Manufacturers and traders in Hong Kong and Macao are making big
inroads into Chinese mainland markets thanks to the Closer Economic
Partnership Arrangement (CEPA).
And mainland consumers and some industries are expected to
benefit from the free-trade pact, industry insiders said.
Under the arrangement, which took effect on January 1, 311 Hong
Kong and Macao products are exempt from tariffs when exported to
the mainland.
"These products account for around 90 percent of the exports
from Hong Kong to the mainland," said Cliff Sun, vice chairman of
the Federation of Hong Kong Industries.
Cheered by the zero tariffs, more made-in-Hong Kong and Macao
products will appear in stores and shopping centers in major cities
on the mainland.
"We are planning to establish an office and stores in Beijing
this year, then we may enter Shanghai and Guangzhou," said K.S.
Yeung, senior product designer with Hong Kong-based Teamwise
International Ltd, an exporter and manufacturer of watches, leather
goods and fashion accessories.
"Previously we mainly focus on Hong Kong and European markets.
Now CEPA offers us a gold opportunity to penetrate the mainland
market, as the zero tariff pact will make our products more price
competitive here," said Yeung while showing his products at the
CEPA Promotion Expo held in Beijing by China Council for the
Promotion of International Trade.
"For example," he pointed to a leather belt: "This will be sold
at about US$8-10 if we export it to the mainland last year. Now we
plan to price it at US$5 thanks to non-tariff."
Frankie Choi, an official from Trade and Investment Promotion
Institute of Macao told China Daily that traders in Macao
are also set to export more to the mainland.
Along with exporters and manufacturers, other Hong Kong and
Macao businessmen welcomed CEPA.
"The arrangement not only facilitates trade, but also promotes
economic interaction," Ng Wing Fai, deputy director of Widnell Ltd,
a Hong Kong-based provider of services for building developments,
civil and infrastructure projects, process and petrochemical
installations, interior fittings and maintenance work.
"Under CEPA, a mutual acceptance system of different
certificates on the mainland, and in Hong Kong and Macao is
implemented. It brings convenience for us Hong Kong investors," Ng
said.
Meanwhile, mainland consumers are happy at the coming inflow of
low-price Hong Kong and Macao products.
Four large shopping centers have arranged to set up exclusive
sales counters to showcase and sell made-in-Hong Kong products.
These counters at SCITECH Plaza, Blue Island Plaza, Full Link Plaza
Shopping Arcade and Zhongfu are expected to open this month.
"I will visit these counters as soon as they open," said
27-year-old Zhang Lei, an enthusiastic collector of bracelets in
Beijing.
Mainland manufacturers will also take advantage of CEPA's zero
tariff by investing and producing in Hong Kong and Macao, suggested
Cliff Sun.
This helps them to slash costs by importing raw materials
without paying tariffs.
"(Then) they may export their products with Hong Kong-origin
labels back to the mainland under the zero tariff," Sun said.
But mainland manufacturers should cautiously use this strategy
as other production costs may be higher than that on the mainland,
Sun cautioned.
What is CEPA?
The Mainland/Hong Kong Closer Economic Partnership
Arrangement (CEPA), which went into effect on January 1, covers
trade in goods services and investment facilitation.
Under CEPA, 273 goods of Hong Kong origin will enjoy
zero-tariff treatment on the mainland. Zero tariffs will apply to
all Hong Kong goods no later than January 1, 2006.
(China Daily January 8, 2004)