Now that China has been admitted into the WTO, what lies ahead, and what should Hong Kong businesses be doing?

After 15 years of tough negotiations and seemingly constant dispute, the 142 World Trade Organisation (WTO) members' vote in Doha, Qatar, on November 11 to admit China to their ranks was greeted with excitement and anticipation, but also with a pinch of anxiety.

"The events of September 11 in the United States have adversely impacted the U.S. economy, and that of the global economic environment, including Hong Kong. But China's entry -- and Taiwan's accession -- into the WTO will undoubtedly serve as a catalyst that will help put Hong Kong's weakening economy back on track," he said. "China's entry will boost its exports, while Taiwan's accession will accelerate direct links across the strait. We expect that the local economy will benefit from this economic environment and help improve our economic outlook for the coming year."

"It will inevitably exert widespread and far reaching impact on China's economy and on the world economy in the new century," he said.

He also challenged the organisation to establish 'a fair, just and reasonable international economic new order' that would deliver more of globalisation's benefits to developing countries.

"Using my own example, I just received our first convenience store license from Beijing three months ago after two years. Due to government restructuring, I'm sure this process will be speeded up," he said.

The Three Links

Taiwan's entry to the WTO, under the name 'Separate Customs Territory of Taiwan, Kinmen and Matsu,' is not expected to dilute Hong Kong's role as the key gateway for Taiwanese businesses investing in the Mainland.

Previously, Taiwanese businessmen were forced to 'hide' their business activities in the Mainland due to the Taiwan government's restrictions on investment, which made it very difficult to get support from banks.

"Now the Taiwan government is saying Taiwan banks can do business with the Bank of China, and companies can even borrow money to do business in China," he said at the Chamber's November 15 roundtable luncheon on the establishment of the three links. "This will have a tremendous impact on investment in China."

"Hong Kong, in my eyes, is still very valuable, and I think it will still be the gateway to China for the Taiwanese," he said.

Regarding direct links across the Taiwan Strait, Mr Wang said that despite many people heralding the move as a major saving for businesses, the estimated cost-savings will hardly make a dint in companies' expenses.

"So Hong Kong will still be the preferred gateway into the Mainland for the Taiwanese," he said.

Free Trade Agreement

"A regional trade agreement between the Mainland and Hong Kong would provide a head start for Hong Kong business before full implementation of China's WTO accession commitments according to agreed-to timetables kick in. That would be permissible under WTO rules and would be in accordance with the one country, two systems' principle," Chamber Director Dr Eden Woon said.

A speech in October by the Beijing Mayor, which was misreported by the Hong Kong media as 'granting special preferential treatment to Hong Kong companies,' raised the hopes among Hong Kong businesses that they would get a head start. But the mayor's quotes were misinterpreted and Central Government officials have reiterated several times that Hong Kong companies should not ask for special treatment because this would be against WTO rules.

The China Gold rush

"There is gold over there. There is no question about that. It is a huge country. The largest emerging market that has ever been seen. And if we, sitting in Hong Kong, don't put ourselves out to get a bit of it, then we have been very silly," he told the audience at the Chamber's November 5 WTO Workshop on Professional Services.

"You need to engage local people to become your partners in every sense, psychologically, emotionally and financially. With local knowledge and local guanxi, you can add your international knowledge and capability that you have developed here in Hong Kong," he said.

"If you have not yet taken that first step, I would encourage you to do so now," he said.

Chamber WTO study

To help businesses prepare for China's WTO entry, HKGCC released its report, 'China's Entry into the WTO and the Impact on Hong Kong Business,' in January last year. In the report, HKGCC pointed out that the Hong Kong business community will need to cope with challenges expected to arise from the new business environment, yet for ambitious entrepreneurs, China's entry into the WTO would definitely create many new business opportunities.

"In the one-and-a-half years following the release of the report -- which we periodically update -- Hong Kong enterprises have been taking measures to prepare for the challenges and opportunities ahead," Dr Woon said. "In September we began a series of nine industry specific workshops which updated members on current developments within their sector. We are also planning to conduct follow-up workshops which will look at China-Hong Kong WTO issues in greater detail."

The Chamber also launched recently a 'China WTO Corner' on its Web site (www.chamber.org.hk) to provide members with the latest information, business opportunities and activities regarding China's entry into the WTO. Moreover, its 8th Annual Hong Kong Business Summit on December 13 entitled, 'Hong Kong 2002: The First Year of China WTO,' will present an on-the-ground assessment of the WTO question.

"With such resources, we are confident that the local business sector can be kept up to date on issues affecting their businesses and be in a position to adapt to the on-going economic changes to create unprecedented business opportunities," Dr Woon said.