New regulations in the Mainland cities of the Greater Bay Area are opening the region further to local businesses, but also creating questions about what role Hong Kong will play in the future. At a Chamber webinar on 13 November, a panel of experts discussed the recent survey from the Hong Kong Trade Development Council and PwC on “Hong Kong’s position as the international business hub for the GBA” and the environment for businesses.
Nicholas Kwan, Director of Research at the Hong Kong Trade Development Council, said that while there is a great deal of official information available about the GBA, many potential investors want to hear from businesses already on the ground.
“People are very much interested in knowing the views of the practitioners who are already operating in the area,” Kwan explained. “Do these businesses see their operation in the GBA as it is outlined in the official plans?”
The evolution of policy development for the GBA in different levels of government can be difficult for Hong Kong businesses to keep track of, but Kwan noted that they do not need to wait for the ideal regulatory environment before entering the market.
“If you look at the history of the GBA, or the Pearl River Delta, much of the integration and changes were first driven by the private sector,” he said. The increasing government support is helpful, but the private sector can also drive development, and do it efficiently.
Albert Wong, Partner of Public Sector Consulting, PwC Hong Kong, said the survey had looked at a number of hypotheses about Hong Kong’s position as a business hub for the GBA including cross-border infrastructure and regulatory framework.
In terms of Hong Kong’s key strengths, the responses included connectivity, professional services, range of financial services, tax system and consistently high standards. He added that softer aspects were equally important in Hong Kong’s status as a business hub, such as quality of life and the general business environment.
“To maintain Hong Kong’s position as an ethnically and culturally diverse city is very important, and very attractive to overseas companies.”
For areas that could be improved, survey respondents mentioned Hong Kong’s skewed talent pool, which is weighted towards financial, legal and professional services. Other issues facing companies include the diminishing role of intermediaries in trading, reluctance to adopt new technologies, and for multinational companies, the high cost of operating in Hong Kong.
The survey respondents also considered Mainland China’s evolution into a more market-oriented economy.
“This is an interesting one, as it is seen as both an opportunity and threat,” Wong said. Hong Kong businesses can help Mainland companies in this transition. But, as the Mainland catches up in areas like professional services and business environment, this could challenge Hong Kong’s competitive advantage.
But overall, the respondents were positive about the GBA initiative. “Almost all respondents said that Hong Kong needs to have closer integration with other GBA cities, in terms of business relations,” Wong said.
One Hong Kong company that has benefited from the GBA initiative is UMP Healthcare Holdings, which has clients including big corporates and insurance companies. Executive Director Felix Lee outlined the company’s development.
“We are a primary healthcare group that has expanded into specialist and ancillary services, and this will be relevant as we talk about the Greater Bay Area opportunities.”
While Hong Kong has world-class healthcare, the Mainland is some way behind, so UHP has developed a network of healthcare professionals trained to a Hong Kong standard.
Lee added that Mainland government is committed to not only the growth of the healthcare sector, but also the insurance industry – just two days earlier the Chinese authorities had published new guidance for the insurance sector in the GBA.
The GBA initiative has been a huge boost for UMP, Lee explained. “We have been in Mainland China for 20 years, but our business has increased tenfold in the past two years due to the Greater Bay Area initiative,” he said. “We are just at the beginning. We are cautiously optimistic that we can continue to grow.”
However, Lee sounded a note of caution that businesses should not expect an easy ride in the region, and should research their market extremely well before they make the move.
“If you think Hong Kong is a competitive market, I actually think the Greater Bay Area is probably the most competitive market,” he said. “Businesses and consumers are extremely demanding and empowered by technology to make choices very quickly on their mobile phones.”