Hong Kong’s plan for an urban overhaul offers opportunities to Canadian clean tech companies.

Hong Kong has, for some time, been a platform for foreign firms expanding their markets into Mainland China and throughout Asia. Canada, however, has never had as substantial a foothold there as it should.

Currently, there are only about 150 Canadian firms using Hong Kong as their Asian base. Yet the strength of Canada-Hong Kong relations is indisputable, as evidenced by the Canadian Chamber of Commerce in Hong Kong. It’s the largest Canadian business association outside of Canada, and the second largest foreign Chamber in Hong Kong. Despite this, the Canadian Consulate in Hong Kong is unable to respond to frequent requests for new Canadian suppliers because Canadian companies aren’t seizing the opportunities available.

Hong Kong has been the launch platform for North American and European countries in Asia for many years, with its history of British rule of law and regulatory system, coupled with English as the common language of business. This makes the business climate familiar for Westerners. The workforce is globally aware, educated and typically speaks a minimum of two languages.

Another key advantage to establishing a base in Hong Kong is its ‘Closer Economic Partnership Arrangement’ (CEPA), which offers preferential access to Mainland markets for Hong Kong companies in selected business sectors. It also has one of the world’s simplest tax systems and no foreign ownership restrictions. All of this adds up to an extremely user-friendly business climate for foreign companies.

Hong Kong’s infrastructure needs  
The demand for environmental solutions and products in Hong Kong is substantial right now. The extent of public investments and the timelines the region has put in place for implementing massive infrastructure change is remarkable by North American standards.

The 2008-09 Policy Address for Hong Kong included programs and investments for a low carbon economy, clean fuels, energy efficient buildings, energy audits and conservation and waste reduction and recycling. The Hong Kong government has launched major initiatives in waste management, water quality and air pollution control.

Hong Kong companies own 65,000 factories in Mainland China and now they want those factories to clean up their act. An example of how they are going about that is the Hong Kong Federation of Industries’ “1-1-1- Project” — One Factory, One Year, One Environmental Project.  

Air pollution
In Hong Kong, there are 279 cars per kilometre of roadway, compared to 37 cars per kilometre of road in the U.S., and only four per cent of U.S. cars run on diesel. In Hong Kong, 25 per cent are diesel-powered. Due the building density in Hong Kong, these emissions don’t disperse easily, causing extreme low-level pollution. Add the industrial and power plant emissions in the Pearl River Delta on the neighboring Mainland. The health and well being of Hong Kong’s 7 million residents and 77,000 visitors per day can no longer tolerate uncontrolled emissions.

To address this, the region has create Action Blue Sky, a multi-faceted, and financially well-backed program to tighten emissions, update pollution control technology, and invest in renewables. On the drawing board is a 100-megawatt offshore wind farm in Hong Kong’s waters. Hong Kong is also working with the mainland Guangdong government to address regional smog problems, with emission reductions targets that put the Kyoto Accord to shame.  

Water
Right now, 25 per cent of Hong Kong’s sewage goes untreated into its harbour. The government is investing CDN $3 billion over the next ten years in treatment systems and infrastructure and they are looking for public-private sector partnerships to design-build-operate these facilities.

A CDN $360 million investment has been set aside for fixing 370 kilometres of antiquated water mains. Add to that figure major investments for water conservation and resource protection, grey-water recycling and desalinization technologies.

And like every other first world economy, Hong Kong produces more solid waste than it can handle. Its three landfills will be full within eight years, and the city is scrambling to implement recycling and recovery programs with plans to spend $1.2 billion for a landfill extension project.

Springboard to China
In Mainland China, the State’s 11th Five-Year Plan 2006-2010 has committed US$17 billion for protecting the environment. It is now rolling out aggressive top-down mandates for its factories and businesses, with a focus on provinces with heavy industry and manufacturing. These businesses must make changes fast but need help to do it. By establishing a base and network in Hong Kong, foreign companies are well positioned to help these companies and capture these opportunities.

There are endless market expansion opportunities in Hong Kong and Mainland China. Yes, the Chinese GDP is in decline along with the rest of the world, but their GDP is slipping to seven per cent after years of double digit growth. In a period when North American markets are not growing domestically, it makes sense to assess what other opportunities are and determine whether now is the time to go East.
 

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