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Following is a question by the Hon Sin Chung-kai and a written reply by the Secretary for Commerce, Industry and Technology, Mr Henry Tang, in the Legislative Council today (December 18): (Translation)

Question:

According to the timetable for opening up the service industries committed by China on its accession to the World Trade Organisation, the telecommunications service industry (including the information technology (IT) service industry) in the Mainland will gradually be opened up to foreign investments in the coming six years. In this connection, will the Government inform this Council whether:

(a) it has evaluated the impact on the relevant sectors in Hong Kong of the opening up of the telecommunications service industry by the Mainland authorities, and the competitiveness of the local sectors concerned and the overseas enterprises in the Mainland market; if it has, of the details; if not, the reasons for that; and

(b) it has formulated policies and specific measures to assist the local telecommunications and IT sectors in developing the Mainland market; if it has, of the details; if not, the reasons for that?

Reply:

Madam President:

(a) At present, the Mainland is gradually opening up its telecommunications and information technology (IT) markets under its commitments on accession to the World Trade Organisation (WTO). For the telecommunications market, the Mainland is gradually lifting and relaxing the restrictions on paging services, value added services, mobile/cellular phone services, local and international fixed network services and Internet service. For the computer and related services market, the Mainland will also fully or partially open up the consultation service on hardware installation, software implementation service and data processing service.

The potential of the Mainland market is enormous. The gradual liberalisation of telecommunications and IT markets will bring tremendous opportunities to the Hong Kong industries. For example, the Mainland is already the largest mobile market in the world, with 196 million subscribers at a penetration rate of 15 per cent only. Besides, the number of Internet users has surged more than 70 per cent from 26.5 million last year to 45.8 million this year. Despite the rapid growth, this is still less than 4 per cent of the total population in the Mainland.

While many larger foreign enterprises have advantages in capital, human and technical resources, professional knowledge, experience in project management and implementation, and international connection, Hong Kong enterprises also enjoy unique strengths in developing the telecommunications and IT markets in the Mainland. We have strong domain knowledge in trade, finance, logistics and transportation. In addition, we have a profound understanding and ample experience in doing businesses in the Mainland. When coupled with our excellent bilingual abilities, close cultural affinity and geographical proximity, we are well placed to explore the Mainland market. Indeed, Hong Kong has strong competitiveness in the design of information products, business knowledge required for developing business software, project management, international sales and marketing, as well as developing mobile application services and content.

(b) Our established policy is to promote the development of telecommunications and IT in Hong Kong, and enhance their competitiveness with a view to assisting them to explore the international and Mainland markets. Specific measures are as follows:

To implement outsourcing strategy - The Government takes a proactive role in outsourcing internal telecommunications and IT projects to build up a critical mass for the local market. This will in turn help sustain the development of telecommunications and IT in Hong Kong. At the same time, it will help accumulate experience and nurture local talents, with a view to enhancing the competitive edge of local companies in venturing into the Mainland market.

To foster exchanges - We help the local telecommunications and IT sectors explore the Mainland market by organising various exchange activities with the Mainland from time to time, such as trade missions, exhibitions and conferences. For example, we hosted in Hong Kong the ITU TELECOM ASIA consecutively in 2000 and 2002. We also led a delegation of local suppliers of e-government services to participate in the e-Government China 2002 Expo held in Beijing in mid-December 2002. These exhibitions and conferences enable the local telecommunications and IT sectors to showcase their products and services to the Mainland government and enterprises and to develop business networks.

To facilitate access to information about the Mainland market - In collaboration with Hong Kong Trade Development Council (TDC), we will add in TDC's website a web page relating to the telecommunications and IT sectors next year to disseminate information on the business opportunities emerging from China's accession to WTO. This will facilitate access by the local industries to information about Mainland market. Besides, we will continue to co-operate with the Economic and Trade Office of the Government of the Hong Kong Special Administrative Region (HKSAR) in Guangdong, TDC and Hong Kong Productivity Council in providing the local IT sector with information relating to the IT market of the Pearl River Delta (PRD) and organising business matching activities for Guangdong and Hong Kong. At the moment, the Office of the Government of HKSAR in Beijing and TDC are closely monitoring the preparatory work of the 2008 Beijing Olympics. We will disseminate information relating to telecommunications and IT to the local sectors to assist them in tapping the business opportunities therein.

To strengthen co-operation in software industries - Through the promotion and assistance given by the Governments of the HKSAR and various provinces in the PRD, the industry associations of the two places have signed a framework agreement on software co-operation and established a PRD software alliance. The alliance will conduct exchanges on exploring markets, technology development, financing and quality accreditation and work out plans on enhancing software technology transfer and outward processing. The Government of the HKSAR will continue to assist and organise industry participation in the joint projects. Looking ahead, we will strengthen the co-operation in software industries between the two places in areas of financing, market exploration and training. These measures will not only help the local telecommunications and IT industries gain access to the Mainland market, but also bring about synergy for both places in jointly exploring the international and the Mainland market.

To enhance co-operation in e-commerce - An E-business Working Group has been established under the Mainland/HKSAR Joint Commission on Commerce and Trade to enhance co-operation in e-business regulations, e-government and enterprise e-business applications. We hope to formulate, in collaboration with the Mainland, a specific work plan to promote commerce and trade by electronic means between the two places.

End/Wednesday, December 18, 2002

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