Green finance key to foreign businesses in Hong Kong

Johannes Hack, president of the German Chamber of Commerce, Hong Kong

HONG KONG: The 26th anniversary of the establishment of the Hong Kong Special Administrative Region (SAR) has seen the city make good progress in cementing itself as Asia’s world city, and this will strengthen its ability to attract overseas companies and talents.

“In many ways, Hong Kong is still stacking up really well,” said Johannes Hack, president of the German Chamber of Commerce, Hong Kong. “We can focus on what we can do to become more competitive.”

In an interview with China Daily, Hack said the SAR’s competitiveness in the context of regional competition has to be examined from a wider perspective.

“Looking at Singapore is one important aspect, but Hong Kong also needs to look beyond Singapore and ask: How are we stacking up?” noting that the Lion City is indeed a serious competitor for Hong Kong in areas like wealth management.

“It is not just Singapore. Dubai is also trying very hard to be an upcoming place for finance. At the moment, it is not terrific but, further down the road, it (Dubai) may become more important.”

The International Institute for Management Development, in the “World Competitiveness Yearbook 2023”, ranked Hong Kong as the world’s seventh-most-competitive economy, compared with fifth place in 2022.

To sharpen Hong Kong’s edges, Hack suggests the city should embrace digitalisation, leverage its niches in green finance, improve the education of the workforce, and bolster links with the Chinese mainland.

Business digitalisation is particularly important for the 500 to 600 German companies, branches and regional offices operating in the SAR, with most of them in the logistics and sourcing sectors, according to the German Chamber of Commerce, Hong Kong.

But it is different in Guangdong province on the mainland, where the majority of the German firms operating there are engaged in manufacturing services, with huge production facilities.

Although German enterprises in Hong Kong are not as financial services-oriented as those from the United States or the United Kingdom, they do benefit from financial services provided by Hong Kong in trade finance, currency hedging and other financial products.

“For trading companies, Hong Kong’s trade-hub status is very important because the city is a gateway to the mainland and the whole of Asean region as well. German trading companies can do business with all the countries in the region,” said Hack.

German supermarket chains and major retailers throughout Europe and the world have their sourcing companies in Hong Kong, while the mainland is still the most important source of goods.

German sourcing companies use their Hong Kong bases to run their operations in the mainland and other places.

“Hong Kong occupies a central geographical position in the region, with all the infrastructure sourcing companies need, such as quality control, laboratories and quality assurance,” noted Hack.

“Singapore has the advantage of oil trading and other trading activities but, for the sourcing business, Hong Kong is clearly the place with the talents and infrastructure.”

The chamber chief said Hong Kong was also an important sourcing base for German trading companies that were looking at supply-chain sources beyond the mainland. They currently were more focused on stabilising their operations on the mainland. — China Daily/ANN