The central government's policy encourages mainland and Hong Kong enterprises to jointly conduct overseas business expansion amid the uncertain global macroeconomic environment, a senior Ministry of Commerce (MOC) official said on Wednesday.

Speaking at the Second China Overseas Investment Summit in Hong Kong, assistant minister of commerce Li Rongcan said: "Mainland and Hong Kong enterprises should capitalize on the current global economic adjustment to grasp the new business opportunities in expanding into overseas markets."

He said mainland companies should particularly utilize Hong Kong's niches in the services industry to promote their internationalization strategies.

Hong Kong has a free flow of information that can be levered by mainland firms in constructing their platforms for overseas business expansion. The city's strength in the exhibitions industry can also be capitalized by mainland firms to showcase their products and services.

"We believe that when mainland and Hong Kong companies join hands in overseas expansion, their business competitiveness can be enhanced in the international market," Li said.

Hong Kong's Financial Secretary John Tsang Chun-wah, backed Li's views, saying mainland firms should "leverage on the city's strengths in international trade, corporate services and financial products to enhance their competitiveness in going global."

The central government, in its 12th Five Year Plan framework, said it is the country's economic strategy to encourage more mainland firms to expand overseas. In July, the State Council made recommendations on how to induce more mainland private enterprises to expand their operations abroad.

According to MOC data, overseas direct investment (ODI) in Hong Kong by mainland companies totaled $23.5 billion in the first half of 2012, representing 66 percent of the total ODI made by mainland firms. The ministry also said 1,086 mainland companies had approved the establishment of their operation bases in Hong Kong in 2011, bringing a total investment of $35 billion in the city.

In addition to Hong Kong's competitive edge in the services industry, its strength in helping mainland firms to raise capital should also be capitalized by mainland companies, Tsang told the forum.

In July, mainland companies accounted for 46 percent of all listed enterprises on the local bourse, representing 58 percent of the local share market's total capitalization. The share-trading transaction value contributed by mainland companies accounted for 72 percent of the total transaction value in the same period, according to Hong Kong Exchanges and Clearing Ltd.

As Hong Kong becomes the favorite place for mainland companies to go global, there is no doubt the city is also one of the most preferred destinations for overseas direct investment by foreign companies.

According to InvestHK, Hong Kong has been ranked as the No 4 destination in attracting overseas direct investment as the city attracted $83.1 billion in overseas direct investment last year.

Currently, 3,752 mainland and overseas companies have set up their regional headquarters and regional offices in the HKSAR.

oswald@chinadailyhk.com

(HK Edition 08/23/2012 page2)