Woo mainland firms with tax incentives

Now that China is in the World Trade Organisation (WTO) the SAR Government is encouraging Hong Kong entrepreneurs to seek business opportunities on the mainland.

I am not sure this is the right way to go about things. I think the administration should be emphasising the importance of trade rather than investment opportunities.

Hong Kong can make use of WTO membership to sell its expertise in various sectors, like banking and logistics. Encouraging investment could lead to an outflow of capital to the mainland and this can only harm Hong Kong and would not be a good idea, given the rising unemployment rate.

The Government should be telling mainland enterprises about the business opportunities available to them if they come here. This would give them greater exposure on international markets. Mainland businesses could be persuaded that the SAR can be a gateway to these markets.

If more mainland firms were established here, this could help create jobs. Also foreign traders would continue to make use of Hong Kong to carry on their business with the mainland.

To make it easier for mainland entrepreneurs, we could offer tax incentives, or change our listing rules so they could raise capital through the stock market. However, in that case they would have to set up their head office here.