Guangdong, HK, Macao can play key role for B&R

By Liang Haiming Source:Global Times Published: 2017/5/14 23:08:40

Illustration: Luo Xuan/GT

With the "One Belt and One Road" (B&R) initiative expected to support China's medium- and long-term development, practical measures are needed to deal with the challenges of implementing the plan.

Over the past few decades, companies in Guangdong Province, Hong Kong and Macao have accumulated rich experience of "going global." If the B&R could use the resources and experience of the Guangdong-Hong Kong-Macao Greater Bay Area, it would help Chinese mainland companies increase overseas direct investment, explore overseas markets, expand product exports, deal with excess capacity and break through trade barriers, laying a solid foundation for the comprehensive and successful implementation of the B&R.

First, the resources and experience of the Guangdong-Hong Kong-Macao Greater Bay Area could be used to facilitate a cross-border "time-space envelope," a kind of bloc devoted to helping mainland companies go global.

Many of the successful overseas investments made by companies in Guangdong, Hong Kong and Macao are attributed not only to the decision-makers' international insight and rich experience, but also to the support of a "trinity" of local governments, semi-government agencies and commerce chambers. Take the "trinity" in Hong Kong as an example. The Hong Kong government leads the general development direction for the local economy and companies; semi-government agencies like the Hong Kong Trade Development Council and the Hong Kong Productivity Council are committed to international trade negotiations and market exploration; and various commerce chambers like the Federation of Hong Kong Industries and the Chinese Manufacturers' Association of Hong Kong offer their member companies detailed investment guidelines through such means as analysis seminars, field studies and investigations, while also meeting their overseas investment needs for services in terms of finance, infrastructure and trade.

Against the B&R background, the relevant authorities could also consider using the mechanism for reference. With the experience of the Guangdong-Hong Kong-Macao Greater Bay Area, one or more time-space envelopes could be established in each of the free trade zones for certain key countries, industries and projects along the B&R route.

The time-space envelope for the B&R could consist of government departments, semi-government agencies, banks, funds and commerce chambers inside the free trade zones, with all the relevant private enterprises connected by a strategic network and investment platform. Such an approach would further help mainland companies "go out" by enhancing the connections and coordination among them.

Second, the resources and experience of the Guangdong-Hong Kong-Macao Greater Bay Area could be used to establish a complete high-standard international mechanism for investment and follow-up services to help mainland companies penetrate further into the overseas markets.

Due to the similarities in industrial structure between China and some countries along the B&R route, there is fierce competition between them. Meanwhile, Chinese companies are also facing strong competition from Western multinationals in investing in countries along the route. Moreover, past experience has shown that a government transfer in countries along the route may lead to the termination of contracts with Chinese companies. In the face of these challenges, companies located in other parts of China may go global in cooperation with companies in Guangdong, Hong Kong and Macao that can offer first-class international services. In addition to offering investment in infrastructure and other forms of hardware, they could also provide countries along the route with high-standard, high-efficiency and high-value-added services, so that these countries could rely on and welcome Chinese investment.

It is unusual for companies located in the Guangdong-Hong Kong-Macao Greater Bay Area to encounter contract defaults for no reason in foreign markets. This is because they have a large number of world-class legal, accounting and finance professionals to offer professional risk assessment and legal protection services, and most of these companies follow the current international-standard model when making overseas investments.

As such, mainland governmental agencies could invite the Hong Kong and Macao regional governments in particular to participate in the design and formulating of a new mechanism for overseas investment. By learning from the experience of Hong Kong and Macao agencies and companies, mainland governmental agencies should establish a transparent, trustworthy, professional and normalized foreign investment cooperation model with countries along the route based on international legal systems.

Third, the resources and experience of the Guangdong-Hong Kong-Macao Greater Bay Area could be used to set up a long-term goal of promoting the B&R by setting up media agencies and research institutes.

The success of overseas investment by many companies in the Guangdong-Hong Kong-Macao Greater Bay Area is mainly because they are good at dealing with the governments, media and the public in their investment destination countries. They have a clear investment concept and a positive and responsible image, thus winning a very friendly investment environment.

This is exactly what many mainland companies need, especially when some countries along the route still have doubts about the initiative. Therefore, relevant authorities should set up media agencies and research institutes related to the B&R in the Guangdong-Hong Kong-Macao Greater Bay Area, and should encourage and subsidize institutes to set up think tank headquarters and branches in this region, so as to promote the B&R's policy purposes and to create a favorable environment for mainland companies in overseas markets.

The author is chief economist with China Silk Road iValley Research Institute, a Guangzhou-based think tank.


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