June 12, 2013

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Chief Executive CY Leung

Our message to the US business community today is simple. The best route for your companies to reach the vibrant Chinese and Asian markets is not a straight line on a map, but the route through Hong Kong.
 
When you think of the huge China market, or the potential of emerging economies across Asia, when you think of the opportunities for your companies to do business in our part of the world, then think of Hong Kong.
 
Connecting the US and Asia
Allow me to highlight some of the reasons why Hong Kong is a great connector linking the US and Asia. Some of these are unique to Hong Kong, while others will be very familiar to the business community here in New York. After all, Hong Kong and New York play similar roles in international business and finance.
 
Both of our cities are major international business centres; both serve huge hinterlands; both are leading global financial centres; and, both owe their prosperity and dynamism to enterprising, hardworking and outward looking populations. Anyone who has visited Hong Kong and New York will also know that neither city spends much time sleeping!
 
Of course, I am not the first person to draw parallels between our two cities and I am sure I won't be the last. But I am here at a time of extraordinary opportunities for us all.
 
A market for US exports
Consider this. Hong Kong, a city of just seven million people, is the 10th largest market for US goods exports. The value of these US goods exports have tripled over the past decade to US$37.5 billion last year. There are over 1,300 US companies in Hong Kong, and about half of them are regional headquarters.
 
These companies know that a presence in Hong Kong is a ticket to the Chinese and Asian markets. They know that if their products or services sell well in Hong Kong, they will also sell well throughout China, a market with 1.3 billion potential customers.
 
In other words, our city is a very effective showcase for American goods and services targeting consumers in Asia – a Madison Avenue of the East!
 
Last year we welcomed over 30 million visitors from the Mainland of China alone. Many came in search of foreign brands or the latest high-tech or high fashion trends from the US and elsewhere.
 
Comprehensive business support
Also, if you look a little deeper into the Hong Kong "shop window", you will find a comprehensive network of services to support business operations, including financial services, legal services, logistics and IT services, hospitality services and so on.
 
Since its earliest days as a trading port and throughout its extraordinary development, Hong Kong has always reached out to markets way beyond its boundary lines.
 
Hong Kong has contributed to and benefited from the opening up and reform policies of the Central People's Government since 1978.
 
During this extraordinary period, we have built up the right experience, the contacts and the know-how in doing business in the Mainland of China. Through our day-to-day business operations, we share this experience with our friends in New York and elsewhere. When you think of Hong Kong, think of us as the "Chief Information Officer" or "Chief Knowledge Officer" for the Mainland of China.
 
A platform for information trading
When companies in New York, or London, or Tokyo or Southeast Asia want to know more about China, they turn to Hong Kong for the best and most reliable information. And because Hong Kong is a globally connected city, you don't have to spend valuable time and money crossing the Pacific Ocean to get the best information or make the right contacts, you can do all that right here in New York.
 
The HKTDC has had an office here in New York for almost 50 years. We also have a Hong Kong Economic and Trade Office in New York. And, importantly, we have the support of various business associations on both sides of the Pacific that have a mission to promote business links.
 
One such organisation is the American Chamber of Commerce in Hong Kong. AmCham Hong Kong is one of the largest US business chambers anywhere with around 2,000 members. It does a wonderful job in promoting the business-friendly environment in Hong Kong and in promoting US business interest to the Chinese Government.
 
A gateway to and from China
I would also like to share with you some words of wisdom from the US Consul-General to Hong Kong, Mr Stephen Young, who is here today. Speaking at a Hong Kong AmCham event last month, Mr Young said, "Just as no nation stands to gain as much from the continued growth and dynamism of Asia's economies as the United States, so too is Hong Kong ideally situated to profit from China's meteoric rise, whether it is from the continued development of the offshore RMB market, from Hong Kong's role as a pre-eminent gateway to and from the Mainland, or from the growth of China's middle class. And American companies like yours are well positioned to profit from Hong Kong's role."
 
Allow me to expand on Hong Kong's role as a pre-eminent gateway to and from the Mainland.
 
Since becoming Hong Kong's Chief Executive last July, I have made it a priority of my Government to pull out all the stops in building closer business ties between Hong Kong and the Mainland of China. We are working on multiple levels to enhance government-to-government (G2G), people-to-people (P2P) and business-to-business (B2B) links across the boundary.
 
In terms of B2B connections, we have a unique free trade pact called the Mainland and Hong Kong Closer Economic Partnership Arrangement, or CEPA.
 
Foreign firms also enjoy CEPA benefits
CEPA benefits both Hong Kong and the Mainland by eliminating import tariffs and providing preferential access to markets in 48 services sectors. A key aspect of CEPA is that foreign firms incorporated in Hong Kong, including US companies, can enjoy the full benefits of CEPA.
 
Since CEPA was launched in 2003, about US$6.4 billion worth of goods have enjoyed zero tariff treatment under CEPA, saving companies a total of over US$550 million in tariffs.
 
My Government is working with our counterparts in the Mainland on ways to improve the implementation of CEPA to bring more advantages to our business community.
 
The advantages that we offer US companies have attracted also Asian companies to Hong Kong. For over one hundred years, Hong Kong is the entrepot for the well known "South-North" trade between China and Southeast Asian economies, drawing on the strong presence of overseas Chinese businesses in countries such as Thailand, Indonesia, the Philippines, Malaysia and Singapore.
 
Familiar platform for US businesses
Ladies and gentlemen, I have mentioned some of the things that give Hong Kong its unique competitive edge as a springboard to the large and complex markets in the Mainland of China and Asia.
 
Hong Kong is "different", no doubt about it! But we also provide a very familiar platform for US businesses.
 
Under the formula of "One Country, Two Systems", Hong Kong maintains its own common law system with an independent judiciary. We have our own low and simple tax system, separate to the system in the rest of China. In Hong Kong, profits tax is capped at 16.5 per cent and salaries tax at 15 per cent. There is no GST or VAT, no inheritance tax and no capital gains tax.
 
As an international financial centre, we have our own currency. The Hong Kong dollar is freely convertible and has been linked to the US dollar at a fixed rate since 1983. We maintain a robust regulatory regime on par with international standards. Our civil service is clean and efficient and we have open borders, free flows of ideas and a free media.
 
These are some of the reasons that the Heritage Foundation in Washington DC has ranked Hong Kong as the world's freest economy for each of the past 19 years. We have also been consistently ranked number one for economic freedom by the Fraser Institute of Canada.
 
As a leading financial hub in the Asian time zone, Hong Kong is third behind London and New York in the latest Global Financial Centres Index.
 
China’s global financial centre
My final point today is Hong Kong's role as China's global financial centre, and what it means to the business community here in the US.
 
The liberalisation of the Chinese currency, the Renminbi, is a key trend in the international business community and one that is likely to become increasingly significant for all of us. Hong Kong has a crucial role to play as a launch pad for China's currency liberalisation.
 
In the short span of nine years, Renminbi deposits in Hong Kong have grown from zero to over 800 billion Renminbi. There is a growing range of Renminbi-denominated investment products and a large appetite from overseas companies to use Hong Kong as a Renminbi capital-raising centre.
 
In 2007, we issued the first Renminbi bonds in Hong Kong. So far, there have been about 265 Renminbi bond issuances with cumulative outstanding deposits of over 270 billion Renminbi.
 
Major companies, including leading US multinationals, have issued Renminbi bonds in Hong Kong to finance their operations in China.
 
Today, companies around the world, including here in the US, can settle their trade with partners in every province of China using Renminbi. Since the pilot scheme was launched in 2009, banks in Hong Kong have handled about 5,750 billion Renminbi worth of trade settlement.
 
Ladies and gentlemen, I encourage you to take full advantage of Hong Kong's position as China's global financial centre and an international business hub in Asia. We are at your service and we are always open for business.
 
I have mentioned some of the things that make Hong Kong a super-connector in linking US firms to markets in the Mainland of China and across Asia.
 
I hope that you will further explore these and many other exciting developments during this "Think Asia, Think Hong Kong" Symposium.
 
I look forward to seeing you, your companies and your brands in Hong Kong very soon.
 
Chief Executive CY Leung delivered this speech at the "Think Asia, Think Hong Kong" Symposium in New York.