This year marks the 20th Anniversary of Hong Kong’s return to China and the establishment of the Hong Kong Special Administrative Region (HKSAR). Since 1997, the enduring success of the “one country, two systems” formula has been instrumental in cementing Hong Kong’s position as the “super-connector” between mainland China and the rest of the world.
Hong Kong and Japan have enjoyed a stable and mature relationship for many years. There are currently about 1,400 Japanese businesses operating in Hong Kong, forming the largest group of international companies in the city. The number exceeds even those from the U.S. and mainland China. Japan is a global economic leader and has a lot to offer the international market. It is not limited to Japanese products; Japan’s technology and infrastructure solutions are also in high demand around the world. With a range of comprehensive and quality business services, Hong Kong is the springboard that can help bring the best of Japan to mainland China and the rest of the world. We have the know-how, experience and talent to help Japanese companies to penetrate into overseas markets more effectively and extensively.
Bilateral trade between Hong Kong and Japan is also active, with Hong Kong being Japan’s eighth-largest trading partner and fifth-largest export market in 2016. Reciprocally, Japan was Hong Kong’s fourth-largest trading partner, with bilateral trade of $46.8 billion in 2016. Remarkably, for a city of some 7.3 million people, Hong Kong has been the largest overseas market for Japanese food and agricultural products since 2006, currently accounting for about 25 percent of those exports, according to Japan’s Ministry of Agriculture, Forestry and Fisheries. Apart from the numerous Japanese restaurants in Hong Kong, much of the food produce is re-exported to markets across Asia. So it is hardly a surprise that Japanese exhibitors are among the largest contingent at the annual Food Expo in Hong Kong, showcasing products to more than 490,000 public visitors and close to 21,000 trade buyers at the fair last year.
Hong Kong people love Japanese culture and Japanese products, and many Japanese companies have approached us for advice on how to successfully sell their products in Hong Kong. While that is certainly very welcome, we would usually remind Japanese companies that they should not lose sight of the huge market potential in mainland China and overseas that would become favorably accessible to them if they come operate in Hong Kong.
Hong Kong has made a unique free trade pact with mainland China called the Closer Economic Partnership Arrangement (CEPA), under which products made in Hong Kong and various business services provided by Hong Kong companies can enjoy tariff-free entry to mainland China. Japanese firms incorporated in Hong Kong, or if they partner with a Hong Kong firm, can enjoy the benefits under CEPA. Hong Kong and Japan also have had a comprehensive double taxation agreement in place since 2011; Japanese companies are well protected from being taxed by both governments at the same time.
Looking ahead, the “Belt and Road” initiative put forward by the central government of China presents further business opportunities to Japanese companies. The grand and forward-looking vision seeks to deepen economic ties and infrastructural connectivity between some 65 countries in Asia, Europe and Africa, accounting for about 30 percent of both global gross domestic product and the world’s merchandise trade. The infrastructural projects that it promises would generate tremendous demand on related technology solutions, capital, experience and expertise. We all know about the remarkable quality, reliability and productivity of the transport infrastructure in Japan. The Belt and Road initiative offers a new perspective for Japan to export infrastructure, and Hong Kong has the means, expertise and connections to match interested parties with potential clients.
On the tourism front, the ties between Hong Kong and Japan are growing ever stronger as well. Hong Kong is the fourth-largest source of tourists to Japan with about 1.84 million Hong Kongers visiting the country last year, according to Japan’s National Tourism Organization. That is an increase of 21 percent compared to a year earlier. And the number is likely to rise further as Japan gears up to host the Rugby World Cup in 2019 and the 2020 Tokyo Olympic and Paralympic Games the following year. On the other hand, Japan is Hong Kong’s fifth-largest source market, with Hong Kong receiving more than 1 million visitors from Japan in 2016.
To celebrate the HKSAR’s milestone anniversary, the government is organizing a series of events locally and in various overseas countries this year. In Japan, there will be a number of events in such fields as music, dance, art and culture to showcase Hong Kong’s vibrant lifestyle and creativity, including a “Hong Kong in Miniature” exhibition in Tokyo from Sept. 29 to Oct. 9, performances by the Asian Youth Orchestra in Tokyo on July 31 and Aug. 1 and by the City Contemporary Dance Company in Niigata on Oct. 15. We welcome all in Japan to join in the celebrations and get a glimpse of Hong Kong’s myriad charms, which would help promote the understanding of Hong Kong in Japan and further deepen the ties between the two places.