Guangdong tries to back Hong Kong companies

PUBLISHED : Thursday, 08 December, 2011, 12:00am
UPDATED : Thursday, 08 December, 2011, 12:00am


Guangdong yesterday introduced a raft of policy measures to support Hong Kong enterprises in the face of shrinking international demand.

Vice-Governor Zhao Yufang said Hong Kong businesses operating in Guangdong had been struggling as orders from the West slowed down.

'The crisis in the US and Europe is worsening and trade protectionism is on the rise,' he said. 'Companies are also facing difficulties in hiring workers and organising electricity, land and finance.'

The central government is keen to ensure that small and medium-sized enterprises in the Peal River Delta withstand the global slowdown because they provide millions of jobs, and any disruption in the area could trigger social unrest.

The policies adopted by the province to assist Hong Kong enterprises through this difficult period include supporting their upgrading and restructuring operations, boosting imports, developing domestic sales and giving them tax concessions.

Yang Yi, who has a factory in Shenzhen that makes labels, said the policies would be helpful, but added that he had his doubts. 'The problem is that lower-level officials may not toe the line from above.'

He said it had never been a smooth ride in the 10 years his company had been in operation on the mainland. 'At the moment, my headaches include rising salaries, high raw-material prices and intense competition,' he said.

Yang said he was very interested in the new land policy, under which industrial land could be used for commercial projects. 'This policy gives us a lot of flexibility.'

According to new rules, enterprises can use their factory land for commercial uses such as real-estate development, with the local government's approval.

Enterprises can also hand the land over to the government to sell. The company will get up to 60 per cent of the profits generated from the sale.

Despite the new measures, Yang was not upbeat on business prospects next year. 'It will be worse than this year,' he said. 'Forget new orders, some customers in Europe are having trouble paying for what they have already ordered.'

Another entrepreneur, who did not want to be named, sounded less concerned with the global slowdown than with local red tape.

'The demand in Europe and the US is weakening and we are trying to prise open the domestic market,' he said. 'But what I find a real pain is dealing with officials.'

The helmet manufacturer, based in Dongguan, said the biggest problems he faced were in hiring enough workers and borrowing from banks.

'It is extremely difficult for small and medium-sized enterprises to get loans from mainland banks. We can only borrow from Hong Kong banks.'