Under Cepa, opportunities keep on opening up for Hong Kong businesses
Chow Chung-kong marks the milestones in our 10-year partnership with the mainland economy
The idea of exporting goods and services to mainland China tariff-free is the stuff dreams are made of for many international businesses. Ten years ago today, that dream became a reality for Hong Kong companies as the Closer Economic Partnership Arrangement (Cepa) came into being.
The Hong Kong General Chamber of Commerce first proposed the concept of a free- trade arrangement to the Hong Kong government in 2000, as a way to inject vitality into our then ailing economy. The celebrations marking the end of the severe acute respiratory syndrome outbreak, to help the city's economy bounce back, provided the perfect opportunity to announce Cepa.
So, on January 7, 2004, it was fitting that a member company went into the history books as the first company to export made-in-Hong Kong goods to the mainland tariff-free. Other Hong Kong companies quickly seized the opportunity. Products entering the mainland tariff-free were gradually followed by Hong Kong businesses setting up operations and offering services across the mainland.
Today, Cepa continues to evolve with the signing of supplements. There are plenty of success stories of how Hong Kong businesses have made use of Cepa. For instance, Mannings, the pharmacy brand under Dairy Farm, was the first Hong Kong retailer admitted into the mainland under Cepa. Watsons, Maxim's, Jusco and 7-Eleven are just a few of the companies that have also entered via Cepa.
One supplement signed in 2009 paved the way for Hong Kong-based banks to open sub-branches in Guangdong. The Bank of East Asia, Wing Hang Bank and others began opening branches across the province under a pilot scheme. In particular, the Bank of East Asia maintains the largest network of mainland branches among foreign banks.
Meanwhile, the lowering of thresholds for foreign insurance operations on the mainland, under a supplement signed in 2011, has provided opportunities for Hong Kong insurers to set up wholly owned operations in Guangdong, also under a pilot scheme. Further relaxation of restrictions on market access to the mainland financial market, particularly the anticipated pilot scheme to be adopted in Qianhai, will provide more opportunities for Hong Kong's financial sector.
Cepa's coverage has expanded from goods to services. Professional services, not least the big four accounting firms, indirectly benefited from the outset by serving their clients who were taking advantage of Cepa.