Rosy outlook for export sector

Financial Secretary John Tsang

A vibrant and energetic business sector has always been the cornerstone of our economic success. The synergy and the close co-operation between government and business has always been the underlying foundation that fortifies the enterprising spirit that permeates our society. Our trade is more than four times our GDP. Last year, our export value reached $3.6 trillion. That was 1.8% down compared with the 2014 total, but these are tough times for exporters – we all know that. And still, last year I am proud to say, we maintained our standing as the world’s eighth-largest trading entity, and the world’s seventh-largest exporter in merchandise trade.

 

The global economy in the coming year will be affected by a number of uncertainties and you can name them, but, thankfully, we are still continuing on a modest growth path. The Hong Kong economy picked up by 1.9 % in real terms in the third quarter of 2016 over a year earlier, following a 1.7% growth in the preceding quarter. Domestic demand gathered further pace, while external demand also saw relative improvement. That should offer some support and perhaps relief to Asia’s trade as well as your exports.

 

Let me assure you that the Government will continue to provide support to the industry in the pursuit of sustainable growth. The Trade & Industry Department will continue to operate a variety of funding programmes to enhance the competitiveness of our SMEs, the heart and soul of our economy.

 

One programme that you should all be familiar with is the SME Export Marketing Fund. I am sure that many of you here today have taken good advantage of the Fund in expanding your businesses through export-promotion activities that were supported by the Fund.

 

Over the years, we have continued to fine-tune this Fund, relaxing conditions for the use of the grant and expanding the Fund’s scope to cover activities such as electronic and media promotion.

 

I announced also in my Budget this year the extension of the application period for the special concessionary measures under the SME Financing Guarantee Scheme for the fourth time, now to the end of February 2017. And the annual guarantee fee rate for the measures has been reduced by 10%. In addition, the minimum guarantee fee rate for the measures has been totally removed, in order to help companies obtain loans and reduce the cost of financing.

 

The Hong Kong Export Credit Insurance Corporation has been playing a key role in facilitating Hong Kong’s export trade as well.

 

It has put in place a wide variety of initiatives to support our exporters, especially SMEs. In 2013, the Corporation introduced the Small Business Policy, targeting exporting companies with an annual turnover of less than $50 million.

 

And in March this year, the corporation offered another boost to SMEs by waiving the full annual policy fee permanently, while offering a 20% premium discount for all Small Business Policies. The point here is clear: we simply want to enhance the competitiveness of our SMEs.

 

At the G2G level, we are working hard to strengthen ties with our trading partners in order to help our exporters explore and enter into new markets.

 

More than 50% of our exports are destined for the Mainland of China, and our largest trading partner continues to hold great potential for exporters. And we shall, rest assured, continue to strengthen co-operation with Mainland authorities at all levels to enhance the competitiveness of Hong Kong products in the Mainland market.

 

I visited Beijing just a few days ago and had meetings with a number of central authorities. The talks have been useful and very constructive. At my meeting with the Minister of Commerce, Mr Gao Hucheng, we agreed to further explore new facilitation measures under the framework of CEPA. And the work is in progress.

 

The ASEAN bloc, I want to mention, a market with more than 600 million people, is our second-largest trading partner. Last year, the total value of merchandise trade between Hong Kong and ASEAN exceeded US$106 billion. And that, ladies and gentlemen, is bigger than Hong Kong-US trade or Hong Kong-EU trade.

 

And we are confident that our trade will continue to expand, following a Free Trade Agreement that we are aiming to finalise with ASEAN in the near future. We are still sorting out a few details, but we are hopeful that we would be able to complete the negotiation in a timely manner.

 

The Hong Kong-ASEAN FTA will help stimulate further flow of goods, services and investment between Hong Kong and the ASEAN countries, and help expand the wide spectrum of opportunities for exporters of Hong Kong.

 

And opportunities ahead will not get any bigger than the Belt & Road Initiative, which will no doubt become the driving force of the global economy in this 21st century.

 

Structured along the framework of connectivity, the Belt & Road Initiative will, for certain, engender further demand and stimulate even stronger international trade and investment flow.

 

As China’s international financial and commercial centre, Hong Kong is perfectly positioned to become the hub for trade, for business and for investment of the Belt & Road region.

 

Now you can find political and economic information on the 60-plus markets along the Belt & Road on the websites of the TDC (Trade Development Council) as well as the ECIC (Export Credit Insurance Corporation). This useful information will certainly help you better understand the Belt-Road markets and the business opportunities that they promise.

 

In the past two years, I have led a number of business missions to major economies along the Belt & Road, including for example Poland, Germany, Hungary, Kazakhstan, the UAE as well as Iran, and many of our enterprises and professionals were able to see for themselves the massive business opportunities and potential that these emerging markets can offer.

 

So I am glad to say that these trips have all been very truly rewarding and fruitful. And from what I have seen and heard, I am also glad to say that the future of our export sector will continue to be promising as well.

 

Financial Secretary John Tsang gave these remarks at the Exporters’ Association annual Christmas luncheon on December 2.

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TDC stands by HK

Chief Executive CY Leung

In celebrating the 50th anniversary of TDC (Trade Development Council), we pay tribute to the Council’s seminal work in championing, and advancing, the entrepreneurial spirit that has long powered Hong Kong.

 

TDC made a big impact from the get-go 50 years ago. Its first office, at Ocean Terminal, was set up in April 1966, some six months before its official establishment. Straight away the Council was banging the drum – and plenty of gongs – on behalf of Hong Kong SMEs and their highly valued products.

 

Within two months, TDC was in Barcelona for its first overseas debut. At a major trade fair there, it captured the most business interest and activities that any exhibitor could hope for. It helped that just outside the fair, so I am told, a Hong Kong auxiliary policewoman, who just happened to be an TDC employee, directed operations from a Hong Kong traffic pagoda. Now that’s promotion you can’t miss.

 

That autumn, razzle-dazzle Hong Kong promotions were attracting big crowds in London, in Stuttgart, and in nine US cities. As part of Macy’s hugely popular Far East Festival, where some 200,000 people poured in a day, the Hong Kong promotion thrilled visitors with its 40-foot-long dragon boat, mini-fishing junks from Hong Kong, brass gongs, pagodas, traditional Chinese costumes and, of course, mountains of made-in-Hong Kong products.

 

That, as they say, was then – the heyday of Hong Kong-based manufacturing.

 

TDC has, since then, helped steer Hong Kong’s transformation from a low-cost production centre to a global financial, trading and logistics hub. In doing so, it has supported Hong Kong businesses to explore new markets, to tap new opportunities all over the world, including the Mainland of China.

 

In 1980, TDC led the first Hong Kong business mission to the Mainland – in Guangzhou. That, of course, helped open the way for Hong Kong companies to set up business in the Pearl River Delta, precipitating a boom in Hong Kong production there.

 

Together with China’s reform and opening up, the relocation of manufacturing industries to the Mainland also set in motion Hong Kong’s rapid rise as a services-based economy.

 

Along the way, TDC, working with the Government and Hong Kong SMEs, has overcome countless challenges, from the Asian financial crisis, to SARS and the financial tsunami eight years ago.

 

Today, TDC organises a wealth of product and service shows – here in Hong Kong and around the world. And it does so on a big, top scale, bolstering our position as a global hub for trade fairs and conventions. At the same time, the best of our city, from intellectual property to fashion to finance and everything else, are showcased.

 

And as we look to a future propelled by innovation, TDC is there, spotlighting our technology and creative industries, and offering a multitude of programmes designed to help our SMEs embrace the promise of technology.

 

TDC is there, as well, promoting Hong Kong as the commercial hub for the country’s Belt & Road Initiative. That inspired strategy, built upon infrastructure connectivity, will drive the global economy in the 21st century. Hong Kong businesses, with critical help from the Council, can play a game-changing role in the Belt & Road.

 

As much as TDC has achieved for Hong Kong over the past 50 years, I am confident it will continue to power ahead with the rest of Hong Kong in the next 50 years and more.

   

Chief Executive CY Leung gave these remarks at the Trade Development Council 50th anniversary cocktail reception on December 1.

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HK set to be IP hub

Chief Executive CY Leung

Innovation has always been an essential ingredient in the success of people, societies and economies – from the advent of the wheel, some 6,000 years ago, to the invention of the printing press in the 15th century and the steam engine in the early 18th century.

 

The difference today, of course, is the variable of technology – its limitless possibilities. The marriage of innovation and technology has set in motion unprecedented developments in every aspect of our lives, for example supply chain technologies that improve productivity and product quality, or online sales that transform the buying experience of consumers.

 

Competitiveness of the Hong Kong economy, and indeed economies around the world, depends on our capability in harnessing the potential of I&T.

 

That is why I&T is one of the policy priorities of the Hong Kong Government. Why, this year, we injected a massive US$2.3 billion into a variety of initiatives – to encourage start-ups, promote mid- and downstream research, and upgrade infrastructure of our Science Park and industrial estates. To ensure that Hong Kong remains an economic force in the 21st century.

 

In technology, an astonishing volume and value of IP subsist. Look no further than the smartphone in your pocket. Today’s mobiles – those less-than 200-gram gadgets that dominate our lives – pack a great variety of IP: industrial know-how, patents, copyright, design, trademarks, IC (integrated circuit) topography, among others.

 

A fast-growing I&T hub, together with a free economy, a strong IP protection regime, and a pool of research and professional talents – all these laid the foundation for Hong Kong to emerge as the regional centre of IP trading and commercialisation. We continue to fare well in the Global Innovation Index compiled by the World Intellectual Property Organisation, especially in infrastructure, institutions and market sophistication.

 

All that, and the world’s IP powerhouse at our doorstep. Yes, the Mainland of China has topped the world in the number of applications received regarding patents, trademarks and design in recent years. China also imported more than US$31 billion in technology from around the world in 2014.

 

The enormous global and regional demand for IP, and its continuing shift to the Mainland of China, offer huge opportunities for Hong Kong.

 

China’s 13th Five-Year Plan, announced this March, outlines the country’s policy on IP and the importance of innovation in that national plan. Innovation received unprecedented attention in this year’s G20 Summit in Hangzhou, China. As President Xi Jinping pointed out when addressing the G20 Summit, the world should work together “toward an innovative, invigorated, interconnected and inclusive world economy”.

 

For those who wish to tap into the thriving IP market in the Mainland of China and throughout Asia, Hong Kong can be your launching pad. Hong Kong is part of China and therefore offers the China advantage. But unlike Mainland cities, Hong Kong offers the additional advantage of practising “the other system”. With the combined advantages of “one country” and “two systems”, Hong Kong “super-connects” – we bring business from other countries and from the rest of China together. We do much the same with IP.

 

And Hong Kong’s IP professionals and intermediaries are at your service: IP agents, accountants, valuers, financiers, lawyers, arbitrators and mediators. They can help you with technology transfer, licensing, franchising, merchandising, copyright trading, dispute settlement, and many others.

 

And we continue to enhance our IP protection regime. That includes reforming the patent system. In June this year, our legislature passed a law providing for a new Original Grant patent system in Hong Kong. It allows applicants to apply for standard patents directly in Hong Kong, without first obtaining a patent from a designated office outside Hong Kong – a measure surely welcomed by inventors and businesses, especially SMEs. We expect to roll out the new system in 2019.

 

Chief Executive CY Leung gave these remarks at the Business of IP Asia Forum on December 1.

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HK designing a creative future

Chief Executive CY Leung

What exactly is design? I lean towards the school that says everything is designed – though not always as well as we might want. Understandably so. As American designer Paul Rand once said, “Design is so simple. That’s why it’s so complicated.”

 

That’s certainly a big reason why you are here at Business of Design Week. To see what works, and why. To experience good design. To learn from the world’s top designers and from each other. To be inspired by other people’s work, and words.

 

With over 70 high-profile speakers from all over the world here at BODW, and networking opportunities everywhere, the inspiration is sure to flow fast and free.

 

BODW promises that, in part, through its annual partner programme. Partnering each year with a different country, or city, BODW ensures a fresh perspective in sharing experience, encouraging collaboration, inspiring innovation, and creating value for all. This year, Chicago finds a welcome spotlight, as BODW’s Partner City.

 

I was in Chicago in June last year, for the Hong Kong Trade Development Council’s “Think Asia, Think Hong Kong” business event, one of the largest Hong Kong promotions ever in the United States.

 

Many know Chicago as a major financial and business centre. But Chicago is equally renowned for its bold architecture, a city blessed with landmark buildings, museums, innovative parks, public art, and the newest city stunner: the Chicago Riverwalk. I am told that the last stage of the Riverwalk just opened in October.

 

So partnering with Chicago makes perfect sense. Our two cities have a good deal in common. Hong Kong is a city of skyscrapers as well, and we, too, have a spectacular harbourfront. Like Chicago, we have moved on from a manufacturing economy to a services economy – finance, commerce, logistics, innovation, professional services and other high value-added activities.

 

Tale of two cities 

And our two cities are forging new partnerships. Last week, I met with President Zimmer of the University of Chicago, who was here for the naming ceremony of the University of Chicago Centre in Hong Kong. The Centre will house the Asian campus for the Executive MBA programme of the Booth School of Business. The Centre will, as well, bring together academics, students and researchers from Chicago, Hong Kong and the Mainland of China.

 

Earlier in June, the Massachusetts Institute of Technology set up an Innovation Node in Hong Kong, its first outside the US. In explaining why the MIT chose Hong Kong as its base, the MIT President said, and I quote, “By bringing MIT to Hong Kong and Hong Kong to MIT, the Innovation Node will deepen MIT’s activities in Hong Kong and, through Hong Kong, in the entire Pearl River Delta region.” The Faculty Director of the Innovation Node, Professor Charles Sodini, had this to say, and I quote, “Manufacturers in Shenzhen have mastered the ability to take a prototype device to unit quantities of hundreds overnight … This unparalleled speed of small quantity manufacturing is unique to Shenzhen.” By the way, Shenzhen is a city on the Mainland of China that is a 40 minutes’ drive from here.

 

These are examples of how we turn the “one country, two systems” arrangement to our advantage, and how we share the advantage with our international partners. We benefit in many ways from the Mainland’s far-reaching reforms and rapid economic development, while at the same time maintain close international connections. In short, we are a global super-connector, connecting you to the rest of China with a world of suppliers, markets, talents and creativity.

 

BODW is a working illustration of Hong Kong’s success in bringing together creative industries, and the professionals who bring them to bright life. Indeed, cultural and creative industries contribute about US$14 billion to our GDP, while employing more than 210,000 people.

 

We are determined to boost our creative industries and grow Hong Kong into a creative hub. It is only through innovative design, and technology, that we can ensure Hong Kong’s place in tomorrow’s global economy.

 

And we must embrace as broad a remit as possible. More than creating a product, design is also about innovative production processes, imaginative use of city space to improve quality of living, and integration of culture and recreation into everyday lives of the Hong Kong people.

 

In that, and more, there is much we can learn from Chicago, beginning this week at BODW. I am confident that “ChicagoMade” will inspire a Hong Kong-designed future.

 

Chief Executive CY Leung made these remarks at the Business of Design Week 2016 opening ceremony on December 1.

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