Hong Kong

Each year, Aerius organizes a study trip. This year, Hong Kong is next, after successful (European) trips to Brussels, Berlin and London and intercontinental destinations like Florida and Dubai. In Hong Kong we are going to visit distinctive companies and institutions with relation to the aircraft and logistics industry. To make this study trip possible we will do research for several aviation related companies and government institutions.

This article is written to inform and hopefully interest parties that might have an assignment for us. We hope you know (or better yet: are) somebody to whom Aerius can provide some knowledge. The members who will join this summer’s trip will be selected with the research assignments in mind, for example: when judicial knowledge is needed, the participation of a law student will get priority. As soon as a good match is found – this may also be a multi-disciplinary group – the students begin their desk research, so that they can efficiently fill in the serious part of their stay abroad.

The idea of Aerius’ study trips is that of mutual benefits:

Besides the fun of the ‘unofficial’ part of the stay abroad, the students get a chance to visit relevant foreign companies and institutions (e.g. Universities and government authorities) for a student fare
Besides their training in ‘desk research,’ they get the chance of doing some ‘field research’
The sponsors can expect a good research report for relatively little money (former sponsors often come back with other assignments for the next trip)
When you become aware of certain research assignments we could complete in connection with our visit to Hong Kong, or have some suggestions on where possible assignments can be obtained, we will be delighted to hear from you.
The Hong Kong committee,

Rob Besseling
Kristian Horst
Dennis Smit
Robert-Paul van Tol

China is situated in eastern Asia, bounded by the Pacific in the east. The third largest country in the world, next to Canada and Russia, it has an area of 9.6 million square kilometres, or one-fifteenth of the world’s land mass. The border stretches over 22,000 kilometres on land and the coastline extends well over 18,000 kilometres, washed by the waters of the Bohai, the Huanghai, the East China and the South China seas. The Bohai Sea is the inland sea of China. There are 6,536 islands larger than 500 square metres, the largest is Taiwan, with a total area of about 36,000 square kilometres, and the second, Hainan. The South China Sea Islands are the southernmost island group of China. China lies mainly in the northern temperate zone under the influence of monsoon. Mountains and hilly land take up 65 percent of the total area. There are five main mountain ranges. Seven mountain peaks are higher than 8,000 meters above sea level. The Bohai Sea, East China Sea, Yellow Sea and South China Sea embrace the east and southeast coast.

The national language is Putonghua (the common speech) or Mandarin, which is one of the five working languages at the United Nations. Most of the 55 minority nationalities have their own languages.

China is a multi-religious country. Spread all over the country, we find Buddhism, Taoism, Islam, Catholicism and Protestantism.
Chinese Money is called Renminbi (RMB). The popular unit of RMB is Yuan. The official exchange rate between U.S. Dollar and Renminbi Yuan is about 1 : 8.3 (1.00 Dollar = 8.30 Yuan). In Hong Kong they call the money Hong Kong dollar’s. The time in Hong Kong is 8 hours ahead of GMT.

Hong Kong’s economic life began to slow after the United Nations’ embargo on trade with China in the 1950s. The territory was forced to develop internal industries taking advantage of local and regional resources in order to continue to grow. And Hong Kong’s success in this field was due to a number of factors, namely cheap labour, capital input and the government’s tax policies. The constant influx from China of capital and manpower led to the establishment of light manufacturing throughout the territory by the 1950s and 1960s. At the same time, Hong Kong’s tax policies began to attract growing foreign investment further adding to the territories rapid growth. In the 1950s Hong Kong began in earnest a new career as a manufacturing and industrial centre. Textiles, electronics, watches, and many other low-priced goods stamped “Made in Hong Kong” flowed from the territory in ever-increasing amounts. Associated with events in China, the territory was thrown into turmoil in 1967.

The flow of refugees from China continued unabated throughout the late sixties and into the seventies adding to the human resources, as a work force, in Hong Kong. During the 1980s Hong Kong started to work with China on a series of joint projects that brought the two closer together.

China has always maintained that the three treaties which brought Hong Kong into existence were signed under pressure, and thus unjust. In 1984, the Joint Declaration signed by Britain and China agreed that the sovereignty of Hong Kong would revert back to China in 1997. Hong Kong became, from July 1, 1997, a Special Administrative Region (SAR) of the People’s Republic of China. The Joint Declaration also provides that for 50 years after 1997, Hong Kong’s lifestyle will remain unchanged. The territory will enjoy a high degree of autonomy, except in foreign and defence affairs, and China’s socialist system and policies will not be practised in the SAR.

The new Hong Kong International Airport at Chek Lap Kok was officially opened on 2 July 1998 by president Jiang Zemin, but was opened for business on July 6. It replaced the existing international airport at Kai Tak, one of the world’s busiest international airports for both passengers and cargo. Hong Kong International Airport covering 1,248 hectares is almost four times the size of the old airport. The new airport opened with a single runway and facilities able to meet the demand of 35 million passengers and 3 million tonnes of air cargo annually. The second runway was opened by the end of 1998. It is to be expected, to handle ultimately 87 million passengers and 9 million tonnes of cargo a year. The new airport is able to operate round-the-clock without the night-time flight restrictions imposed at the old airport at Kai Tak. Enclosed you will find a fully detailed list with information about the two airports.

The Airport Authority was established in 1990 by the Hong Kong Government as a provisional body to plan, design and build the airport. The Authority was responsible for the construction of the airport islands, its runways and airfield, the passenger and terminal complex and all on-island infrastructure.

The Hong Kong Special Administrative Region Government is responsible for air traffic control, police, fire services and other institutional facilities such as the airmail centre.

The Airport Core Programme (ACP) includes ten infrastructure projects. These developments include 34 kilometres of expressways and tunnels; a high-speed rail link that connects the airport with Hong Kong major population centres; the world’s longest road-rail suspension bridge; a third cross-harbour tunnel linking Hong Kong to Kowloon, and an new town development. The ACP brings a lot of benefits for the community. The new international airport is located away from the urban area. That means, the airport is not a nuisance to the Hong Kong population. A road/rail network gives the possibility to access the airport in a short time. Due to the ACP, there is more employment, which does good to the economy. For the first time, Lantau Island is linked to the rest of Hong Kong by road. There are many more projects, which will make a better infrastructure.

Hong Kong in figures, the latest developments:

Preliminary figures showed that real GDP declined by 7.1% in the third quarter of 1998, with private consumption contracted by 10% and gross fixed capital formation by 9.1%.
The seasonally adjusted unemployment rate rose to 5.5% in Sep-Nov 1998.
Inflation measured by CPI(A) declined by 0.9% in November 1998.
The prime interest rate was further reduced to 9% on 21 December 1998.
The number of tourist arrivals grew by 5.1% in November 1998.
Total exports dropped by 6.9% in the first eleven months of 1998, while imports declined by 11
Major Economic Indicators 1996 1997 1998
Population (mn) 6.4^ 6.6^ 6.7**
Gross Domestic Product(US$ bn) 152.8* 171.8* 165.0#
Real GDP Growth(%) 4.6* 5.3* -5.0#
GDP Per Capita (US$) 24,216* 26,416* 24,627#
Inflation (%) 6.0 5.7 3.0 (Jan-Nov)
Unemployment Rate (%) 2.8 2.5 5.5 (Sep-Nov)
^ End-period figures * Revised estimates (Oct 98)
# Revised projections (Nov 98) ** Mid-1998

According to the United Nations’ World Investment Report, Hong Kong ranked as the fourth largest source of outward foreign direct investment in the world in 1997. Apart from the Chinese Mainland, other Southeast Asia developing countries are receiving an increasing amount of capital from Hong Kong. In terms of cumulative amount on approval basis, Hong Kong is the largest investor in the Chinese Mainland, and is among the leading investors in Indonesia, Taiwan, Thailand, Vietnam and the Philippines.

Hong Kong has long been the Chinese Mainland’s window to the world. It is a strategic gateway to foreign business contacts, modern technology and investment. Over 800 sailings, 100 flights, 35 trains and 26,000 vehicles move across the Hong Kong-Mainland border everyday.

Hong Kong is also the most important entreport for the Chinese Mainland as about half of the mainland’s exports are handled by Hong Kong. Out of Hong Kong’s total re-exports were either originated from or destined for the Chinese Mainland. According to China’s Customs statistics, Hong Kong ranked the third largest trading partner of the Chinese Mainland, accounted for 15% of the country’s total trade in the first nine months of 1998.

Hong Kong has been used by multinational companies as a regional base to manage their businesses in the Asia Pacific, particularly in the Chinese Mainland. Based on a government survey covering 11,819 overseas companies known to be operating in Hong Kong in 1997, of the 4,275 responses, 924 companies identified themselves as regional headquarters and another 1,606 identified themselves as regional offices. Japan has the largest number of regional headquarters and offices in Hong Kong with 499 companies, followed by the US (481), the Chinese Mainland (245) and the UK (216).
Hong Kong remains a favourable business centre for overseas investors despite its short term economic weakness.

Hong Kong: Gateway to China
Hong Kong is the premier gateway for trade and investment moving into and out of the Chinese mainland. The SAR is also increasingly a source of expertise and funding for China’s efforts to modernise its economy.
Hong Kong continues to handle about half of all exports to the mainland, and accounts for about half of foreign direct investment in China.

There are many more reasons for a company to settle in Hong Kong. At last a scoreboard for the economic success of Hong Kong point by point:

The world’s most liberal economy.
The world’s most service-oriented economy.
The world’s 2nd most competitive economy.
Asia’s highest concentration of fund managers.
The world’s first major city to have fully digitised telephone network.
The world’s busiest container port.
The world’s busiest airport in terms of international cargoes.
The world’s 3rd busiest airport in terms of international passengers.

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