The Hong Kong Association of Banks yesterday said it was aware of the situation and would work with the government to find ways to support local enterprises.

Standard Chartered Bank chief executive Peter Sullivan said the association would work closely with the office of Secretary for Commerce and Economic Development Frederick Ma Si-hang.

Mr Ma, acting as financial secretary, said yesterday the government had conveyed the businessmen's concerns to mainland authorities and promised them his full support.

One option was to help them move their plants to central or western provinces where the new policy would not apply, Mr Ma said.

His comments came as Hunan provincial authorities expressed interest in offering preferential terms to Hong Kong businessmen to invest there.

Permanent secretary for Commerce and Economic Development Yvonne Choi Ying-pik said yesterday: 'If our enterprises are interested, Mr Ma could arrange to lead a delegation to visit the province to explore business opportunities.'

She said she would meet her Guangdong provincial counterpart to discuss the issue.

Ms Choi, the convenor of a government taskforce to support the factories, said after its first meeting yesterday that it understood the owners wanted a longer grace period to prepare for the changes, and that the government had written to the Ministry of Commerce about it.

'We understand that the ministry is considering the issue,' said Ms Choi, whose taskforce comprises 21 chambers of commerce, business groups and government departments.

Taskforce member and legislator Jeffrey Lam Kin-fung said members were not opposed to the policy changes, but wanted more time to adapt to them.

Mr Lam said moving their plants out of Guangdong might not be a good option.

'Doing business is not only about low labour costs. Transport is also an important factor. The transport network in Guangdong is very much developed,' he said.

Fellow taskforce member Andrew Leung Kwan-yuen, a lawmaker who represents the industrial sector in the legislature, warned that 70,000 Hong Kong-invested processing companies in Guangdong could be affected by the new policy.

A Trade Development Council study estimated last month that, in the worst-case scenario, factories would have to shed some 370,000 jobs on the mainland and 10,000 jobs in Hong Kong.

At the centre of the saga is Beijing's new policy to trim its trade surplus by increasing the number of goods that have export restrictions. Exporters of the restricted products will have to pay deposits on their raw materials into the Bank of China before they can continue their business.

Hong Kong enterprises may have to give up their labour-intensive production and move out of their familiar coastal base or upgrade their technology and product quality quickly.