The number of Hong Kong and Macao residents setting up small businesses on their own in Guangdong Province has been increasing by an average of 138 cases a month since the Closer Economic Partnership Agreement (CEPA) came into effect.

According to figures released by Guangdong Industry and Commerce Administration (GICA) to Xinhua News Agency, 726 individuals from Hong Kong and Macao have registered their businesses in the province in the first six months this year, committing a total of 22.7 million yuan (US$2.74).

Almost 93 per cent of new individual ventures are set up in six cities - Guangzhou, Shenzhen, Zhuhai, Dongguan, Zhongshan and Foshan.

Although the minimum capital to start a small business by Hong Kong and Macao people is 34,000 yuan (US$4,111) - about 1.5 times the amount required for mainlanders - the report notes that small investors from the SARs have been showing increasing interest in the mainland market since restrictions were eased under CEPA.

"Since the implementation of CEPA, Hong Kong and Macao residents have been coming to Guangdong enthusiastically to apply to set up small ventures of their own. They have actively attended various seminars and forums to obtain related information and to get a better understanding of the concerned policies," Xinhua said.

"Investment sentiments have been on the rise," it noted.

Le Chaopei, deputy general-director of GICA, told China Daily almost all the businesses were retail trade occupying a space less than 300 square metres.

"Hong Kong City in Beijing Road, Guangzhou, is a concentration point of these small businesses," Le said.

According to officials, almost 90 per cent - or 649 in number - of the small ventures set up in Guangdong from January to June are operated by Hong Kong residents, a trend that Anthony Yeh, a professor at University of Hong Kong, says is bound to continue.

Yeh, chair-professor of the Centre of Urban Planning and Environmental Management of the university, told China Daily it was natural for Hong Kong residents to make a trial in the mainland as the start-up capital was relatively small.

"While the start-up capital is considered relatively small in Hong Kong, the amount is a substantial sum when taken on the mainland," Yeh said.

"With the same amount, it would be more difficult to make a breakthrough here in Hong Kong where the market is highly competitive."

He said the increased purchasing power seen in the Pearl River Delta region has created more demand for services and products of different styles.

He said living standards in the delta region were now comparable to Hong Kong's in the 1980s. "At that time, so many of us in Hong Kong would like to travel, to buy vehicles and so on. Isn't this being repeated in the delta region?" Yeh said.

"In the past, individuals in Hong Kong seldom thought of opening small ventures on the mainland. But so many changes have taken place on the mainland that this is going to be a different story now," he said.

He anticipated that more people - especially those who have moved to Hong Kong from the mainland - would set forth for the mainland, spurred partly by unemployment and partly by the narrowing gap in living standards between the delta and the SAR.

Although the unemployment rate has been dropping lately, about 200,000 people were still jobless, he noted.

Earlier, figures released by the Planning Department of Hong Kong show the trend of Hong Kong people residing on the mainland has picked up significantly over the past two years.

In 2001 when the first estimate was made, about 41,300 Hong Kong people lived on the mainland and in 2003, the number was up 50 per cent to 61,800 of whom 77 per cent resided in Guangdong. The figure is expected to continue to increase in the next 10 years.

(HK Edition 08/03/2004 page2)