Tsang outlines opportunities for Canadian firms in HK

Financial Secretary John Tsang outlined the opportunities for Canadian firms in Hong Kong brought by the latter's close integration with mainland in his remarks at an Economic Club luncheon in Toronto.

He pointed out that Canadian firms can raise capital for their Mainland operations by issuing renminbi bonds in Hong Kong.

"Last year, fast food giant McDonald's became the first foreign company to issue renminbi-denominated bonds. Then follow Caterpillar and others. A variety of enterprises, including the Asian Development Bank, have also since followed suit. I encourage Canadian firms to test the waters in this area," he said.

He added that Canadian firms doing business in the Mainland can also take advantage of Hong Kong's renminbi experience by using Hong Kong as the centre to settle trade using renminbi. Renminbi trade settlement was introduced by the Central Government in 2009 and expanded last year. Canadian companies can now settle their Mainland trade in remninbi with 20 Mainland provinces and cities.
 
Another opportunity for Canadian companies, Tsang noted, is to list on Hong Kong's stock market.

"Once again, our biggest advantage is the China factor!" he exclaimed.

"The great thing for overseas companies listing in Hong Kong is that they can attract wealthy institutional investors from Mainland China and throughout Asia. At the same time, a Hong Kong listing helps firms to raise their profile in the Mainland and promote their brands across our nation's vast markets," he stated. "We offer attractive valuations while maintaining robust listing rules. For example, companies must comply with a three-year 'profit test' before they can launch an initial public offering."
 
Still another way for Canadian businesses to benefit from Hong Kong's close integration with Mainland China is through a unique free trade pact. Called the Mainland-Hong Kong Closer Economic Partnership Arrangement, or CEPA,  it is advantageous for being nationality-neutral. Overseas companies, including Canadian firms incorporated in Hong Kong, can enjoy the same advantages as local firms. This includes the "first mover" advantage, tariff-free entry for goods produced in Hong Kong to the Mainland and enhanced access to markets in 44 services areas.
 
"It is one way for Canadian firms to add value to their operations and reach increasingly affluent Mainland consumer markets," Tsang stated.
 
The 12th five-year plan sets out specific areas where Hong Kong can contribute as an off-shore centre for business using the Mainland currency, the renminbi; as China's global financial centre; as an international asset-management centre; as an international centre for trade and as an international shipping centre.
 
The plan also underscores the Central Government's commitment to maintaining the long-term prosperity and stability of Hong Kong.

" China's rapid growth has been a mainstay of Asia's economic recovery. It has also given our nation more financial clout on the international stage. However, the Mainland maintains a closed capital account and imposes restrictions on investment. Here enters Hong Kong," said Tsang.