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Thursday, 25 May, 2000, 12:22 GMT 13:22 UK
Hong Kong hopes for trade boost
Hong Kong is the gateway to China
Hong Kong is the gateway to China
By BBC Hong Kong correspondent Damian Grammaticas

Hong Kong is a city of hard-headed businessmen used to the realities of dealing with China.

It's been celebrating the vote for normal trade relations with the United States - but also warning that it won't all be smooth going.


Hong Kong's factories might face more of a threat
Hong Kong's factories might face more of a threat
For Hong Kong, with its understanding of both China and the outside world, there will be many new business opportunities.

Chinese firms will look to Hong Kong for expertise in areas they are weak in, like accounting, management and public relations.

And both Western and Chinese companies are likely to take advantage of Hong Kong's transport links, its financial services and communications.

The decision by the US House of Representatives to approve permanent normal trading relations augurs very well for business relationships with China according to Frank Martin, the President of the American Chamber of Commerce in Hong Kong.

"The reduction in tariffs is going to benefit US and international exporters, as well as manufacturers who must import raw materials to China, he says, adding that if the vote had gone the other way the consequences could have been disastrous.

The biggest changes Frank Martin believes will be "the improvement in the regulatory environment and in transparency, improvements in the distribution system, and the fact China will be subject to a rules-based trading system."

Lobbying hard

Hong Kong's businesses, government and politicians had all lobbied hard on Capitol Hill. The Chief Executive Tung Chee-hwa visited Washington in April to remind Congress that all Asia wanted the bill to pass.


Tung Che Hwa pleaded for a trade deal
Tung Chee-Hwa pleaded for a trade deal
And opposition leader Martin Lee, the chairman of Hong Kong's Democratic Party, believes his lobbying helped sway at least 20 wavering voters. He feels that as business opens up, so Chinese society will also be forced to change.

Other Chinese dissidents, based in the US, had lobbied against the trade bill, arguing that it was essential to keep up the pressure on China to curb human rights abuses.

Changes will be slow

But already businessmen in Hong Kong are warning that the passage of the trade bill won't lead to overnight changes.

"China is a difficult place to do business," says Eden Woon, director of the Hong Kong General Chamber of Commerce, "many many obstacles remain, the opening up is only going to be incremental."

"We caution people that in trying to win this vote the proponents may have oversold the openness of the Chinese markets, and how easy it is to make profits in China," he added.

Both foreign and Chinese companies will have to adapt to the realities of doing business with each other, and they will have to overcome considerable language and cultural differences in the process.

For China the changes mean difficulties in the short-term for state-owned enterprises that will now have to face up to competition from foreign companies. It's likely there will be considerable unemployment as industries have to become more efficient.

In the longer-term, though, the opening-up of China is a threat to Hong Kong's dominance as a business centre. When direct trade with China becomes easier, the territory's position will become more precarious.

Whatever the future for business in China, the consensus is any changes will take years, maybe even a decade or two to come to fruition.

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See also:

25 May 00 | Business
China hails trade deal
25 May 00 | Business
Why the US trade vote matters
22 May 00 | Asia-Pacific
Case tests Hong Kong autonomy
19 May 00 | Business
Analysis: China's WTO hopes
18 May 00 | Business
Business lobbies hard on China
15 Nov 99 | The Economy
US business eyes Chinese market
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