HONG KONG: At the beginning of China's economic reform, Hong Kong brands were once very popular in mainland cities, including Beijing.

As the recently held Hong Kong Brands Exhibition taking place in the National Convention Center in Beijing - the first of its kind - showed, the SAR's brands have started to step into the Beijing market again.

Products and services welcomed by the mainland range from financial services, subway projects, electrical products, jewelry and watches to comics and toys.

"The quality of Hong Kong brands offers a better guarantee, while their consumer service is good. The company will answer enquiries, whenever there is a problem," Beijing resident Mr Wang said.

"Made in Hong Kong" has come to mean trendy, innovative and of good quality. The products usually have strong attractiveness and competitiveness in the market," said a middle-class consumer on the mainland.

Felix Chan, who is the Northern China Regional Director at the Hong Kong Trade Development Council, said Hong Kong enterprises, with the US and Europe as their major export markets, have been impacted by the global financial crisis.

The mainland market, however, has been less affected, especially the Beijing market, where consumer spending power is still strong. Therefore, the mainland is an attractive market for Hong Kong brands, Chan concluded.

Hong Kong enterprises have always been the largest foreign investors in Beijing. At present, almost 10,000 Hong Kong enterprises are investing in Beijing, with more than $13 billion of investment in total.

Meanwhile, for the first eight months of 2009, Hong Kong companies have commenced 368 new investment projects in Beijing, with contracts worth $3.71 billion, a 27.7 percent jump from a year earlier.

Since the Closer Economic Partnership Arrangement (CEPA) launched in 2003, more than 1,500 products from Hong Kong have been included in the zero-tariff list. Thus, Hong Kong products, compared with other import products from the US, Europe, Japan and Korea, have an advantage to offer in lower prices.

Apart from different kinds of Hong Kong products, the SAR has also contributed to major infrastructure projects in the capital, such as the subway project.

Hong Kong's MTR Corporation invested in and will operate the Beijing Metro Line 4. In fact, the MTRC will have the right to operate the metro line for the next 30 years.

The Beijing Metro Line 4 is the first railway project in mainland cities that adopts a franchising model of operation. MTRC forecasts profits in just three years time, and expects to break even after 10 years.

Meanwhile, Hong Kong's banks have become major foreign lenders in Beijing. Hong Kong lenders, including HSBC, Hang Seng Bank, and Bank of East Asia have set up branches in Beijing.

According to CEPA, the threshold for Hong Kong banks to enter the mainland has been lowered to $6 billion from $20 billion. Hong Kong lenders can also apply to the China Banking Regulatory Commission directly for setting up branches on the mainland, even if they do not have a representative office on the mainland.

A spokesperson of the People's Bank of China said earlier that it will continue to attract more financial institutions in Hong Kong interested in opening branches in Beijing.

Alan Yip, a well-known creative designer from Hong Kong, said creative talents in Hong Kong should try to penetrate mainland markets more.

"Not many industries are left in Hong Kong. People will have to go to the mainland to explore market opportunities," Yip said.

He added that industrial design is growing very fast on the mainland, despite its brief history of only 15 years.

This edited article was first published in Bauhinia magazine Dec 2009. Translation by Joey Kwok

(HK Edition 12/25/2009 page3)