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Following is a speech by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, at the luncheon seminar with the Dutch logistics industry in Rotterdam, the Netherlands today (September 26, Rotterdam time):
Hemmy, George, distinguished guests, ladies and gentlemen,
It is my great honour to visit Rotterdam, which is a major shipping port and commercial centre in Europe. I am also pleased that I'm able to take this opportunity to address a distinguished group of business leaders and logistics professionals at the luncheon seminar today.
I notice that our tables are named after some of the districts or areas of Hong Kong which lie on the Western part of Hong Kong. Apart from the fact that we have the Kwai Tsing Container Terminals in the western part of Tsing Yi, we have Kwai Chung, we have Chek Lap Kok and the head table the Hong Kong International Airport. Apart from that, I think you may like to know that the western part of Hong Kong is actually going to be a major area of development in Hong Kong as we have Lantau Island, where the Chek Lap Kok airport is located. The Government has plans to develop Lantau Island on a rather large scale. Within the coming two decades, the western part of Hong Kong, including the current northwest New Territories, if I may say, will be quite totally transformed.
When it comes to logistics, of course, logistics can't do without transport, links and various forms of connectivity, whether internationally or within the region. The western part of Hong Kong of course is also going to see a lot of transport infrastructure works.
Hong Kong is very similar to Rotterdam because for Rotterdam, the city is situated at a strategic location and supported by a well-built transport system, and it has been serving as the gateway to Europe for decades. In the same way, Hong Kong has long been the gateway to China and has further developed into a regional logistics hub for Asia, leveraging on its strength as a global business and financial centre, as well as a major aviation and maritime hub. Today, within 10 to 15 minutes, I would like to share with you the vibrant business opportunities in the booming Chinese and Asian economies, and how Hong Kong may help your companies realise your business goals on the other side of the globe.
China and Asia - strong and growing consumption market
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Among Asian countries, the recent economic transformation in China has been the most impressive. In just over three decades, China has grown to be the world's second largest economy. Its GDP in 2013 of US$9.27 trillion, at a growth rate of 7.7 per cent was about 3.6 times that of 2004, and is forecasted by the International Monetary Fund to grow by another 7.4 per cent this year.
The beneficiary of strong economic growth, the middle class in China is fast expanding, fueling the consumption demand. Globally, Chinese consumers are already the number one buyers of many brand name goods. China's private consumption was around US$3.5 trillion in 2013, representing 37 per cent of its GDP, compared to the world's average of 60 per cent. What does that mean? That means there is still huge potential for Chinese consumption to rise.
The phenomenal growth of high-end consumer markets in China and, similarly in other Asian economies, has created a strong demand for supply chain solutions to facilitate the distribution of brand name goods. As a regional logistics hub with a big pool of professional talent, Hong Kong is well-positioned to service the regional needs for efficient and just-in-time delivery of goods, especially quality products. Currently, about 20 per cent of China's international merchandise trade is routed through Hong Kong. Many international brands also prefer to set up a regional distribution centre in Hong Kong to manage their sales and distribution network across Asia. They have made this business decision for good reasons.
Hong Kong - the gateway to China and heart of Asia
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In my portfolio, I look after both transport and housing. I find the two similar in at least one respect, if not many, and that is location. When you buy property, location is most important. The same for transport-related development potential.
Location is one of the foremost considerations for a regional distribution centre. Strategically located on Europe's Far East routes and at the doorstep of southern China, Hong Kong has, over the years, established itself as a renowned trading and logistics hub. Our flights from Hong Kong can reach all major Asian economies within four hours, and our flights from Hong Kong can reach half of the world's population within five hours. This geographical advantage gives Hong Kong a strong edge in the distribution of goods to a broad range of markets.
Hong Kong's institutional strengths
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Hong Kong's role as a regional logistics hub is underpinned by a number of institutional strengths. As a free port, Hong Kong levies no tariff on imported goods. We have highly transparent customs procedures and efficient customs clearance. The taxation rate is low and the tax system simple. Capital and information flow freely. With well-entrenched rule of law, we provide a level playing field for all enterprises. These factors explain why Hong Kong has been ranked the freest of all economies for 20 consecutive years by the Heritage Foundation.
Hong Kong's efficient logistics services
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With a long history as a trading hub, Hong Kong is home to the largest community of shipping, freight forwarding and logistics operators in Asia. Our logistics service providers have accumulated immense knowledge and experience in handling all sorts of goods, ranging from wines to heavy construction machinery, and from art treasures to sport horses. They know how best to save costs and to meet service demands with different product sources and markets through sophisticated tailor-made supply chain solutions.
They offer comprehensive value-added services like bar-coding, price-tagging, pick and pack, quality control and customs clearance. In particular, they maintain tight security all along the supply chain and enforce intellectual property protection vigorously, which are essential for brand name goods and products, particularly high-value products such as fashion, electronic goods and pharmaceuticals.
Our logistics operators also have common language and cultural affinity with the Mainland of China, as well as long-time experience dealing with Chinese enterprises and government authorities, while at the same time fluent in English and well-versed in international business protocol. These benefits make them the natural trading bridge between the West and the East.
Multi-modal transport and connectivity
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Multi-modal connectivity is pivotal to a logistics hub, especially distribution operations. Our logistics industry is supported by world class air, sea and road connectivity that offers flexibility in supply chain solutions. The Hong Kong International Airport at Chek Lap Kok is the busiest international airport in the world, and that compares with airports not just in international cargo, but also domestic cargo as well. Our airport is supported by some 7 000 flights every week to about 180 destinations worldwide. Planning is now underway for building a third runway which will more than double our cargo handling capacity by the 2020s - and not just cargo, but also doubling our passenger handling capacity by the 2020s.
On the maritime side, Hong Kong's container port is among the world's busiest container ports, with some 380 weekly sailings to about 550 destinations worldwide, including destinations on the Mainland. Last year alone, we handled over 22 million TEUs (20-foot equivalent units). We are currently undertaking a dredging project to deepen our container port channel so that by early 2016, the new-generation ultra-large container vessels can berth anytime at all tides.
On the land side, Hong Kong has extensive road network connecting it to the neighbouring Guangdong Province of China. There are already seven land crossing points between the two territories and an eighth one is now under construction for completion in 2018. We are also building a mega-bridge to link up Hong Kong with Macao and Zhuhai across the Pearl River Estuary which, upon commissioning in a few years' time, will open up Hong Kong's hinterland into the booming western Pearl River Delta (PRD). The PRD is not just economically fast-expanding. It is China's largest GDP contributor as the region contributing 9.3 per cent towards the Mainland's GDP last year. Its population of about 57 million is also a huge consumer market for a wider variety of products.
Hong Kong for international brands and companies
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It is therefore no surprise that world-famous brands like LVMH, Burberry, A&F, Timberland, Philips, Canon and Schneider Electric use Hong Kong as a regional distribution centre. International brands also set up stores in Hong Kong as the springboard for entering neigbouring Asian and Chinese markets. With over 54 million tourists visiting Hong Kong last year, flagship stores of international brands are commonly found in Hong Kong's shopping malls.
But we welcome not just big brands, but different businesses, large or small, including Dutch logistics companies, to establish offices in Hong Kong. A Dutch global logistics company, TNT Express, set up a regional hub in Hong Kong in 2012.
CEPA - Hong Kong's free trade arrangement with Mainland China
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Foreign companies which establish business in Hong Kong or partner with Hong Kong companies stand to benefit from Hong Kong's Closer Economic Partnership Arrangement (or CEPA) signed with Mainland China. CEPA is by nature a free-trade arrangement which allows Hong Kong products to enjoy zero tariff on importation to the Mainland, and gives Hong Kong-based foreign companies greater access to the Mainland market.
Avoidance of double taxation agreement and opportunities with the Netherlands
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In 2010, Hong Kong and the Netherlands signed a comprehensive agreement for the avoidance of double taxation. Effective from 2011, the agreement has provided additional incentives for Dutch companies to do business in Hong Kong and to ship goods through Hong Kong. Last year, the bilateral trade between Hong Kong and the Netherlands grew by 4.8 per cent, up from an average growth rate of 2.2 per cent between 2009 and 2013. Bilateral trade between Hong Kong and the European Union also recorded a growth of 1.7 per cent last year. We see strong potential for Hong Kong-Europe trade to expand further.
Concluding remarks - welcome to ALMC 2014 in Hong Kong
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Before I close, I would like to extend my warm invitation to each of you here to the Fourth Asian Logistics and Maritime Conference (ALMC) to be held in Hong Kong on November 18 - 19, 2014. It is a big annual event in Hong Kong where you can gauge the latest logistics and maritime landscape of Hong Kong and Asia, access unbound business opportunities and meet with nearly 2 000 participants and potential business partners coming from around the world including China. We look forward to seeing you there.
Thank you.
Ends/Friday, September 26, 2014
Issued at HKT 22:17
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