Hong Kong's four big Chinese ministry-backed conglomerates announced an unprecedented tie-up yesterday to prepare for foreign competition with the mainland about to join the World Trade Organisation (WTO).
An agreement was forged earlier this week to co-operate on all fronts between China Everbright Holdings, China Resources (Holdings), China Merchants Holdings and China Travel Service (Holdings) Hong Kong, the official Xinhua news agency reported.
The alliance, which centres on better co-operation and creation of synergies, was aimed at 'quickening the development and reforms of Hong Kong-based Chinese enterprises', Xinhua said. The pact would also help the four conglomerates meet the opportunities and challenges arising out of China's WTO entry, hopefully in the first quarter of next year.
The pact - a framework agreement - includes co-operation on investment, asset restructuring, mergers and acquisitions, as well as fund raising in the debt market and other financing.
The core operations of the four conglomerates range from banking, finance and securities to transportation, tourism and property, some of which are expected to face keen competition when China joins the WTO.
Analysts believe the move represents one of the most radical attempts by Beijing to tighten control over Hong Kong-based companies, in a bid to break up the sector monopoly in which different ministries exercise control over different sectors.
