San Diego Seminar Presents the Hong Kong Plus Model (March 2004)

Attendees of the HK business seminar held at the San Diego Marriott La Jolla on March 25th picked up a morning's worth of expert advice and real life examples related to using HK as a platform to doing business in China. The seminar, organized by the HKTDC and the San Diego World Trade Center, featured a panel of experienced business leaders offering different perspectives.

Keynote speaker Mr. Anthony Wong of the HKTDC focused on the seminar's main theme of combining the strengths of HK and the Pearl River Delta (PRD) for optimal positioning in China. This Hong Kong Plus model allows companies to take advantage of the world class business services of HK by placing their headquarters there while decentralizing sourcing and manufacturing activities to the nearby PRD, which enjoys high industrial standards and is also a proven consumer market. This combination is unique, as HK-based firms already have "unparalleled knowledge" about essentials such as Chinese factories and subcontracting, paving the way to success. Mr. Wong also discussed the advantages of CEPA (Closer Economic Partnership Arrangement) and how American companies might be benefited from this free trade deal between Hong Kong and mainland China.

As panelist Mr. Dennis Owen, of Cathay Pacific, pointed out, China has grown in strategic importance and "HK is clearly the gateway leader to China." Other advantages HK possesses include protection of intellectual property rights, legal support, and a sophisticated financial sector. Mr. Christopher Leu of Daystar Capital Partners, Inc., pointed out that not all contracts signed in China can be readily enforced and collected on, but those signed in HK receive full protection under the law.

The panelists emphasized one important aspect of doing business in China: the need for localization to get the best deals. As Mr. Leu and Mr. John Kowalski, President of Pulse commented, businesses interested in tapping into China need partners who are there on the spot. Mr. Kowalski has used exactly the HK Plus model to great success. Twenty years ago, he set up a hub office in HK and a number of plants in China, which currently employ 18,500 people and efficiently cover 75% of Pulse' production of electrical components. Travel between HK and China is simple, and the direct labor in China offers great flexibility for products with short life cycles.

Choosing a good partner is an essential point. Ms. Caroline Cheung of Allied Intrade, Inc., recommended the HKTDC for its extensive business matching service (see www.tdctrade.com). Mr. Scott Kaiser, Vice President of Wells Fargo HSBC Trade Bank, concluded the panel discussion with an overview of financing.

Click here for Current issues or other Past issues of Hong Kong Focus Newsletter.