Others News
- Breeze for HK-based business turns to chill
Date: 7-Feb-2007 Sources: (Xinhua Online)
Investing on the mainland was once a breeze for Hong Kong manufacturers who enjoyed a privileged position in a market thirsty for capital.
But increased costs, competition and regulatory changes have seen that breeze turn cold, and the mainland's largest group of overseas investors now find themselves in a far less benign climate.
'This is a hard time for Hong Kong manufacturers, although it is only a natural adjustment,' said Dennis Yip, vice-president of the Chinese Manufacturers' Association of Hong Kong (CMA).
Hong Kong manufacturers should either upgrade their products or move to the hinterlands, where business costs are more affordable, Yip said.
CMA, one of the oldest and largest industrial associations in Hong Kong, has received a growing number of complaints from its members in recent years.
Yip, who has been in garment material manufacturing for decades, suggested two solutions for his Hong Kong peers.
'Take handbag making for example -- there is huge room for factories to add value to their products,' he said. 'Instead of making basic bags they can design more attractive bags or make exclusive brand-name purses, which would generate higher profits to their businesses.'
'If a product upgrade is not a feasible option, another alternative is to lower cost by moving to locations where business costs are more affordable,' Yip said.
Hong Kong investors are facing increasing difficulties on the mainland following the withdrawal of favorable policies by the central government, and they have voiced their concerns through various intermediaries.
'We used to enjoy very favorable tax rates, but not any more. I hope the central government could think twice before they launch the new policy,' legislator Wong Ting-kwong said at a press briefing.
But some observers say challenges Hong Kong enterprises are facing could help them to improve their competitiveness and better adjust themselves to the fast-changing mainland economy.
'The new policies will ultimately only help them. They should worry more about how to improve their competitiveness to better compete with their rivals on the mainland,' said associate professor Liu Ming from Department of Finance of the Chinese University of Hong Kong.
Manufacturers that have expanded their efforts to make higher standard products, or shifted away from the investor-packed Pearl River Delta, still enjoy prosperous business, he noted.
One such company is working glove and mask maker Billabong Enterprises, which says it has invested in research and development (R&D) to make more technologically advanced products.
'We have launched a series of filters, including water filters. Our R&D team is working hard to further extend our product range. There are tons of business opportunities as long as you have open arms for innovation,' said the company's Managing Director C.B. Chiu.
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