, through Qianhai, Hong Kong and Shenzhen can cooperate to serve as a center of fundraising and professional services for the One Belt One Road Initiative.”
“Hong Kong and Qianhai can complement each other, as Qianhai enjoys favorable and innovative policies while Hong Kong has expertise and experience. Leveraging these strengths and working together, Qianhai and Hong Kong will be able to play a bigger role in the region together,” Wang remarked.