Speaking to the North America Environmental Technology Mission to Hong Kong

I recently gave a speech on "Hong Kong’s tax advantage for mainland enterprises’ outbound investment" during the Briefing on Hong Kong Platform for mainland outbound investment. In recently years, there is a growing trend of Chinese mainland companies actively seeking overseas investment and cooperation opportunities. Hong Kong Trade Development Council put together a mission for North American companies to visit Hong Kong, Guangzhou, Nanjing and Wuxi from October 28 to November 3, 2011. More than 15 environmental technology companies from North America visited Hong Kong and the mainland to familiarize with the industry in this region and establish contacts with potential investors on the mainland.

Three decades ago, China started to emerge as a leading destination for global sourcing of low-cost goods.  Today, the primary motive of most global investment in China has been about capturing market share in fast-growing urban consumers and a global source of capital. FDI from China alone has surged from roughly US$2.7 billion in 2002 to over US$59 billion in 2010. China’s next five-year plan is likely to call for more than $450 billion in investment to protect the environment. Wastewater treatment companies will be hoping to reap the benefits. China’s investment in environmental protection which includes wastewater treatment and pollution control has reached more than $224 billion during the current 11th five-year plan (2006-2010). With a year to go in the current cycle, the original budget of $219 billion is likely to blow out even further.

More than 50% of the Mainland ODI was invested in Hong Kong or through Hong Kong to overseas. With world class intermediaries and services providers, Hong Kong’s role is to facilitate the communication and mutual understanding between Chinese mainland and overseas companies. Overseas companies could be benefited from services Hong Kong companies offer in facilitating cross border acquisitions and investments activities, including financing, due diligence, business valuation, feasibility studies, risk assessments and other services. And Hong Kong is actively expanding its treaty network. As of now, it has about 21 treaties, 13 of which were signed in 2010.

I see more and more outbound investment from China to the US and other parts of the world in the coming years, and Hong Kong will continue to play an important role in supporting mainland enterprises' global expansion plans.