Investors March On Into New Territory

The pattern of spending on the mainland is shifting from process industries to the infrastructure needed to help China modernise. Louise Lucas reports

Hong Kong companies have long been in the vanguard of the commercial march into China. The territory accounts for some 60 per cent of Chinas external investment - as much as 80 per cent in the case of neighbouring Gangdong province - and the pace shows no signs of slowing down. The pattern of spending is, however, undergoing a metamorphosis.

The first wave of Hong Kong investors in China essentially comprised process industries, keen to capitalise on Chinas cheap land and labour to feed overseas demand. Todays investors are more likely to be building office blocks, roads and power plants - the infrastructure which will allow mainland China to modernise its economy.

 

Even so, manufacturing is set to remain crucial to Hong Kong investors well into the next millennium, as the case of V-Tech, an electronics company which has a US$150m factory in Dongguan in southern China illustrates. It plans to complete its second US$200m plant in 2003, quadrupling its production capacity.

The company, turns out some 15m educational toys a year, along with cordless phones and computer products.

On certain fronts I hope that it will be easier after the handover, says Mr Allan Wong, chairman and chief executive of the company.

I hope that cross-barrier formalities will be simpler once Hong Kong is part of China