Cover Story
Finding a Role on the New Silk Road
Finding a Role on the New Silk Road <br/>探尋在新絲綢之路的角色

Finding a Role on the New Silk Road <br/>探尋在新絲綢之路的角色

Finding a Role on the New Silk Road <br/>探尋在新絲綢之路的角色

More than 2,000 years ago, traders first traversed what would become known as the Silk Road – a network of land and sea routes that enabled the exchange of goods, ideas and culture between China and Europe, Asia, Africa and the Middle East

The Central Government’s Belt and Road Initiative, launched in 2013, aims to build a new Silk Road by improving connectivity along these routes and beyond, and, ultimately, to create greater economic opportunities and prosperity for all. Today, more than 150 countries and organizations have signed up to the BRI.

“We hope that Hong Kong can play an important and growing role as the Belt and Road develops,” said Chamber Chairman Aron Harilela. “It is a huge and ambitious initiative, and accessing the opportunities may take some effort. But we should not be put off. Hong Kong has long been a connector between countries and cultures, and we can leverage this experience as the BRI develops.” 

Some of the flagship BRI projects to date are major infrastructure developments, such as the Gwadar port in Pakistan and train lines from China to Thailand and Laos. One criticism of the BRI has been that opportunities seem to be limited to the Mainland’s SOEs.

Another criticism, as Andrew Wells, Convenor of the Chamber’s Belt & Road Working Group, pointed out, is that it is just a branding exercise. For example, a hotel project in Vietnam that was going ahead already now falls under the BRI umbrella. However, these criticisms have receded.

“I think the position has changed very substantially in this regard,” Wells said. “Those two ideas – or misperceptions – are not quite so prevalent.” This is partly because awareness of the BRI has increased as the initiative has grown in size and scope.

“Another thing is that we have a deeper understanding of the role of the AIIB, which, under the leadership of Jin Liqun has become an effective and respected institution,” he added. 

Although the Asia Infrastructure Investment Bank (AIIB) is not directly connected to the BRI, this multilateral institution, proposed by China in 2013, has some overlap in its aims to fund infrastructure projects. 


Professional services

So where are the opportunities for Hong Kong businesses? Wells pointed to the legal sector, and to arbitration in particular. “That’s an obvious one, because with major projects you need a dispute resolution mechanism based in a common law jurisdiction like Hong Kong. And leveraging that is very good for our legal services industry.”

Speaking at the Belt and Road Summit on 12 September, Thomas ST So, Chairman of the Belt and Road Committee at The Law Society of Hong Kong, also said that Hong Kong can be an important centre for BRI arbitration. 

“If people have a problem too difficult they will go to their lawyers,” he said. “Opportunities always come with challenges.”

So added that Hong Kong professionals can also help investors manage legal risks, protect their intellectual property and raise finance. 

Petrina Tam, Chairman of the Chamber’s China Committee, has noted the evolution of the BRI. “In the early years of the Belt and Road, the initiative seemed to be dominated by SOEs,” she said. “However, this is no longer the case, and we are now seeing private investment playing a significant role, including from major companies like Tencent and Alibaba.”

BRI projects tend to be long-term investments, and are increasingly following the public-private partnership model, she added. This is providing opportunities for professional services, particularly companies that already have networks of offices and partners in BRI countries. 

“Professional services firms can provide clients with information about the regulations and culture of Belt and Road countries, and help with structuring work, due diligence, financial modelling and internal control work.”

There is increasing integration of local people in BRI projects, and professional services firms can also train local staff to manage the projects in the longer term, Tam added.


SME opportunities

While global corporations have the resources and networks to explore BRI markets, it is understandable that SMEs may feel “locked out” of the opportunities. But a number of speakers at the Belt and Road Summit showed that it is possible for SMEs to make a success of BRI investment. 

Pauline Ngan, Deputy Chairman and Managing Director, Mainland Headwear Holdings, shared her story. A traditional manufacturer of hats, the company decided to venture out of the Mainland due to the “new normal” conditions at home and the opportunities emerging under the BRI. 

Ngan gave a frank account of her experience in setting up in Bangladesh. On the positive side, costs are low and people have the skills for the textile sector. On the other hand, the company faced many challenges. “The infrastructure is really underdeveloped – so power, water and gas were all in short supply,” she said. “Bureaucracy is slow, all laws and regulations are written in the local language, and low standards of education means that communication is difficult.” 

However, from a small factory, the company now employs 6,500 people, and hopes to soon have 10,000. Recent external events have also confirmed that it was the right decision. 

“If we hadn’t taken that step, the trade war would have killed us off,” Ngan said. “The U.S. is 80% of our market. If we hadn’t gone global at the start of the Belt and Road Initiative, I wouldn’t be talking to you today.”

Lena Ng is Chief Investment Officer at AMATA Corporation, a Thai-based company that specializes in building industrial estates. She explained the benefits for SMEs of being based in such parks when they explore new BRI markets, including reliable power supply, help with permits and administrative matters, and tax incentives are often available. 

Speaking at the same session, Li Yadong, Assistant President, China Merchants Group, also spoke on the benefits of using industrial parks. “It is very often perceived that only the big enterprise will enjoy the opportunities, but I think there is more for SMEs.”

He said that China Merchants Group has four major overseas parks, including in Belarus, Laos and Djibouti, adding that the company acts like a “ship that carries SMEs on board.”

Even Ngan, who went in to Bangladesh “with a cart and a donkey,” agreed, saying: “Of course, you should go with an industrial park.” 


Evolving initiative

Another point worth noting is that the emergence of more opportunities for SMEs is a natural part of the process as more projects get the green light and as understanding of the BRI grows.

“This progression from the SOE perception to an SME-favourable perception is an inevitable one,” said Wells from HKGCC. “It is also because you do need to have the heavy infrastructure first. You need to have ports and roads before you can start to build hotels.”

Construction requires architecture and design expertise, for example, and, once projects are under way, the large numbers of workers will require everything from education and medical services to housing, retail and leisure.


Destination choice

Another challenge of the BRI is that there is a lot of choice in terms of location. Hong Kong’s closest neighbours, such as the ASEAN countries, may seem like the obvious place to start. Ng from AMATA recommended Laos, Myanmar, Cambodia and Thailand. 

“Why these four? They are emerging opportunities with regards to the supply of goods that are in demand and a huge growing population,” she said. “They are looking at huge infrastructure opportunities. If you are in infrastructure, food production or the innovation space, this market will be very interesting.”

Wells, however, noted that many Hong Kong companies will already have an ASEAN strategy in place, and suggested the Middle East, Central Asia, Africa, and possibly Eastern Europe and Russia. In Africa, for example, there is huge need for infrastructure and, once that infrastructure is in place, there will be many more related opportunities. 

He recommended that investors should actually go to the country concerned for the best insight of potential investment opportunities. The Chamber’s upcoming Mission to Ghana and Morocco, from 3-11 December, for example, will give participants the opportunity to find out what is happening on the ground in both of these dynamic and growing economies.

“We see the Chamber mission as a great way to meet officials and explore a potentially large market that it would be difficult to access otherwise,” Wells said.

Besides the mission, the Chamber has organized a series of meetings and roundtables, to help members learn more and make contacts with businesspeople in this region. 

Chamber CEO Shirley Yuen said that the more unfamiliar destinations on the Belt and Road may seem daunting, particularly to SMEs, but that the Chamber could be of assistance. 

“We hope that investors who are interested in exploring the BRI will tap in to the deep and diverse range of experience we have among our membership, as well as our role as a platform to meet officials and experts from around the globe,” she said. “The BRI continues to develop, and we believe Hong Kong businesses are in an excellent position to take advantage of these new opportunities as they emerge.”




Over the years, we have helped businesses overcome adversity and thrive locally, in Mainland China and internationally.

If you want to take advantage of our network,insights and services, contact us today.