LCQ18: Supporting local enterprises to open up Mainland domestic market

     Following is a question by the Hon Sunny Tan and a written reply by the Secretary for Commerce and Economic Development, Mr Algernon Yau, in the Legislative Council today (April 19):
     The 2023-24 Budget has proposed that in order to further integrate into the overall development of the country and create strong impetus for growth, Hong Kong needs to open up the Mainland domestic market. However, some members of the industrial and commercial sectors, such as the textiles and garment industry, have relayed that as the level of disclosure of credit and financial information varies among some private enterprises on the Mainland, the Hong Kong Export Credit Insurance Corporation (HKECIC) and insurance companies are unable to gain full access to the relevant credit information. As a result, the assessments of the credit risks of Mainland private enterprises are generally on the high side and there have been cases of Hong Kong enterprises being refused coverage or charged high premiums for the relevant export credit insurance (ECI) taken out when exporting goods to Mainland buyers, making it difficult for Hong Kong enterprises to open up the Mainland domestic market. In this connection, will the Government inform this Council:
(1) given that the Secretary for Commerce and Economic Development indicated in his reply to my question in May last year that the HKECIC was actively studying how it might have better access to the credit information of companies on the Mainland, including strengthening co-operation with relevant agencies like credit agencies and fellow insurers, as well as risk sharing with reinsurance companies, so as to further enhance its insurance coverage for the Mainland market, of the progress and details of such work;
(2) whether it knows if the HKECIC will consider strengthening co-operation with Mainland banks or financial institutions, so as to underwrite more ECI policies for Hong Kong exporters trading with Mainland buyers; and
(3) as there are views pointing out that e-commerce platforms and the cross-border e-commerce industry on the Mainland are developing rapidly, of the Government's specific strategies and approaches (including promoting cross-boundary logistics and third-party cross-‍border payments, as well as applying artificial intelligence and big data) in place to support Hong Kong enterprises in seizing the development opportunities of e-‍commerce in the country to open up the Mainland domestic market, as well as facilitating the country's accelerated establishment of a new development pattern featuring domestic and international dual circulation?
     Having consulted the Financial Services and the Treasury Bureau, the Innovation, Technology and Industry Bureau and the Transport and Logistics Bureau, the consolidated reply to the question raised by the Hon Sunny Tan is as follows:
(1) and (2) The Mainland is one of the major markets of the Hong Kong Export Credit Insurance Corporation (HKECIC). Over the past five years, HKECIC's insured business involving Mainland buyers amounted to about 30 to 40 per cent of its total insured business. In light of the increasing demand and market developments, the HKECIC has always proactively explored means to further enhance its underwriting capacity. At present, HKECIC's insurance coverage has already been expanded to cover the sales contracts signed between subsidiaries with over 50 per cent shares controlled by Hong Kong exporters with local or overseas buyers in various markets (including the Mainland). Under the "Dual Circulation" development strategy of the Mainland, Hong Kong exporters can make use of the extended coverage to explore the vast Mainland market and seize business opportunities.
     As the Hon Member has pointed out in his question, the credit and financial information of Mainland private enterprises is generally not as comprehensive as Hong Kong companies, which presents some difficulties in conducting risk and credit assessments. In order to support local exporters in further expanding into the Mainland market, the HKECIC is exploring potential strategic co-operation with banking institutions and its counterparts in the Mainland to strengthen exchange and co-operation, while conducting discussions with credit agencies in the Mainland to understand their latest developments in data analyses. These initiatives will facilitate the HKECIC in analysing and understanding the financial information of Mainland private enterprises, so as to enhance its ability to expand its Mainland business and provide more comprehensive protection to Hong Kong exporters. Relevant discussions are ongoing and we hope to be able to report on the progress by mid-year.
     Apart from the above, the HKECIC has worked with reinsurers to share its risk burden, such that the HKECIC may provide more effective support to local exporters seeking to expand into the Mainland market. Moreover, the HKECIC has been promoting its support to exporters through various channels including regular business seminars and co-hosting activities with business partners. With the resumption of normal travels between the Mainland and Hong Kong, the HKECIC will enhance its liaison with Mainland counterparts and relevant institutions, so as to develop and maintain holistic and co-operative relationships.  These measures will facilitate the HKECIC in enhancing its insured business in the Mainland and support the industry in leveraging the opportunities brought about by the Nation's domestic circulation economy, exploring the Mainland's vast consumer market, and making full use of the business opportunities created by the resumption of cross-boundary travel. The Government will continue to observe market developments, consider and formulate relevant measures as appropriate, with the aim to maximise trade and commercial flows between Hong Kong exporters and the Mainland, thereby injecting impetus into the Nation and Hong Kong's economic growth.
(3) The Government is committed to promoting the adoption of e-commerce by small and medium enterprises (SMEs) and assisting enterprises to develop digital support facilities as well as carry out upgrade and transformation. For example, the Technology Voucher Programme subsidies local enterprises in using technological services and solutions to improve productivity, or upgrade and transform their business processes, in order to enhance their long-term competitiveness. Solutions include big data and cloud-based analytics, cyber security, enterprise resource planning, logistics management systems and e-commerce platform. They are all conducive to the development of e-commerce by SMEs.
     The Hong Kong Productivity Council (HKPC) regularly organises training and activities on information technology and e-commerce for SMEs and introduce to them the latest technology developments and applications. The HKPC has also introduced a free one-stop digital transformation solutions platform "Digital DIY Portal" that brings together digital transformation solutions, digital and innovation information and successful cases of digital transformation in industries, in order to assist local SMEs to embark on digital transformation.
      At present, the major e-wallet and retail payment operators in Hong Kong including Octopus e-wallet, Alipay HK, WeChat Pay HK and UnionPay have made available cross-boundary retail payment services to their users and some major Mainland e-commerce platforms have already been included. The Hong Kong Monetary Authority will continue to liaise closely with the e-wallet and retail payment operators, and encourage the various operators to further expand the merchant acceptance network for cross-boundary retail payment services via their Mainland partners, with a view to better meeting the daily payment needs of Hong Kong people in the Mainland.
     As regards cross-boundary logistics, we will continue to improve various intermodal transport initiatives, including the sea-air intermodal cargo transhipment scheme being developed by the Airport Authority Hong Kong, and strengthen co-operation with other Greater Bay Area (GBA) cities to facilitate the flow of goods within the GBA and beyond.

Ends/Wednesday, April 19, 2023
Issued at HKT 12:47