Chinese Mainland Nipping At SAR's Heels

by Philip Morton, Investors Offshore.com

13 March 2002

A new survey has found that foreign investors and multinational companies are increasingly viewing expansion into the Chinese mainland as a high priority, an announcement which must surely be causing concern in Hong Kong, which has traditionally been the Southeast Asian regional hub.

The poll, which was conducted by Deloitte Touche Tohmatsu and CFO Asia magazine, found that of the 680 businesses questioned, nearly 90% intend to expand their investment in the mainland over the next three years. The survey results indicated that these companies intend to spend around US$4.5 billion, leading Deloitte Touche Tohmatsu partner Joseph Tse to comment that:

'This is a surprisingly large number. Foreign direct investment in 2001 for China, amounted to almost US$47 billion. That means that our 680 respondents alone, as one group, will have accounted for nearly 10% of the FDI for 2001.'

Recent reports have played down competition between Hong Kong and mainland China for investment, and speaking to the National People's Congress in Beijing, the Governor of the Guangdong province, which hopes to become a regional logistics centre, denied that the Southern region was in competition with the SAR.

'There is no rivalry between Guangdong and Hong Kong to develop the logistics sector. Instead we, as brothers, are developing close co-operative relations to develop the business,' Governor Lu Ruihua explained.

However, as concerns about the 'risky' nature of direct investment in China slowly dissipate, Hong Kong will need to keep on its toes if it is to maintain its position as regional leader.

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