2004-01-20 10:43:52
Shopping centres to open CEPA counters
  Author: JIANG JINGJING,China Business Weekly staff

Sun Wei, a high school teacher in Beijing, recently went window shopping for a wedding ring.

But she decided to hold off buying it until the city establishes exclusive sales counters in shopping centres for goods that enter the Chinese mainland under the Closer Economic Partnership Arrangement (CEPA).

Under the agreement, 273 products manufactured in Hong Kong can now enter the mainland duty free. CEPA took effect on January 1.

"I like Chow Tai Fook brand rings ... I can save up to 1,500 yuan (US$181) without tariffs. It is worth waiting for another month or two," Sun said.

She is not alone. Many Beijingers are eager to buy products from Hong Kong now that they are less expensive.

And they won't have to wait much longer. Four shopping malls in Chaoyang District, Beijing's commercial centre, will soon set up CEPA counters.

The stores are SCITECH Plaza, Blue Island Plaza, Full Link Plaza Shopping Arcade and Zhongfu Telecom, said Fang Aiming, an official with Chaoyang Business Bureau.

The bureau, Fang said, is acting as an administrative service provider to help local shopping centres take advantage of business opportunities arising from CEPA.

Those efforts might also make it easier for Hong Kong's producers to penetrate the Chinese mainland's market.

Enterprises, rather than the government, are playing major roles in the business, Fang said.

There are no policy obstacles or limitations hindering the establishment of CEPA counters in Beijing, Fang told China Business Weekly.

"After the products arrive in Beijing, they can enter the market immediately," he said.

Li Xiaoqun, a Chaoyang District government official, said the most popular products will be garments, cosmetics, food, jewellery, clocks and watches and some electronics goods.

Fang said the shopping centres are considering offering preferential treatment - such as lower rent or prime retail space - to people who establish CEPA counters.

SCITECH has already sent a delegation to Hong Kong to discuss its purchasing list with the region's trade department officials.

"We are targetting the high-end customers, so we are more strict about the products sold in our store," said Bao Jian, SCITECH's public relations manager.

The shopping centre will begin establishing its CEPA counters after the delegation returns to Beijing. The first counter will be open within two months.

"It takes time to determine the booking list, buy from Hong Kong and price the products," Bao said.

Officials with Blue Island Plaza said CEPA counters cannot be established overnight.

"It is the first time there has been such a business, so the store must be cautious," said an official with the shopping centre.

But he sees a bright future.

"Our target customers are middle-income people, who are price-conscious. They cannot afford to buy luxurious international brands. Hong Kong products are good options for them."

Hong Kong manufacturers are also pleased.

"It is a cost-effective way for Hong Kong's manufacturers to explore the Chinese Mainland's market," said Kevin Lau, president of the Hong Kong Watch Manufacturers Association.

A wider range of Hong Kong products will begin showing up in large quantities in shopping centres and department stores, he said.

To encourage more local retailers to buy from Hong Kong, the Beijing Commerce Bureau established a specific office to provide related information and promote bilateral co-operation for local commercial retailers and Hong Kong manufacturers.

The Beijing Logistics Association will work with Hong Kong institutes to hold promotional fairs twice a year to help Hong Kong businesses participate in the construction of the capital's logistics parks.

These facilities have been designated as key projects in Beijing's 10th Five-Year Development Plan (2001-05), and by organizers of the 2008 Olympic Games.

Meanwhile, officials of the Beijing Commerce Bureau and the Hong Kong Trade Development Council will meet twice a year to discuss key economic and trade issues affecting Beijing and Hong Kong.

The central government is creating an economic bridge linking the Chinese mainland's retailers with Hong Kong's manufacturers.

Shopping centres in Shenzhen, Shanghai and Guangzhou are also exploring ways of boosting CEPA-related business.

(Business Weekly 01/20/2004 page9)

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