Thank you very much. I'd like to welcome everyone. I'm very much honoured by your presence here today and we are delighted with the turnout for this lunch.

The topic of my talk today is about Hong Kong as a platform for partnership, but before that I would like to explore with you the landscape that I see across the world and also three global themes.

The first global theme is globalisation. It's been talked about the last ten years - borderless trade, etcetera. And to many people, that means increased competition, and to many people, it means falling sales prices for the products that they sell, shorter product cycles and also over-capacity. This is because we find that customers now have more choices. Of course, globalisation also means new markets, bigger markets, etcetera. But we know that companies must seek new products, new markets and new customers to survive and also to prosper.

Now China is a new member of the WTO. It is the seventh-largest trading nation. China's trade is predicted by many to double in five years after this entry. And everybody knows that China is one of the most prolific competitive manufacturing regions in the world, as well as a consumer market of huge potential. The focus is on 460 million urban consumers, out of a total population of 1.3 billion. So it is therefore no longer disputed that Asian companies with capability and scalability will want to explore ways to engage China.

But let me just go into the area of the Pearl River Delta and Hong Kong, which I believe is where the action is. It is the fastest-growing region in China today, it has the largest GDP in China today and also it is the most prosperous region in China today in terms of GDP per capita. It produces 34 per cent of China's exports and consumes 36 per cent of its imports. The Pearl River Delta has about 30 million people and a size which is equivalent to Canada and bigger than Australia. And Hong Kong, as the main metropolitan hub, handles 80 per cent of these imports and exports. Hong Kong is a value-creation centre; it is not a cost centre. This I will talk about in more detail later.

Hong Kong and the Pearl River Delta have enterprising people, networking opportunities, industrial clusters and also industrial diversity. These are characteristics of what I call regional economic growth engines. And these engines have a business culture that is characterised by change, improvement, innovation, with brains and attitude, diligent, hardworking and eager to solve problems.

The second global theme that I see is that, in the future, world trade is going to be conducted and linked region-to-region, city-to-city -- not so much country-to-country. Let me explain. In Europe there are four growth engines: Milan in the Lombardy area; Stuttgart in the Baden-Wuerttemberg area; Lyons in the Rhone-Alpes area and, of course, Barcelona in the Catalonia area. Now, each of these areas has a population that is around ten to fifteen percent of the total country, but they do 30 to 40 per cent of the country's trade. Their growth rates are higher, their unemployment rates are lower, and I believe that these growth engines are what's driving their various economies. And I believe Hong Kong and the Pearl River Delta is another one of these engines and it is relevant, and it is right, that we form linkages between these growth areas.

Now back to the WTO and China. Throughout my trips this year, I have visited about 50 cities in about 50 weeks, talking to a lot of business people and many companies are very excited about China entering the WTO because of the market opportunities. But in the same breath, they're terrified of the risks and obstacles, because they know that over the last 20 years many have tried, but have failed. But the question now that many people talk about is not whether to engage China or not, the issue is how. What they need is a safe and reliable platform from which they can launch and branch out into the mainland, and perhaps a local partner who can lead them through the maze. And I believe Hong Kong can offer both.

First of all, as a platform for trade and services, Hong Kong is a superb machine. Hong Kong's core business is actually trade. As a separate member of the WTO, Hong Kong welcomes China's WTO membership positively because 50 per cent of Hong Kong's GDP is trade-related and 40 per cent of our employment is trade-related. 100,000 out of 300,000 SMEs, or small and medium-sized enterprises, are engaged in trade. With an unrivalled position - a location that's just adjacent to the Pearl River Delta - Hong Kong is the premier trade and services platform. But it owes its success to what I call five different pillars.

The first two pillars are what I call marketing pillars; that is the ability to sell. First, the ability to sell to the world. Hong Kong currently is ranked number one in the world in terms of trade, doing about US$420 billion annually. Hong Kong is number one in the world in terms of nine types of consumer products, second or third in a further seven. We jumped from being ranked number 23 in 1979 in just over 20 years to number nine. Hong Kong's a place where you add value, you create value. Whilst in 1979 we were basically contract manufacturers, today, 36 per cent of Hong Kong companies own their own brands and 60 per cent are doing original-design manufacturing. And we believe that, now China has entered the WTO, in fact, more obstacles were removed, so there is more predictable access to overseas markets for Hong Kong entrepreneurs, because by entering into the WTO, a lot of restrictions were removed from China's entry to the world marketplace.

As far as our ability to sell is concerned, we have mentioned this convention and exhibition centre, this thing that you see here, this structure. We attract about 100,000 buyers a year from all over the world. That's our physical market place that Hong Kong manages. We also manage a cyber-marketplace, which is called tdc trade.com. This is a trade portal and today we register 2.1 million hits a day.

Second is selling to China. I believe that Hong Kong has a first-mover advantage in the mainland. China's share of Hong Kong's business in terms of exports has risen from 6 per cent to 35 per cent in 20 years. And 50 per cent of China's foreign direct investment goes through Hong Kong. This trade explosion that we believe is happening will of course need substantial services support. Hong Kong's economy is 85 per cent services; China's is 33 per cent. Therefore, we believe that Hong Kong's trade services will be actively helping to fill this gap. As I said, Hong Kong has years of China experience, because Hong Kong companies not only know what to do in China, but they also know what not to do in China. Although they have had fewer failures than successes, as private companies - as most of them are - when it hurts their own pockets, they don't forget the lessons they learn. And we notice that many overseas companies, especially medium-sized and smaller-sized companies, have extremely low appetite for risk. They are acutely aware that their lack of knowledge of China could spell disaster. By partnering with Hong Kong companies, they can address this issue effectively, because Hong Kong companies are effective and also excellent China risk-managers.

Now, so much for the two marketing pillars that I have described. In addition, Hong Kong has three structural pillars to mitigate international risk. Hong Kong aims to stay ahead by always raising ever-higher hurdles for itself and for its competitors in three key areas: logistics, institutions and the tax regime. First of all, logistics: fast, reliable logistics for just-in-time manufacturing and shorter product cycles. Hong Kong's free port excels at this and, as you know, Hong Kong is a completely autonomous and separate customs territory from China, because we're a separate WTO member. And this makes us distinctively different from the other Chinese cities.

Let me give you some numbers. As far as import and export declarations are concerned, they're cleared in thirty minutes. One fully-loaded container lorry is cleared into Hong Kong every minute. Letters of credit are cleared within 24 hours, as our banks open on Saturdays to clear these papers. 35 containers are sent off to sea every single minute and 18 million go off every year. Hong Kong is the world's busiest container port. And as far as international cargo is concerned, in terms of air cargo, four tonnes of air cargo goes off by air every single minute and cargo jumbos are, of course, unloaded within one hour. As you know, New York telephone calls to Hong Kong cost three times more than Hong Kong to New York. So reliability is guaranteed, because what our merchants and our enterprises promise, Hong Kong must deliver. And it works.

Second, our tax system. I believe - and we all believe here - I believe the ultimate incentive for business is that if you work hard and you work smart, you should be able to keep the profit that you make. Our low, flat taxes, of course, are well-known - 16.5 percent profits tax for corporate and also personal taxes. But we have no sales tax, no capital gains tax, no dividends tax, no tax on overseas income, no estate-duty tax on non Hong Kong assets. So it is a haven for small, family- owned businesses. It is a haven for enterprise.

Thirdly, institutions. Over four years after the handover, Hong Kong's freedoms and our way of life remain unchanged under "one country, two systems". We live it, we breathe it and our visitors can feel it when they come to Hong Kong. We have a small, hands-off government; the British common-law heritage, including world-class enforcement of intellectual property rights; free and instant information; a transparent and effective financial system run on an international basis and, of course, a fully-convertible currency. In summary, all this spells reliability, predictability and also transparency.

An Italian friend of mine recently came to Hong Kong who's in the trade business. He said to me, "Hong Kong is a China that speaks English, where you can understand the institutions and the laws work." So, with these five pillars altogether, Hong Kong as this super platform attracts not only overseas companies wanting to do business with China, but also Chinese mainland companies seeking a conduit to the world. In fact, many officials of the inland provinces and cities want to use Hong Kong as their showcase and they describe Hong Kong as their aircraft carrier - an aircraft carrier where they can project their economic and their trade interests.

So Hong Kong has been able to build up a critical mass of companies from around the world, offering huge scope for business networking. One overseas company is set up in Hong Kong every single week. 4,500 are now in Hong Kong, of which 3,200 are regional headquarters or operations in Hong Kong. So, if you are a medium-sized or smaller-sized enterprise from overseas, what does it all mean for you?

I'd like to go to my global theme number three. Which is that I believe that in the next ten, 15 or 20 years, the driving force of world trade is going to be medium-sized and smaller-sized companies. I believe they have the agility, they have the quickness to adapt to the changes that are so demanding in this new world of trade and business.

Hong Kong is extremely SME-friendly. I described the institutional framework, I described the small government and I think that Hong Kong companies are extremely China-savvy in terms of being available to overseas companies, both as partners and also as service providers. These advantages have made Hong Kong a haven for medium-sized and small-sized enterprises. As you know, in fact, 98% of all companies in Hong Kong are SMEs.

We know that domestic markets are too small for many companies in many countries and there's a huge danger in terms of competition from big companies. So smaller-sized companies, medium- sized companies are looking for opportunities. These opportunities include forming alliances to leverage their respective comparative advantages in the areas of innovation, marketing, distribution and also operational excellence, building on synergies so that they can compete with the larger-sized companies.

While Hong Kong companies have a first-mover advantage in China, they face the same challenges as SMEs around the world: limited resources, limited expertise, limited reach. All these things are a problem. So Hong Kong companies are also looking for partners with different skills in products, in marketing, distribution and operations. We believe that the market in China is so huge and diverse that much more diversity is needed to get this whole market growing and we believe that time is short.

So allow me to conclude by saying that, while Hong Kong and Thai trade and investment ties have been strong, we all recognise that there is room for further strengthening. Hong Kong is Thailand's fourth-largest export market and its fourth-largest source of investment. By the way, 75% of Hong Kong's rice comes from Thailand. There are many opportunities for Thai-Hong Kong partnership that await discovery and I believe there's a good fit between the culture of the business community in Thailand and in Hong Kong. There are Thai manufacturers who would look to source materials from China, or trading companies wishing to market their products there. I think we need look no further than Hong Kong for knowledgeable and willing partners. The service industries in Thailand who wish to collaborate internationally can also find plenty of willing Hong Kong partners with strong international business experience. Examples include Thai film post-production firms and infrastructure development firms who will find a huge choice of Hong Kong counterparts, since Hong Kong itself is a film and infrastructure hub.

I believe Hong Kong and Thailand understand each other, because we're both enterprising. We understand each other's challenges; we were both stunned by the Asian economic crisis; we're both suffering from the current downturn worldwide. But we are both resilient and quick to respond to changing circumstances. I believe we can both benefit from economic expansion in China, perhaps the one bright spot in the gloomy world economy today. Now I believe Hong Kong offers Thai companies a triple - that is, a trade services platform to and from the Pearl River Delta and China, plus partnership opportunities on a region-to-region, company-to-company basis and a haven for enterprises.

A little bit on the TDC: we have 35 years of international experience. Our budget is US$200 million. We have 47 offices around the world, with 11 offices in China. But TDC serves anybody who uses the Hong Kong platform. In other words, we don't just serve Hong Kong-Chinese companies. Any company, no matter what nationality, can use our platform, can use our trade portal, can use our exhibition centre, can use our physical marketplace, can use our cyber-marketplace.

As I said before, I've visited 50 cities since I took over as chairman around the world within this year. They were very nice: they gave me two weeks off because of Chinese New Year and Christmas. But the reason that I made these visits is to connect. It is important that I connect with the business communities around the world, connect with creative businesspeople with new ideas and also new products - and also people who understand the global themes that I outlined in terms of what's happening. And my message is very simple indeed - that Hong Kong is the right platform, it is the right partner and, clearly, now is the right time.

Thank you very much.