Hong Kong will continue to attract increasing number of Japanese companies using it as a regional business base after 1997, according to senior representatives of Japan's business community, meeting in Hong Kong today (Monday).
In a joint communique at the end of the 18th Plenary Session of the Hong Kong/Japan and Japan/Hong Kong Business Co-operation Committees, Japanese business leaders said they would continue to use Hong Kong as a gateway to China and a centre for sourcing and distributing across the region.
"With its free port, low tax, fair regulatory environment and strategic location in the region, Hong Kong would continue to play a pivotal role in Asia's economic development," they said in the communique.
Tabled and discussed at the meeting, attended by 20 members from the Japan committee and 18 Hong Kong committee members , were the results of a recent survey undertaken for the Hong Kong/Japan Business Co-operation Committee on Hong Kong as a regional sourcing and distribution base for Japanese companies.
In anticipating Hong Kong's role in the coming years, 76 per cent of respondents, all of whom are Japanese companies presently operating in Hong Kong, believed Hong Kong would be increasingly important as a gateway to China.
Some 90 per cent said they would increase their activities in China in coming years and 66.5 per cent said they would increase activities in Hong Kong. At the same time, 82.2 per cent and 65.5 per cent of respondents, indicated they would increase their purchase of products made in China and other Asian countries, respectively. More than 75 per cent said their purchase of Hong Kong-made products would remain unchanged or would slightly increase.
The survey noted a 53 per cent increase in the number of Japanese companies using Hong Kong as a regional headquarters over the past three years, from 273 in 1992, to 419 in 1995. There are over 2,000 Japanese companies operating in Hong Kong.
According to the joint communique, recent public statements by Chinese leaders, emphasizing their commitment to preserving Hong Kong's high degree of autonomy and economic dynamism, were helpful in reassuring Japanese businessmen about Hong Kong's future.
The two committees also felt that the territory's advantages as a business hub and a channel for investments in the mainland would become even more significant after 1997 as China's economy continued to develop in line with the Ninth Five-Year Plan.
Co-chairing the 18th Plenary Session of the Hong Kong/Japan and the Japan/Hong Kong committees were, respectively, Dr. Raymond Ch'ien, who is also group managing director of the Lam Soon Hong Kong group of companies, and Mr Tomiichi Akiyama, who is also president of the Sumitomo Corporation.
Messages of support for the work of the joint committees were received from the Governor, Mr Chris Patten, and Japan's new Foreign Minister, Mr Yukihiko Ikeda.
Mr Ikeda said in his message that the close relationship between Japan and Hong Kong has contributed to the prosperity of the Asia-Pacific region which is now heading for rapid economic development.
He said that with the return of sovereignty to China, the world is concerned over what would happen to Hong Kong after 1997. "Maintaining Hong Kong's stability and prosperity is not only important to Hong Kong and China, it is also important to the entire Asia-Pacific region. Japan wishes that the return of Hong Kong's sovereignty will be done in a smooth manner, (so that) Hong Kong's merits will be continuously maintained," Mr Ikeda added.
Today's discussions covered a wide range of issues of mutual interest, including Japan's economic recovery package, its future growth prospects and Hong Kong's economic adjustment. It was noted that Hong Kong's cost competitiveness had improved in the past years.
The committees discussed how Hong Kong companies could capitalize on Japan's growing demand on imports. Also examined were the practical implications of Japan's changing wholesale and retail environment on the export strategies of Hong Kong manufacturers and traders.
The committees welcomed the significant increase in Hong Kong's total exports to Japan in recent years. Japanese members attributed this to an improved image of Hong Kong products among Japanese importers and consumers, particularly in the areas of quality, design, innovation and attention to Japanese consumer needs.
This observation was reinforced by the results of the survey, tabled at the meeting. Ninety-three per cent of the 176 respondents, all of whom are Japanese companies based here, said Hong Kong products had improved in recent years, while 93.1 per cent said Hong Kong manufacturers and exporters had improved.
The most significantly improved areas for Hong Kong products were "appeal to Japanese consumers" and "compliance with Japanese requirements". Price also continued to be a strong point in favour of Hong Kong products, with 56.3 per cent or respondents rating price as "good" or "excellent"
To accelerate Hong Kong's deeper penetration of Japan's market, it was suggested by members of the Japan committee that Hong Kong companies now devote more resources to promoting the brand identity of their products and upgrading after-sales service.
Nearly 40 per cent of Japanese companies participating in the survey recommended that Hong Kong companies publish product catalogues in Japanese. A further one-third suggested that Hong Kong companies communicate more frequently with Japanese customers and observe Japanese tastes in product design.
Other promotional efforts suggested in the survey included the holding of presentations and seminars to introduce Hong Kong products in Japan, advertising campaigns in Japanese newspapers and the setting up of offices or the appointment of agents in Japan.
The most recommended channel for Hong Kong companies to distribute their products in Japan was the establishment of relations with buying offices of Japanese companies in Hong Kong.
A major conclusion of the survey was that Hong Kong companies could not always rely on price to compete. Local manufacturers would need to graduate from OEM manufacturing to produce products with original designs and brands.
Discussed at the plenary was the continuing interest in overseas investment of Japanese companies, especially small and medium sized firms. The committees considered how to maintain Hong Kong's attractions as a destination for Japanese investment, including investments in the further development of the territory's infrastructure, high technology manufacturing and the services sector.
Finally, members of both committees examined the broader impetus provided to economic growth across the region by November's APEC meeting in Osaka and discussed future expectations for the realisation of APEC's trade liberalising objectives.
It was agreed to convene the 19th Plenary Session in Japan at the end of 1996.
More than 50 senior executives from Japanese companies based in Hong Kong attended the meeting today as observers.
The Governor, Mr Chris Patten, hosted a luncheon for members of the two committees.
Tomorrow members of the Japan committee will visit Fuzhou for a two-day programme of briefings organised by the Hong Kong Trade Development Council, to gain a better understanding of the China economy and its business opportunities.
The TDC provides the secretariat for the Hong Kong/Japan committee. The Tokyo-based secretariat for the Japan/Hong Kong committee is provided by the Keidanren, Japan's federation of economic organisations.
The two comittees were established in 1979 to promote the further development of economic ties between Hong Kong and Japan and to discuss topical issues affecting business relationship. They meet alternate years in Hong Kong and Japan.
For press enquiries, please contact Ms. Sarah Monks or Mr. William Cheung of the HKTDC at (852) 25843333