Hong Kong businesses warm to New Silk Road initiatives

An increasing number of local industrialists are setting their sights on riding the New Silk Road, a strategic concept aimed at improving links between Asia, Europe and Africa.

The initiative of building a Silk Road "economic belt" and a 21st-century maritime Silk Road proposed by President Xi Jinping in 2013 has continued to attract attention from the business sector in Hong Kong, after the city was included in the action plan unveiled by the central government three weeks ago.

The scheme stipulated that Hong Kong, Macau, Taiwan and coastal regions of the mainland would "deepen their cooperation" and "build the Guangdong-Hong Kong-Macau Big Bay Area".

Many Hong Kong companies said they would embrace the New Silk Road initiative, even though they were waiting for more details.

"There is a larger market for Hong Kong products," said Eddy Li Sau-hung, president of the Chinese Manufacturers' Association.

He said the two initiatives could strengthen exchanges and bring economic prosperity to countries in the region. "When there is a link, good fortune ensues," he said.

Not only infrastructure builders but also Hong Kong exporters could benefit from the initiatives as consumption was expected to increase rapidly in the economies along the New Silk Road, Li added.

As labour costs in China continue to rise, Hong Kong manufacturers could consider moving some of their production facilities on the mainland to low-cost Silk Road countries to enjoy savings.

But Li said manufacturers should be cautious about relocating their production lines. "It depends on what types of products you are producing," he said.

Clothing and footwear could be easy to move, whereas hardware manufacturers would be less mobile geographically because the latter required more facilities, he explained.

Apart from the traditional manufacturing industry, the linchpins of the new digital economy could also have a rosy future in New Silk Road markets.

Data centre operator Grand Ming Group has mapped out an expansion plan to tap into future opportunities. Group chairman Chan Hung-ming said he expected high demand for quality data storage infrastructure as regional economies continued to pick up.

"We have started an investment project in Nanning [in Guangxi ]," he said .

The southern mainland city has been described as the country's gateway to Southeast Asian countries and a key node in the New Silk Road.

Although opportunities abound, some companies in Hong Kong still have concerns about entering unfamiliar markets, which have different legal systems and cultures.

The Shanghai Cooperation Organisation (SCO), which has also been pressing the New Silk Road development, said earlier that its member states in Central Asia generally welcomed foreign investors.

Speaking in front of dozens of company executives, professionals and academics during a seminar in Hong Kong on April 9, SCO secretary general Dmitry Mezentsev said the implementation of the New Silk Road initiative required a lot of talent.

"Everyone is able to contribute his or her effort," he said through an interpreter.

The organisation comprises China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. While security has always been the group's priority, economic cooperation is also emphasised.

Mezentsev said he looked forward to further discussing business opportunities brought about by the New Silk Road initiative with the city's entrepreneurs. But he urged those who were interested in investing in Central Asia to be prudent when working with potential local partners, without specifying how and when the private sector could enter this regional market.