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American Chamber of Commerce Hong Kong - Bridge to New Opportunities in China

New deal for Hong Kong and US trade

May 06, 2011

Signed by HKTDC Executive Director Fred Lam and US Assistant Secretary of Commerce for Trade Promotion Suresh Kumar, the Pacific Bridge Initiative program aims to help US companies tap growing Asian markets and Mainland China in particular. The PBI is the first formal agreement of a trading partner to support the National Export Initiative (NEI) announced by President Barack Obama early this year, which aims to double US exports in 5 years and create 2 million American jobs.

Under the PBI, the HKTDC will work together with the US Commercial Service to organize road shows, trade fairs, seminars, inbound and outbound missions, as well as an online portal to help explore business opportunities for Hong Kong and US companies. The first trade fair that benefited from PBI is the Eco Expo Asia 8, which was held at the AsiaWorld-Expo with more than 30 US companies participating – the largest contingent from the US ever at the environmental show since it was started 5 years ago.

Raising awareness
Speaking at a luncheon organized by the American Chamber of Commerce and the signing of the PBI, Dr. Kumar stresses that American businesses are excited to be part of the Asian boom.

“American businesses are keen to engage in this region. The administration is committed to supporting them by connecting them to business in China, Hong Kong, and beyond,” he said, “We have the technology, products, and services that Asia needs to improve lives and livelihoods.”

“The PBI Agreement demonstrates our commitment to work together to achieve
by Daniel Kwan the NEI goals that President Obama announced this January,” Dr. Kumar, who also heads the US Commercial Service, said. In an interview with, Ralph Chow, Director, Product Promotion of HKTDC, explained that although the TDC has been promoting trade with the US for decades, the PBI is a “structured approach” and represents much greater commitment by all parties involved to help US businesses to make use of Hong Kong as a platform to export and invest. He said what’s important is to first raise awareness among US companies about the potential in markets like China, as well as the support services available for them to go abroad. “We will have to create the awareness among the US companies about this Pacific Bridge Initiative ... and how they can make use of the PBI to approach the Mainland market," he said.

Andrew Wylegala, Chief Commercial Consul of the US Consulate General in Hong Kong, echoed his view: “The issue has been making the companies aware that we exist and then that the relatively distant Asia is worth the time and interest to approach. So that’s been the harder effort.”

From Eco Expo Asia to FILMART
But that is changing slowly as the Eco Expo Asia shows. Partly thanks to efforts by Commerce Secretary Gary Locke and stepped up efforts by US Commercial Service offices in the US, recruitment efforts paid off this year. According to Wylegala, pressure at home also encourages more US firms to look overseas for sales.

“We also see that the economic climate is supporting our [recruitment] efforts because there is pressure on American companies to develop new markets,” he said. “A realization that 95 percent of the world’s consumers live outside the US also leads to a desire to move outside.”

Both the HKTDC and the Commercial Service are now looking to replicate the success of Eco Expo Asia at FILMART – Hong Kong’s annual trade fair to promote the city as the regional hub for distribution and production of film, TV programs, and entertainment-related products in Asia Pacific – next year. In March, American independent film and television companies will, for the first time, have their own pavilion at the Hong Kong FILMART thanks to a grant by the US Department of Commerce. The grant to the Independent Film & Television Alliance (IFTA) will help create an American Pavilion both at FILMART and another major international film market yet to be announced. IFTA projects the pavilions will generate US$112 million in export revenues over 3 years for small- and medium-sized companies, creating 1,120 direct and 2,464 indirect American jobs.

It is natural that FILMART will benefit under PBI as creative and entertainment industries is selected as one of the 9 priority sectors supported by the program. The other areas include licensing services, environmental products and technology, education, and food and beverage. According to Chow, these sectors are chosen partly because US companies are known to be market leaders in these areas, and there are growing demands in these fields in Mainland China. For example, the Chinese government is quite serious about the environmental issues, so China is keen to import a lot of these environmental technologies,” he said, “These are areas where the US companies are good at.”

Hong Kong platform
As the HKTDC and US Commercial Service step up their promotional activities, they will also highlight benefits US companies may enjoy by using Hong Kong as the platform to enter the China market. Closer Economic Partnership Arrangement (CEPA) – which allows service providers in Hong Kong greater market access in the Mainland – is one of such benefits. “At this moment, over 40 service sectors have been opened up (under CEPA) for the Hong Kong companies to approach the Mainland market. For product trade, more than 1,600 kinds of products have been offered tariff-free when they are exported to the Mainland market,” Chow said.

“All these benefits can be enjoyed by the US companies if they make use of Hong Kong as their platform,” he added, “At the same time, all these benefits are actually better than the World Trade Organization offers. So they can actually enjoy more benefits than if they simply make use of the WTO offers.”

In addition, incentives are available from both Hong Kong and the US sides. Hong Kong government offers various incentives to help companies in Hong Kong such as SME loan financing schemes and trade promotion funds. The HKTDC sponsors new buyers to trade shows in Hong Kong.

Another incentive program available is the Green Export Enabler Program (GEEP) funded by the US Department of Commerce and implemented by the El Camino College Centre for International Trade Development. The program’s objective is to increase global competitiveness and exports of California green technologies to China. With GEEP, US companies enjoyed lower fees to participate at the Eco Expo Asia.

According to Wylegala, the HKTDC and the US Commercial Service are working on various programs under PBI in the coming year. Focused trade missions and trade fairs are certainly on the drawing board. Another component concerns outbound investment related missions. “In the Commerce Department and in Commercial Service, they’ve established an Invest-in-America office to support those activities,” he said, “so an investment component could be an interesting dimension.”

Both Wylegala and Chow agree that much remains to be done to realize the full potential of PBI.

“We encourage the US visitors coming to Hong Kong to make side trips to Mainland China so that they can understand more about the market,” Chow said, “When we organize the programs for them in China, we can also introduce them to some of the government officials who can tell them the latest policies so that they can have a comprehensive understanding about the Mainland market.”

“This will be very helpful for them to formulate their marketing strategies and also to prepare for their future approach to the Mainland market,” he added.

Wylegala said he is optimistic that more US companies will come to Hong Kong – and China – as more activities and events planned under the PBI are launched.

“I would say that we have already been doing the bulk or three-quarters of what we do under PBI, but we want to give it a framework and an added profile so that efforts like the Eco Expo Asia are known and will not become something like a best-kept secret anymore,” the US chief said.

“More US companies, Hong Kong companies, third country companies know about this effort, and they will know that the Americans are committed to this market and this Eco Expo Asia won’t be a one-off, but it would be more of a model. We will repeat this with half a dozen shows every year,” he added.

New deal for Hong Kong and US trade

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