With Hong Kong's services industry accounting for 83 percent of the city's GDP in 2002, and their counterparts in the Mainland less than 30 percent, Hong Kong service providers understandably have high hopes of expanding in the world's fastest growing market.

Now that CEPA promises to give easier access to local companies in 17 service industries, starting January 1, 2004, Hong Kong firms will be in a position that foreign competitors can only dream about, says HKGCC's Senior Director for Business Policy Dr W K Chan.

He also reckons that the actual number of service industries which will benefit from the free trade agreement will exceed the 17 listed sectors.

"Services listed as 'construction and real estate,' for example, are hugely complicated and diverse industries," he says. "So what this means is that a large number of service industries in the Mainland are being opened up under CEPA to Hong Kong companies."

The arrangement provides four main concessions to service providers. The first, early liberalization, allows Hong Kong firms to take advantage of China's WTO commitments starting from January 1, 2004. Secondly, lower thresholds will particularly benefit smaller companies. In some cases, the reduction is substantial. Banks, for example, now need assets of US$6 billion, down from US$20 billion in China's WTO agreement. Third is mutual recognition of qualifications and relaxation of regulations on Hong Kong service suppliers. And fourthly, CEPA offers liberalization beyond China's current WTO commitments.

"I must say that the quality of these concessions is actually very high," says Dr Chan.

The knock-on effect of Hong Kong's service economy should result in more businesses indirectly benefiting from CEPA. As this business trickles down the chain, the multiplier effect is expected to benefit Hong Kong's economy as a whole, he added.

The agreement will also reinforce Hong Kong's regional hub role and attractiveness to foreign firms who might consider CEPA as a way to get a foothold in the Mainland market, especially for areas left out of its WTO agreement.

However, analysts speaking at the Chamber's series of workshops on CEPA in July, pointed out that just because companies are able to enter the China market early, this does not automatically mean it will be plain sailing. Companies will still need to get all their documents, certificates and licenses chopped. They will still have to deal with red tape and they will still need to build up their "guanxi" to get things moving.

Certain service sectors will derive more benefits than others under CEPA, but most analysts agree that even if businesses do not go into the Mainland directly, the increase in business activity should stimulate economic activity here as a whole.

At the Chamber's CEPA Workshop on Professional Services on July 11, Stephen Liu, Chairman, International Committee, Hong Kong Institute of Surveyors, said CEPA will allow qualifying surveyors to set up wholly-owned foreign enterprises in the Mainland, as opposed to a joint venture or rep-office in the past. However, companies will still need to acquire local qualifications before they can do business there.

With CEPA being a work-in-progress, Mr Liu said it is still not clear whether Mainland surveyors will qualify to operate in Hong Kong. With the Mainland having hundreds of thousands of valuers, compared to just a few thousands in Hong Kong, there is a danger that the market could become flooded with Mainland surveyors.

Mainland lawyers may also qualify to work in Hong Kong, but Anthony Chow, Council Member, The Law Society of Hong Kong, said in principle it sounds simple, but in reality, a lot of rules will have to be drawn up before anything can actually be done.

On the whole, however, he is optimistic about CEPA, because the arrangement has delivered to Hong Kong law firms what the WTO left out.

Individual lawyers are now able to sit for the national legal examination to qualify as a lawyer on the Mainland. Once they pass, they can work in a Mainland law firm handling Hong Kong-related services.

"So a Chinese Mainland law firm can instantly have someone on their team to deliver Hong Kong legal service," Mr Chow said.

That said, other hurdles still need to be crossed before lawyers are allowed to work in China. Although they may have passed the national examination, they will still need to get their certificate to practice law. Another point is that only lawyers of Chinese nationality can engage in law on the Mainland. Foreign lawyers could in theory give up their citizenship and become Chinese nationals, but their Mandarin must also be up to par.

"To tie into that, these lawyers cannot practice court work," he said. "We don't know the reason for that, but as we are not there to compete against local lawyers -- 70 percent of who do court work -- but to do mainly corporate work, this should not be too much of a problem."

Paul Chan, Vice President, Hong Kong Society of Accountants, said that for accountants, CEPA does not offer much exciting news or any direct benefits, but there could be substantial indirect benefits.

"Under CEPA, more Hong Kong people can go to China to set up businesses, and more multinational companies might invest here," he said. "So from that sense, the level of activity will increase."

Like Mr Chow, he expects companies setting up in China will need to be of a larger size to be able to specialize and apply resources to grow their market.

He also pointed out that when Hong Kong manufacturers first went to set up factories in the PRD 15-20 years ago, they too faced certain restrictions, but they worked with the regulations and set up joint ventures to get into the market.

Likewise, accountants could consider strategic alliances with Mainland firms to set up a network of firms in China, and conduct cross referrals, etc.

"I think along those lines, our local professionals need to increase their creativity and marketing abilities," he said.

Charles Y Bien, Managing Director, GML Consulting Limited, said he sees CEPA as a major step, but because the details have yet to be worked out, it is still unclear exactly what areas consultants will be able to explore. He sees huge potential in the training, management recruitment and education consultancy services in the Mainland, but as these sectors are heavily controlled in China, he doubts if they will be included as the finer details of the CEPA document are worked out.