Hong Kong’s road to El Dorado

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With the China-Latin America now going in full swing, the business community urges to open an Economic and Trade Office in Latin America.


Hong Kong has talked more about ‘integrating’ with mainland China in recent years and while there seems to be backlashes politically, economically the notion means a fatter wallet for many Hong Kong people. But to focus only on the China market, the Hong Kong Government is missing the bigger picture.


Economic and Trade Offices (ETOs) under the Trade and Industry Department are responsible for fostering bilateral trade between Hong Kong and foreign nations, and to draw foreign investment to Hong Kong. There are currently a total of 16 ETOs operating in the Greater China region, Australia, South East Asia, Europe and North America. China alone accounts for 4 of them, followed by 3 in the US. However, there are no offices in the vast Latin America region (ETOs are also absent in Africa and the Middle East).


“In the light of the shift of the global economic balance towards the east, Hong Kong needs to increase the number of offices in the Asian region,” Chief Executive CY Leung highlighted in his latest Policy Address this month. Already, he plans to open liaison units in the Shandong Province and the central region of China to support the ETOs in mainland.


What is missing from Mr Leung’s words above means the Government has no intention to open an ETO at the other side of the Pacific Ocean, a fact that was confirmed by a spokesperson of the Commerce and Economic Development Bureau (CEDB).


“We have not had in Latin America the visit of a Chief Executive since Donald Tsang in Chile [in December 2010] and Brazil, in April 2012


China-Latin America relationship on the rise


If it is true that Hong Kong is to be the ‘super-connector’ between China and the world, as the Government reiterated on many occasions, then Mr Leung and his cabinet may want to take heed of the development of the bilateral relationship between China and Latin America.


Earlier this month, Beijing hosted the first China-CELAC forum and subsequently, President Xi Jinping announced China will invest around US$250 billion in Latin America for the next 10 years and boost the bilateral trade to US$500 billion. CELAC, an acronym for ‘Community of Latin American and Caribbean States’, consists of 33 countries of Latin America and the Caribbean, and was launched in Venezuela in 2011 to allow members to work together and potentially reduce the influence of the US in the region.


The forum was hardly the first time such a high-level meeting was held between the two players. Last year, President Xi took the opportunity to visit Brazil, Argentina, Venezuela and Cuba when he attended the 2014 BRICS summit in Brazil. Over 150 cooperative agreements were signed which covered sectors such as energy, mining and infrastructure, and they are worth around US$70 billion.


But it was in 2009 when Xi Jinping, then Vice President of China, first toured Latin America. The visit last year was the second time in only 13 months after he became the President in 2012, a strong signal of the important role Latin America plays to China, if only the Hong Kong Government would notice.


Such high profile visits by Chinese leaders only draw a sharp contrast to Hong Kong. “We have not had a Chief Executive visiting Latin America since Donald Tsang in Chile and Brazil, in April 2012, nor by a Hong Kong Government Cabinet Secretary for some time either. Meanwhile, several Chinese cities’ officials, most recently from Tianjin, have made the investment aimed at making their locations attractive to Latin American counterparts. Aren’t then we getting the point? Let’s get on the train!” Former CG of Chile in Hong Kong Mario Artaza told Harbour Times.


Hong Kong’s role to play


What Hong Kong does have are three Trade Development Council (TDC) offices in Mexico City, Sao Paulo and Santiago. As a semi-government unit, TDC helps promote Hong Kong’s goods and services but when it comes to improving the bilateral trade and foreign investment, TDC’s role seems to be minimal. And without an official office in South America, it is hardly convincing to show the Hong Kong Government is serious about the Latin America market.


“Why aren’t we moving more actively, strategically, in the direction that China’s and other regional leaders have identified as attractive for business and investment?”


“Hong Kong cannot stand idly by at a time when emerging economies that are investment grade such as Chile, Colombia, Mexico and Peru, as well as Brazil, a full fledged member of the BRICS, are making positive strides towards establishing stronger as well as more comprehensive links with China and other Asian economies,” says Mr Artaza, now the Chief Representative of Banco Security in Hong Kong. He is also a member of the HKGCC’s Americas Committee.


There was a breakthrough in 2012 when Hong Kong signed a Free Trade Agreement (FTA) with Chile which came into effect in October 2014.  “The FTA can give local traders and investors preferential access and legal certainty in market access and national treatment when trading with Chile. To further enhance mutual investment flows, Hong Kong and Chile agreed to commence negotiations on an Investment Agreement,” CEDB says. Efforts to strengthen bilateral trade with Latin America has since been less conspicuous.


However, some in the business sector remain optimistic and are confident Hong Kong-Latin America trade development will take off soon. Mr Thomas Wong, a founding partner of CWCC and Vice Chairman of HKGCC’s Americas Committee, expanded his businesses to Latin America in 2006. Speaking to Harbour Times, he saw a spike in business activity between Hong Kong and Latin America after Financial Secretary John Tsang’s visit to Chile in 2010. He feels strongly that the trade development between Hong Kong and Latin America will only grow and not diminish, and more companies will set up their regional HQs in Hong Kong. Asked if he considered Hong Kong to be lagging behind, he replied: “No. There is a certain procedure to follow within the Government to establish ties with foreign countries. Let’s take it step-by-step.”

The first few steps have been taken, mostly by the last CE. The question is whether Hong Kong should make strides now, rather than to take baby steps. “Why aren’t we moving more actively, strategically, in the direction that China and other regional leaders have identified as attractive for business and investment?” Mr Artaza’s question is a puzzle to many in the business community and it is CY Leung’s to answer.