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Winning in Hong Kong is not a short cut to China

Hong Kong is back on the radar for civil engineers as it embarks on its next big infrastructure surge, but consultants have been warned not to be fooled into thinking the region will provide a springboard to the mainland.

Hong Kong has been something of a honey pot for British firms - particularly in the 1990s.

But more recently attentions had turned to lucrative markets in the Middle East, Latin America and to those that had bucked recessionary trends such as Australia and Canada.

Last week, NCE hosted its first Tunnelling 20Twenty conference in Hong Kong. At the same time, the Think Asia, Think Hong Kong event was held in London where over 100 government officials flew in to coax UK firms to consider doing business there.

The promise for those dipping their toes into Hong Kong through a handful of large scale projects is a golden ticket into mainland China and its seemingly never-ending appetite for more and more infrastructure.

UK trade ambassador to Hong Kong Stephen Cartwright has told NCE that Hong Kong was the perfect “springboard into mainland China” (News last week).

Whether this is actually the case, especially for small and medium firms, is another question.

Cost consultant Turner & Townsend has based its Chinese operations in Beijing from day one, and regional managing director Duncan Stone says mainland China is simply too different to Hong Kong to be relevant.

“I’ve observed companies that have done that [used Hong Kong to enter China].”

“We went straight into China ourselves and compared to our peer group, we’ve done quite well. There is a danger if you think you can just use Hong Kong and believe that they are close to China then they will have a strong affiliation to the mainland - but they don’t.”

This reflects research released last week by law firm Allen & Overy which says that after interviewing more than 1,000 top level executives from international firms including infrastructure and energy businesses, China was their number one growth market but was considered the hardest to enter.

The report, 50 Degrees East, said this was because of the regulatory environment.

Stone agrees. “China is so heavily regulated,” he said. “You can’t do delivery [taking a project from design through construction to commissioning] on projects because of the regulations which means they are protected. So anyone thinking they can go and deliver a full service should know that legally, you can’t do it.”

Atkins China managing director Samson Sin says the springboard has actually been working the other way.

“Chinese clients want to go outside China. They publicly list in Hong Kong and use that as a springboard to the international market.”

China certainly has been making large investments in infrastructure around the world and Sin says that where Chinese investment goes, Chinese contractors will follow. “But in terms of design to a western standard, they need international help…so there is a role for consultants.”

Whether it is opportunity in Hong Kong or opportunity from Chinese cash abroad, the prospects seem endless.

“Hong Kong is going through a wave of infrastructure development which clearly is stretching the industry at all levels,” says Stone.

Perhaps it is just the right place to be at the moment, regardless of whether it opens up the door to the mainland or not.

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