Hong Kong delegation visits Rogers

by The City Wire staff ([email protected]) 138 views 

No sales tax, no travel visa required, no export duties to move product into China and the lowest corporate income tax in the world – that’s just a few of the perks businesses find when they set up shop in Hong Kong.

Anita Chan, the director for the Hong Kong Economic Trade office in New York, spoke to 50 or so business and economic leaders in Rogers Wednesday on a quick swing through the Natural State.

The commissioner for Hong Kong’s economic and trade affairs, Donald Tong, traveled with the small delegation to Little Rock on Tuesday but was called back to Washington early and did not make the trip to Northwest Arkansas or local speech planned today (April 25).

Chan stayed behind to meet with Walmart this afternoon (April 25) and delivered the speech at the Arkansas World Center in Rogers.

She urged business leaders to strongly consider the benefits that result from both trading with investing in Hong Kong.

“We have a free market economy and tremendous liquidity. We can help Arkansas companies who want to sell their goods to Hong Kong but also facilitate exports throughout Asia,” Chan said.

Walmart and Tyson Foods do a great deal of business in Hong Kong, but Chan said there is also new opportunities for Arkansas wine makers to explore Hong Kong.

“The Hong Kong government abolished the tax on wine which has created a business boom around that sector. I don’t know why, but we drink a lot of wine in Hong Kong and it’s all imported because the land is not conducive for growing grapes.”

She said one savvy Canadian wine maker shipped frozen grapes to Hong Kong and set up a small winery distillery in Hong Kong with the proper climate controls inside an urban warehouse.

Chan said the wine maker was then able to export that wine into China without duty from Hong Kong because she had the proper business permits, which can be obtained fairly easily in a one-stop shop.

While Hong Kong has been knocked around economically a few times since the late 1990s, the city of 7 million people today boasts a low 3.4% jobless rate with $800 billion in fiscal reserves.

“Hong Kong is kind of like a rubber ball, the harder you hit it, the higher it bounces,” Chan said.

Aside from Hong Kong’s free market economy, Chan said another big advantage in business with Hong Kong is the British common law that prevails and the fact the Hong Kong currency is pegged to the U.S. dollar.

Arkansas companies benefited from Hong Kong trade with more than $129 million in product exports last year. Total exports to that Asian market actually decreased from $131 million in 2010, but have grown from $49.9 million in 2006.

Food manufactures like Tyson Foods exported a combined $109.36 million of products to Hong Kong in 2011 – which was 84% of the state’s total exports to this large Asian market, according to the U.S. Department of Commerce.

Other industries in Arkansas poised to benefit from expanded trade with Hong Kong include: computer electronics, transportation equipment, chemicals, agricultural products, paper and fabricated metal products.

Chan planted a seed with investment bankers in the room to consider corporate bond issuance denominated in Chinese currency – (RMB). The only place that can be done is Hong Kong.

She said companies like McDonald’s, Caterpillar and YUM Brands that are aggressively expanding in China are raising the capital in Hong Kong with corporate bond rates at 2 to 4%.

“This gives these companies the cash they need denominated in Chinese currency and at a cheaper interest rates,” Chan said.

When asked about any fallout on the Hong Kong economy with respect to the recessionary concerns in Europe, Chan said these concerns have reduced Hong Kong’s expected GDP this year to a modest 1 to 3% range.

“It’s important to note we have enough reserves to last 22 months if we don’t make a dime this year,” Chan said.