Speeches and Articles by Former Consul General Michael Klosson

Remarks to "Partnering with the U.S.: Buying, Selling and Investing" Seminar
U.S. Consul General Michael Klosson

March 28, 2002

It is my pleasure to welcome you to this seminar on "Doing Business with America." I want to congratulate the U.S. States and Ports Association and the Hong Kong Trade Development Council for taking the initiative to organize this event.

I want to talk to you a little bit about what makes Hong Kong an attractive place for American companies to do business, and what services we at the Consulate can offer to promote U.S.-Hong Kong business ties. In doing so, I recognize that talking to Hong Kongers about business is a little like talking to a Saudi Arabian about oil. You probably know the issue better than I do, and even if you didn't invent the concept, your entrepreneurial skills certainly have set the standard for exploiting it.

Before doing so, let me underscore what has become evident in recent weeks: the U.S. economy is back in business. Recent statistics show that the U.S. economic recovery is proceeding faster than predicted even just one month ago. Real GDP, rather than declining in the fourth quarter of last year, actually grew 1.4 percent. Many analysts expect that the figure for the first quarter should be even higher. U.S. firms have liquidated inventory at a rapid rate and the need to replenish stocks should soon boost production and increase spending and income. Labor market conditions are also improving. Layoffs diminished noticeably in January and employment turned up last month. Consumer spending remains strong, particularly for purchases of new homes. The Conference Board's index of consumer confidence jumped to 110.2 in March, up from a revised 95 in February, and far in excess of the projected modest increase to 98. In simple language, that means consumer confidence surged to its highest level in seven months. Productivity is perhaps the key ingredient to the U.S. economy's underlying strength and resilience. In this regard, Alan Greenspan recently noted that productivity increases held up even in the face of last year's abrupt slowdown. The Bush administration believes the economic numbers should continue to look promising in the months ahead and Treasury Secretary O'Neil recently predicted that the U.S. economy will be growing at an annual rate of 3.0-3.5 percent by the end of the year.

Now to Hong Kong, where the effects of the American recovery are beginning to be felt, according to my conversations with colleagues in the trade. Hong Kong has been a key center of U.S. business interests in the Asia Pacific region for many years, and American companies have a long and successful history of trading and investing in this dynamic city. Hong Kong is our 15th largest trading partner, and over 1100 American companies have set up shop here, including seven of the 10 largest American banks. To see what that strong commercial relationship means in concrete terms, just look on any store shelf in Hong Kong and you will see a wide range of U.S. products. From cosmetics to medical equipment, from chocolate chip cookies to chicken feet, virtually every U.S. industry is represented here. And its not just what can be found on store shelves. U.S. companies have been very active in finance, insurance, consulting, accounting, franchising and many other service sectors. One of the largest American Chambers of Commerce outside of North America makes its home here as well.

By the end of 2001, according to preliminary U.S. Government statistics, U.S. direct investment in Hong Kong totaled approximately US$25 billion. And every year, thousands of U.S. business people come to Hong Kong to sell products, find agents and distributors, and look for partners that might help them do business in mainland China or throughout Asia.

For many years, we at the U.S. Consulate General have been encouraging American business people to look at Hong Kong as a gateway to China and Asia. With the accession of the mainland to the WTO, we are already experiencing an even higher level of interest regarding Hong Kong's preeminent status as a commercial bridge between East and West and a reliable, business-friendly platform for tapping opportunities on the mainland. To satisfy these needs, in 2001, the U.S. Consulate's Commercial Section arranged business matchmaking services in Hong Kong for over 70 American companies, typically providing each company with six to eight meetings. On a per capita basis, we had the highest number of matchmaking services of any U.S. diplomatic mission in East Asia. These meetings are impossible without potential partners like those of you here today. And many of these meetings have resulted in successful deals.

Our commercial section offers a range of services that include matchmaking, market research, company profiles, business counseling, assistance with trade disputes and detailed market briefings. We believe the post-WTO China market begins in Hong Kong, and we stand ready to offer our assistance to American companies looking for opportunities in Hong Kong, and to local businesses that are looking to buy from, or partner with American companies.

We routinely tell our visitors that Hong Kong's well-established rule of law, free flow of information and transparent business practices make the SAR an excellent place to conduct business. We tell them that Hong Kong's protection of intellectual property and commitment to improve its educational system make this city a growing part of the knowledge-based global economy. We tell them that Hong Kong's respect for freedom and human rights make this a great place to visit or live. And since September 11, we tell them that the Hong Kong government has joined strongly in the international effort to eliminate terrorism and has taken proactive steps to assure Hong Kong is a safe place.

Some commentators believe that China's WTO accession will be bad for Hong Kong. I strongly disagree. China's accession does not alter the fundamentals I noted above that make Hong Kong attractive to the international community as a venue for regional headquarters and a platform for accessing the mainland. There will indeed be challenges for Hong Kong to surmount, and significant adjustments will have to be made. But that is what Hong Kong has been doing for much of its history, powered in part by the dynamism of its business community. Much like a rising tide that lifts all boats, the increase in business in post-WTO China should overall enrich Hong Kong as well

It is my hope that this seminar will give you some fresh ideas about doing business with American firms. Our commercial section in the Consulate is here to help you learn about, and contact U.S. companies. I encourage you to take advantage of their resources. Later in the program, one of our commercial officers, Joel Fischl, will be making a presentation. Please don't hesitate to look for him and other members of our commercial section after the seminar. They stand ready to help you build your American business connections.