Peter Woo Chairman Hong Kong Trade Development Council A Tale of Three Cities – The Hong Kong Plus PRD Powerhouse

The China Appeal  GDP will reach US$2,340 billion by 2010  19% of population classified as middle-class = 250 million people  Will increase to 25% by 2010  Spent US$2 billion on luxury items in 2004  Projected to consume 29% of the world’s luxury items by 2015  GDP will reach US$2,340 billion by 2010  19% of population classified as middle-class = 250 million people  Will increase to 25% by 2010  Spent US$2 billion on luxury items in 2004  Projected to consume 29% of the world’s luxury items by 2015

Diverse Markets  Beijing and Bohai Area  Shanghai and Yangtze River Delta  Greater Pearl River Delta  Beijing and Bohai Area  Shanghai and Yangtze River Delta  Greater Pearl River Delta BEIJING SHANGHAI HONG KONG

Greater Pearl River Delta Small region Massive impact Small region Massive impact

Greater Pearl River Delta Nine municipalities 0.4% of China's land mass Population of 45 million Concentration of manufacturing 34% of China’s exports Rich consumer markets 33% of China’s imports Nine municipalities 0.4% of China's land mass Population of 45 million Concentration of manufacturing 34% of China’s exports Rich consumer markets 33% of China’s imports

A Tale of Three Cities Hong Kong + Shenzhen + Dongguan = The HK plus PRD Powerhouse = The best entry point to China's markets Hong Kong + Shenzhen + Dongguan = The HK plus PRD Powerhouse = The best entry point to China's markets

Shenzhen  New "Silicon Valley“ for IT and R&D  50% of industrial output from high tech  20% of China's high tech exports  24,000 Hong Kong-backed ventures Shenzhen  New "Silicon Valley“ for IT and R&D  50% of industrial output from high tech  20% of China's high tech exports  24,000 Hong Kong-backed ventures A Tale of Three Cities

Dongguan  20,000 HK owned factories  Variety of manufacturing clusters  Competitive production, good quality  Steady source of efficient labour Dongguan  20,000 HK owned factories  Variety of manufacturing clusters  Competitive production, good quality  Steady source of efficient labour A Tale of Three Cities

PRD Powerhouse - Average real GDP growth PRD Powerhouse - Average real GDP growth A Tale of Three Cities Shanghai11.5% Shenzhen 15.8% Dongguang18.7% Shenzhen 15.8% Dongguang18.7%

PRD Powerhouse - GDP per capita 2004 (US$) PRD Powerhouse - GDP per capita 2004 (US$) A Tale of Three Cities Shanghai6,682 Shenzhen 7,160 Dongguang8,698 Shenzhen 7,160 Dongguang8,698

PRD Powerhouse - Export Strength (US$ billion 2004) PRD Powerhouse - Export Strength (US$ billion 2004) A Tale of Three Cities Shanghai73.5 Shenzhen 77.8 Dongguang35.2 Shenzhen 77.8 Dongguang35.2

PRD Powerhouse - High-tech Exports (% of China ’ s exports 2004) PRD Powerhouse - High-tech Exports (% of China ’ s exports 2004) A Tale of Three Cities Shanghai17.5 Guangdong Province 40.1 Shenzhen 21.2 Guangdong Province 40.1 Shenzhen 21.2

A Tale of Three Cities Population(Million)GDP (US$ billion) Exports TEUs(Million) Hong Kong Shenzhen Dongguan TOTAL

Hong Kong Advantages Unrivalled platform for China business International centre for:  Finance  Trade and business services  Transportation and logistics Ideal base for regional headquarters to manage operations (3,800 RHQs + ROs) Unrivalled platform for China business International centre for:  Finance  Trade and business services  Transportation and logistics Ideal base for regional headquarters to manage operations (3,800 RHQs + ROs)

Made in China - by Hong Kong Designed, financed, marketed, and distributed by Hong Kong Made in China - by Hong Kong Designed, financed, marketed, and distributed by Hong Kong Hong Kong Advantages

 At the heart of Asia  Three-hour flight to key mainland cities  HK airport connects with 150 world cities + 45 cities in mainland  At the heart of Asia  Three-hour flight to key mainland cities  HK airport connects with 150 world cities + 45 cities in mainland 1 hour 3 hours 5 hours Hong Kong Advantages Location, location, location

Hong Kong's China business advantage:  Knowledge of China and experience  Market access and connection  Risk management Hong Kong's China business advantage:  Knowledge of China and experience  Market access and connection  Risk management Hong Kong Advantages

Ease of doing business  World's freest economy  Strong legal system  Level playing field  Familiar business environment  Strong UK business community (115 UK Regional HQs) Ease of doing business  World's freest economy  Strong legal system  Level playing field  Familiar business environment  Strong UK business community (115 UK Regional HQs) Hong Kong Advantages

HK - Getting ever stronger Key developments:  Strong economic growth  RMB business  Improved infrastructure connection with mainland  More mainland tourists  CEPA III HK - Getting ever stronger Key developments:  Strong economic growth  RMB business  Improved infrastructure connection with mainland  More mainland tourists  CEPA III Hong Kong Advantages

CEPA - what is it?  Closer Economic Partnership Arrangement  Free trade agreement with mainland  Easier / faster access to China markets  Zero tariff on HK-made goods  Allows HK service providers to operate CEPA - what is it?  Closer Economic Partnership Arrangement  Free trade agreement with mainland  Easier / faster access to China markets  Zero tariff on HK-made goods  Allows HK service providers to operate CEPA

CEPA: impact on service sector First mover advantage  Covers 26 service areas  Lowering of entry requirements CEPA: impact on service sector First mover advantage  Covers 26 service areas  Lowering of entry requirements CEPA

How foreign firms can take advantage In goods  Manufacture in Hong Kong In services  Partner with HK companies  Invest in or buy a CEPA-qualified HK company How foreign firms can take advantage In goods  Manufacture in Hong Kong In services  Partner with HK companies  Invest in or buy a CEPA-qualified HK company CEPA

Encourages mainland enterprises to:  Connect with international markets  Manage and finance business deals  Raise capital - US$100 billion already Hong Kong is the natural platform ! Encourages mainland enterprises to:  Connect with international markets  Manage and finance business deals  Raise capital - US$100 billion already Hong Kong is the natural platform ! China's "going out" policy

The rise of mainland private enterprises:  4 million private enterprises  Majority are SMEs  Half of them want to "go out" The rise of mainland private enterprises:  4 million private enterprises  Majority are SMEs  Half of them want to "go out" China ’ s MPEs

China opportunity Don't miss it! Hong Kong plus the PRD is your entry point Don't miss it! Hong Kong plus the PRD is your entry point Hong Kong PRD

HK Trade Development Council How can we help you: 1) Providing information  By market and sector  Face-to-face  London + 11 China offices  Online - tdctrade.com How can we help you: 1) Providing information  By market and sector  Face-to-face  London + 11 China offices  Online - tdctrade.com

HK Trade Development Council How can we help you: 2) Matching business partners  Face-to-face - London office  Online – sourcing.tdctrade.com How can we help you: 2) Matching business partners  Face-to-face - London office  Online – sourcing.tdctrade.com

HK Trade Development Council How can we help you: 3) Connecting clients  Sourcing and selling at trade fairs  28 leading trade fairs in Hong Kong  Online – “virtual trade fairs” at tdctrade.com How can we help you: 3) Connecting clients  Sourcing and selling at trade fairs  28 leading trade fairs in Hong Kong  Online – “virtual trade fairs” at tdctrade.com

Contact us! London Office Tel 44-(20) Fax 44-(20) Contact us! London Office Tel 44-(20) Fax 44-(20)