Northeast passage for HK to Russia

Hong Kong enterprises are shifting their sights from the south of China to Heilongjiang province in the northeast as revitalization of the traditional industrial center continues. Adding to opportunities is Russia's development strategies for its east Siberian region.

With a Sino-Russian border of more than 3,000-km long, the potential for trade and cooperation in science, technology and cultural exchanges is enormous. Heilongjiang's government said the province is well positioned for cooperation with Russia - which Hong Kong's interest seems to verify.

Companies from the island are enthusiastic about the northeast link, illustrated by their visits to the region led by Hong Kong SAR Chief Executive Donald Tsang.

Fred Lam, executive director of the Hong Kong Trade Development Council, said that the number of enterprises joining a recent junket quickly rose to 100 when they heard Tsang would visit northeast China with a delegation.

Fifty percent of participants were from manufacturing industries, while most of the other half came from the service industry, he noted.

Mainland investments by Hong Kong businessmen historically have gone to the Pearl River Delta and the Yangtze River Delta, with the most popular approach building factories for the processing trade.

With land, energy and labor costs rising in the south and east, the northeast offers advantages in a skilled workforce and technology, the executive director noted.

He said that Hong Kong and the three northeastern Chinese provinces of Liaoning, Jilin and Heilongjiang complement each other.

Most northeast industries are fully open to overseas investment and provide attractive opportunities for joint ventures between Heilongjiang and Hong Kong, the trade council executive director said.

As a worldwide procurement center, Hong Kong can help companies in the northeast enter global markets in automobile parts, hi-tech products, infrastructure construction, real estate, tourism, finance, modern service industries, medicine and foods.

The large population of the northeast region in turn provides a huge consumer market for Hong Kong enterprises. Clement Chen Cheng Jen, chairman of Federation of Hong Kong Industries, said that "Hong Kong businessmen in the Pearl River Delta attach great importance to the three northeastern provinces to take part in the transformation and upgrading of enterprises".

Chen said retail sales of consumer goods in the three provinces amounted to 710.8 billion yuan in 2006, 9 percent of the national total.

Toppy International Group was optimistic about the consumer market several years ago when it moved its production north.

The group owns five clothing brands and opened specialty chain stores in the mainland, including in Dalian, Shenyang, Harbin and Changchun.

Yin Yafen from the group said it will now open new stores in the provinces to explore further opportunities in joint venture distribution.

Chairman Wong See Sum from Hong Tai Travel Services Ltd said Hong Kong has deep experience in tourism promotion and internationalization of networks, so the region can help the northeast with overseas promotion and employee training.

Wong added that the three provincial governments are welcome in Hong Kong to introduce and promote tourism so more residents of the island understand the northeast region and its cultures.

Cathay Pacific Airways, owned by Swire Group, is planning more direct flights between Hong Kong and the three northeast provinces, said Chen Nan Lok Philip, director of the group.

Annies C Wu, vice chairperson of Beijing Air Catering Co Ltd, said Hong Kong companies can help Heilongjiang with technology and capital to maintain its position as a leading supplier of agricultural products.

"Heilongjiang is famous for its rich resources, agriculture, livestock and foodstuffs," said Lo Foo Cheung, chairman of FC Packaging Holding Ltd, Hong Kong's largest metal container maker. "Many well-known international and domestic food and dairy companies have invested in factories there. Heilongjiang is the best choice for exploring the Russian market."

Nicknamed "China's king of cans", Lo has more than 20 factories in 14 provinces and cities on the Chinese mainland. He recently purchased the using right of about 20,000 sq m land in the Harbin development zone for $10 million.

Lo said that trade between Heilongjiang and Russia continues to increase, providing "unlimited" business opportunities to Hong Kong enterprises. If Hong Kong's enterprises seize the opportunity to develop in northeast China, they will discover more than they expected in the Russian market, Lo noted.

Chen from the Hong Kong Federation of Industries said that Russia has great demand for textiles and clothing, already the leading goods exported to Russia, accounting for 30 percent of the total. He said the Heilongjiang government should take advantage of the province's long border with Russia to expand trade.

At the same time, Russian consumers attach great importance to brands. Using their experience in building fashion brands, Hong Kong companies can help Heilongjiang and other northeast provinces build brands and open up a new market in Russia, Chen said.

(China Daily 08/04/2008 page8)