Paul Chan Mo-po, financial secretary of the HKSAR government, delivers his speech during the opening ceremony of Hong Kong Green Week and Hong Kong GreenTech Summit 2024, at the Hong Kong Convention and Exhibition Centre, in Hong Kong, Feb 26, 2024. (CALVIN NG / CHINA DAILY)

The Hong Kong Special Administrative Region government plans to build a transnational supply-chain management center to provide enterprises with one-stop services, including supply-chain management, trade financing, and consultation services, according to Financial Secretary Paul Chan Mo-po.

Writing in a blog post on Sunday, Chan said the project will also handle talents and corporate training, and attract Chinese mainland manufacturing firms to set up regional headquarters in the city to manage offshore trade.

“It is estimated there are now more than 50,000 medium-sized manufacturing companies in the Pearl River Delta and the Yangtze River Delta alone. Many of them are involved in overseas businesses, and need to ‘go out’ of some manufacturing processes. Hong Kong’s rich experience and excellent conditions can serve their needs,” the finance chief said.

He said Hong Kong’s advanced and robust financial infrastructure offers the city the advantage of providing trading companies with diverse trade-related financing options. “More than 70 of the world’s top 100 banks operate in Hong Kong, including many leading lenders in the global trade finance market. Mainland enterprises settling in Hong Kong will have access to more efficient and lower-cost trade financing services.”

Financial Secretary Paul Chan Mo-po said Hong Kong’s advanced and robust financial infrastructure offers the city the advantage of providing trading companies with diverse trade-related financing options

So far, 26 banks and 13 data providers have joined the Hong Kong Monetary Authority’s Commercial Data Interchange to combine corporate information.

With corporate authorization, participating banks can obtain trade-related data faster, and simplify loan approvals. By late last year, more than 13,000 loan applications had been processed, with credits exceeding HK$11.7 billion ($1.5 billion) approved.

The HKMA’s mBridge – a cross-border platform to improve international trade settlement - will launch the first phase of services this year. Hong Kong will be among the first cities worldwide to use the central bank digital currency to settle cross-border transactions for enterprises, greatly improving the speed of payments and reducing related costs.

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“In January this year, we raised the statutory maximum liability of the Hong Kong Export Credit Insurance Corporation from HK$55 billion to HK$80 billion. Mainland enterprises in Hong Kong can use export credit services to better manage risks and obtain export financing more easily through insurance policies,” Chan said.

“Businesses can also use the ECIC’s buyer credit investigation and market information sharing services to develop their operations steadily and prudently,” he added.

A bus passes by commercial buildings in Central, Hong Kong, on Jan 8, 2024. (GARY CHIU / CHINA DAILY)

Chan said the Hong Kong Trade Development Council has been supporting mainland enterprises in Hong Kong to go global through different programs and set up bases in the Belt and Road countries.

“For example, the ‘T-box Upgrading and Transformation Plan’ helps Hong Kong companies to upgrade their brands, and strengthen their competitiveness in digital transformation, production and supply-chain solutions, market development and sustainable development,” he said.

Chan noted that the SAR will beef up cooperation among various institutions, such as education or training concerns, as well as industry insiders, to provide training for mainland companies on ESG and other aspects to build up their reputation and expand markets.

Chan said that, besides building a transnational supply-chain management center, and a trade financing base, Hong Kong will accelerate the development of its international innovation and technology hub to attract more key innovation and technology companies

In standard certification, the Hong Kong Quality Assurance Agency has been applying international standards in providing relevant certifications, reviews, verifications and training services to help enterprises improve their management and competitiveness, he said.

Chan said that, besides building a transnational supply-chain management center, and a trade financing base, Hong Kong will accelerate the development of its international innovation and technology hub to attract more key innovation and technology companies.

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“Following our announcement in October last year that about 30 key companies have settled or expanded their operations in Hong Kong, we will welcome the second batch of some 20 enterprises this week,” he said.

“Together with the first batch of companies, they will invest more than HK$40 billion in the SAR, creating more than 13,000 jobs, most of which will be scientific research and management positions. These enterprises will help gather upstream, mid-stream and downstream businesses in related fields in Hong Kong to promote the vigorous development of the entire innovation and technology ecosystem,” he added.

Chan noted that the global trade pattern has been changing in recent years, with the proportion of exports to the United States dropping from 18.6 percent in 2003 to 6.5 percent last year; while that of exports to the European Union fell from 10.5 percent to 6.6 percent in the same period.

In this Aug 16, 2023 photo, the skyline of Hong Kong Island can be seen across Victoria Harbour as tourists throng the Avenue of Stars in Tsim Sha Tsui to enjoy a sunny afternoon. (SHAMIM ASHRAF / CHINA DAILY)

On the other hand, the proportion of exports to the 10-member Association of Southeast Asian Nations rose from 6.1 percent in 2003 to 7.9 percent last year, becoming Hong Kong’s second-largest export market after the mainland. The proportion of exports to the Middle East surged to 3.3 percent.

Chan said the geopolitical situation, the division of labor in the world manufacturing industry, the reorganization of supply chains, and the emergence of nearby ports with excellent equipment are reshaping the production line layout and export models of enterprises, and affecting the SAR’s export performance.

Some major economies are also enforcing more stringent environmental, social and governance requirements, as well as trade financing difficulties in a high-interest environment. This has brought challenges to many companies, he said.

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“According to a report by the Asian Development Bank in September last year, the global trade financing gap has further widened and is estimated to be reach 10 percent of global merchandise trade valued at $2.5 trillion,” he added.