Hong Kong deserves a bigger role than merely being a so-called super connector along the Belt and Road Initiative, as companies in the special administrative region can form strong partnerships with mainland enterprises to invest overseas, especially in Southeast Asian markets.
This message from Jonathan Choi Koon-shum, honorary chairman of the Hong Kong Chinese General Chamber of Commerce and chairman of conglomerate Sunwah Group, is timely.
It comes as some of China’s key infrastructure investment projects, such as railway projects in Thailand and Indonesia, are facing uncertainties in the Association of Southeast Asian Nations (ASEAN) countries.
Choi, whose company has been operating successfully in Southeast Asia for half a century, suggests mainland enterprises come to the city first to leverage its key strengths when pursuing overseas business deals.
In addition to its strength in professional services, Hong Kong enterprises are better perceived, more connected and possess a greater knowledge of overseas markets, compared to their mainland peers.
Choi explained that if mainland enterprises try to engage with Southeast Asian countries directly they could be met with skepticism, whereas Hong Kong — with its long history of doing business deals in these countries — will be well received.
He added that things will be “much easier” for mainland companies if they use Hong Kong as a launching pad.
Choi also noted that Hong Kong is playing a role as a “co-investor and cooperator” for the Chinese mainland in countries along the Belt and Road. This is a proposed trade and infrastructure network that aims to connect more than 60 countries across the ancient Silk Road.
Sunwah has in the past worked with other firms in Hong Kong to operate in ASEAN markets, but its chairman believes the time is ripe to get mainland companies involved.
As a member of the Chinese People’s Political Consultative Conference, the country’s top political advisory body, Choi said he explained his ideas to State leaders in Beijing in March when attending the annual Two Sessions — political meetings where China’s yearly development plan is discussed and outlined.
“I explained all of this to the Chinese leaders, and they said: ‘OK, Mr Choi, we hope you can not only help private enterprises, but also SOEs, to go abroad to ASEAN countries’,” he recalled, referring to State-owned enterprises.
There will be challenges.
For example, in March, Thai Prime Minister Prayut Chan-o-cha said that Thailand would now only contribute two-thirds of the amount the country originally planned to spend on the rail project to link Southwest China’s Yunnan province, Laos and Thailand.
The announcement followed a period of wrangling where Bangkok and Beijing could not agree on the terms of financing, according to media reports.
Bangkok’s decision came as a fresh setback to the project already delayed by several rounds of negotiations since a memorandum of agreement was signed in December 2014. The two countries held a groundbreaking ceremony for the project in December 2015.
And in Indonesia, local media reported in March that China’s $5.1 billion joint-venture railway project linking Jakarta and Bandung was stalled due to the lack of a key official permit.
However, Xinhua News Agency reported later that month that the Indonesian government would “immediately” issue a business permit and a license for the railway construction to go ahead.
Commenting on China’s desire to invest in infrastructure in the ASEAN region, led mostly by SOEs, Choi pointed out that maintaining a relationship with local governments is very important.
“If you don’t know the government’s people and don’t have good relations, I think that’s quite risky,” he said, adding that it is also crucial to be aware of local cultures and practices when aiming to do business overseas.
With many ASEAN opportunities within reach, cooperation between Hong Kong and mainland enterprises will reinforce each other’s strengths, Choi said.