The Impact of CEPA on Hong Kong Transportation and Logistics Companies: A Head Start on the Competition

October 02, 2003 | BY

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CEPA opens new doors to Hong Kong companies seeking access to mainland markets. The big winners are Hong Kong transportation and logistics companies.

By Dan Ryan, Ince & Co., Shanghai & Hong Kong

As a result of the Closer Economic Partnership Arrangement (CEPA) signed on June 29 20031 between Hong Kong and the PRC, Hong Kong companies seeking to engage in transportation and logistics business to, from and within the PRC will benefit in several key ways.

First, Hong Kong companies will be able to establish wholly foreign-owned enterprises (WFOEs) in China that are able to engage in certain transportation and third-party logistics businesses earlier than is provided for under China's WTO timetable. At present, engaging in many types of transportation and logistic businesses in China requires foreign companies to establish a joint venture with a PRC partner.

Second, in many cases CEPA significantly reduces the minimum capital requirements required for Hong Kong companies to establish certain transportation companies in China. Minimum capital requirements have traditionally been quite high and have formed a barrier to establishing many types of transportation and logistics companies in China.

Finally, Hong Kong companies will be able to provide an expanded range of cross-border transportation services in both the road transportation and maritime service sectors.

CEPA, of course, provides preferential access to Hong Kong companies across a wide range of service sectors including banking, insurance, telecommunications and advertising. However, the commitments given in the transportation and logistics sector are arguably the most significant and stand to benefit the widest range of companies

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