Hong Kong's businesses, many with operations across the border, expect to face stiff competition as China increases foreign access to the domestic market following its admission to the World Trade Organisation. The mainland is set to eliminate barriers and liberalise various sectors including banking, insurance, wholesaling and retailing, and distribution services. Most businessmen seem to believe China's entry to the WTO will provide tremendous opportunities to tap the lucrative mainland market. However, the Hong Kong Association of International Co-operation of Small and Medium Enterprises warned that China's opening up would also put pressure on Hong Kong's small and medium-sized businesses on the mainland. Association chairman Phyllis Kwong said she believed China's trade liberalisation might deal a blow to those trading firms serving as middle men helping foreign companies to invest on the mainland. 'The importance of middle men will gradually reduce in future,' she said. She added that she was worried some small foreign-funded firms might not cope with the change in view of the increasing number of multinational corporations rushing to grab market share in the coming years. If these small firms were forced to close, she said it would be more difficult for them to relocate back to Hong Kong due to the extra cost. At present, more than 100,000 Hong Kong firms employed about five million workers in the Guangdong area, she said. But large corporations would be the primary beneficiary, she added, especially those involved in banking, insurance and infrastructure. Vicky Davis, director general of the Federation of Hong Kong Industry, said manufacturers should be able to take advantage of new opportunities. 'Previously, not all the manufacturers had the rights to sell in the Chinese domestic market,' she said. 'Only about 25 per cent of the manufacturers sell domestically. Therefore there is a huge potential, especially as traditional markets for the export industry, like Europe, the US and Japan at the moment are not showing bright prospects. 'Chinese consumers' buying power is increasing . . . we have better understanding of Chinese culture and we are well established already. This gives us the extra edge.' Hong Kong-listed discount cosmetics retailer Sa Sa International chairman Simon Kwok Siu-ming was also hopeful at the prospects for the mainland retail market. He said the firm had bought a 55 per cent stake of China-based Ebeca Cosmetics to prepare for any future expansion. China has been imposing so many restrictions on foreign cosmetics products that it took almost a year for one product to pass sanitary inspection, he said. On top of the lengthy inspection process, he added, the mainland Government had also imposed a 90 per cent overall tax on foreign cosmetics. Simon Cheung, chairman of fashion chain store operator Gay Giano International, said: 'Competition exists everywhere and we have to face it even operating in Hong Kong.' The company would expand across the border considering the sluggish retail sales in Hong Kong and the United States, he said. Hong Kong Pharmaceutical Holdings financial controller Winston Zhang said the company would speed up its investment through acquisitions or set up a joint venture to capture a larger market share.