Mainland companies are trying to capitalize and leverage on the irreplaceable advantages of Hong Kong's bridging role to go global on a large scale, while Hong Kong is also trying to enhance that role, a recent report says.

Hong Kong has always been the first stopover destination for more mainland companies expanding globally. The bulk of those companies' overseas foreign direct investment, or OFDI, goes through the city before moving on to other countries and regions.

China CITIC Bank International's China Economic Report published in June says, Hong Kong had 47.8 percent and 61.6 percent of the investment flow and investment stock of the mainland's OFDI in 2011, respectively, making the city the biggest immediate investment destination for mainland companies expanding globally.

The bulk of the mainland companies' OFDI into Hong Kong flows into the leasing and commercial services sector, where it accounted for 38.1 percent and 35.7 percent of the investment flow and stock, respectively, in 2011. The second major sector to get the companies' OFDI in 2011 was wholesale and retail trade, where it accounted for 24.7 percent and 15.6 percent of the investment flow and stock, the report said.

More than half of the mainland's OFDI in Hong Kong, and more than 70 percent of the non-financial OFDI in Hong Kong, eventually flows into other countries and regions, it said.

Hong Kong's main competitive advantages are: geographical proximity, economic integration and linguistic connections with the mainland, which make it a natural choice for Chinese mainland companies trying to expand.

Also, Hong Kong boasts a comprehensive professional services network that supplies all-round, highly efficient and top-quality services to mainland companies heading toward internationalization.

The city's efficient government, sound legal and regulatory system, transparent and free information flow, robust capital market networks, stringent intellectual property protection and sophisticated infrastructure also contribute to a superior business setting for mainland companies.

The Hong Kong market also operates within a framework in compliance with international protocols, another advantage for companies with internationalization plans.

The report says Hong Kong should boost its global investment and service platforms to maintain its competitive edge in the industry because other financial centers such as London, New York and Singapore are gearing up to serve mainland companies planning to expand globally.

oswald@chinadailyhk.com.cn

(China Daily Africa Weekly 08/30/2013 page19)