A growing number of Hong Kong investors are planning to increase their investments on the mainland, according to a survey released yesterday.

The survey, conducted by IBM and covering more than 500 Hong Kong companies, found that about 20 per cent of respondents planned to increase their investment on the mainland by more than 50 per cent in two years. Another 27 per cent said they would expand their business by a range between 20 and 50 per cent.

Most of them made the decision because of the growing potential on the mainland market. Sixty per cent of the interviewed believe the mainland marketplace would provide a wealth of business opportunities, while 41.3 per cent said low labour cost was another major reason behind their expansion plans.

Sixty per cent said they were satisfied with their operations on the mainland.

Companies that have not entered the mainland, accounting for 15 per cent of the survey's respondents, said they are geared up to establish presence there in three years.

Expanding business to the mainland is an irresistible trend for local enterprises, said Chung Chi-ping, deputy chairman of the Federation of Hong Kong Industries.

"Hong Kong entrepreneurs should enhance their competitiveness in a global marketplace, while the mainland is a springboard to achieving that," Chung told a forum organized by IBM that brought together some 100 economists and company executives yesterday.

However, companies also said they encountered certain bottlenecks in their mainland operation.

Almost half of them cited different management cultures as the biggest concern. An insufficient knowledge of the local market, too, put a dent on their performance, some said.

Chan Kei-biu, chairman of Hong Kong Electronic Industries, suggested Hong Kong investors alter their mindset and be more aware of the changing environment on the mainland.

For example, he said: "It's wrong to believe that China is still a low-cost labour market."

(Xinhua News Agency September 8, 2005)