Japanese companies in Hong Kong are eyeing investment opportunities on the mainland but will not be abandoning the city any time soon, the country's consul-general said yesterday.
Jun Yokota said that while companies were trying to assess how best to capitalise on China's booming economy and its entry to the World Trade Organisation, they were also facing the perils of investing in an emerging market.
'Following China's entry to the WTO in 2001, there was a mini investment boom in the mainland,' Mr Yokota told the Hong Kong General Chamber of Commerce.
'But while China is still among the prime destinations for foreign direct investment by Japanese corporations, the trends in investment expansion have moderated as more and more Japanese companies and individuals come to terms with reality in China.'
He said the risks included the dangers created by complex and opaque regulations, counterfeit merchandise, cut-throat competition, a shortage of electricity and diseases such as bird flu and Sars.
Japan and the mainland are Hong Kong's two biggest Asian trading partners. Exports to Japan account for 5 per cent of Hong Kong's output, while mainland-bound shipments account for about two-fifths of the total.