HK to acquire 30% stake in Xiaoshan
By Sammy Chan (China Daily)
Updated: 2005-01-16 09:01

The Hong Kong Airport Authority will acquire more than a 30 per cent stake in Xiaoshan International Airport in Hangzhou, East China's Zhejiang Province.

Details of the deal will be formalized next Monday, Zhong Shan, vice-governor of Zhejiang, said yesterday at an investment promotion fair in Hong Kong.

The deal will be the first of its kind to allow overseas direct investment into the mainland's air freight and logistics business, according to industry sources.

The Airport Authority will probably invest 2-2.5 billion yuan (US$242-302 million) in Xiaoshan airport's second phase expansion project, while 500 million yuan (US$60.5 million) will be invested in the logistic park.

The Airport Authority has been in talks with Xiaoshan airport, located about 180 kilometres southwest of Shanghai, for several months on forming a partnership in technology, capital and management exchanges and direct investment.

"The agreement reflects Hong Kong's confidence in our booming aviation development. We are optimistic for more economic co-operation between Hong Kong and Zhejiang to come," Zhong said.

He added that the bid was operated under a fair and open tendor process. Hong Kong won the deal because of its advantages in management, aviation network and scale over other competitors.

Four foreign rivals from Copenhagen, Huston of the US, Singapore and British Airport Authority joined the bid.

Xiaoshan Airport was completed in 2000 and handled 6.4 million passengers and 160,000 tons of cargo last year.

Being the tenth largest cargo airport on the mainland, Xiaoshan is expected to handle 14 million passengers and 600,000 tons of cargo throughput in 2010 with further expansion.

Apart from the airport co-operation, the Zhejiang Week also presents a total of 153 investment projects to lure US$5.734 billion for contractual and direct investment in its tertiary sectors such as logistics, finance, trading, travel and transportation.

"It is the first time for us to offer such a wide scope of service investment co-operation opportunities in Hong Kong," Zhong said. "We believe Zhejiang and Hong Kong can work closely in these areas."

According to market sources, Orient Overseas (International) Limited will sign an agreement on Ningbo Cargo Terminal project worth US$625 million; while Hutchison Whampoa will participate in Ningbo Beilun's 414 metres long port project worth US$150 million.

On the finance co-operation, Zhong revealed three Hong Kong banks: HSBC, the Bank of East Asia and Standard Chartered Bank have already opened branches in Ningbo and Hangzhou.

He added that around 20 Hongkongers had obtained individual commercial licences since January 1 this year to run retail businesses under the Closer Economic Partnership Arrangement (CEPA).

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