Dong Jiufeng, executive vice chairman and president of COSCO (Hong Kong) Group, says Hong Kong’s role as China’s trade entrep(t will erode as the mainland’s transportation infrastructure improves. Shanghai in particular will threaten Hong Kong’s lock on trade and trade services, he says.
COSCO is the mainland’s monopoly shipping company, with about 30% of the import/export transportation market for the mainland; foreign shippers such as Maersk Sealand have the rest. COSCO is listed on the Hong Kong Stock Exchange.
Dong outlined Hong Kong’s strengths, which will work in its favour once China enters the WTO, at a dinner hosted by the Asia Society. The resulting expansion in trade means more business for China’s primary international gateway. He believes Hong Kong’s international character and expertise in management, finance and law gives it a huge edge over rival Chinese ports.
But while demand for Hong Kong’s trade services will soar, Dong says its high property costs and wages will inevitably drive shippers toward lower-cost ports elsewhere in China. Furthermore, Shanghai’s central position in China, straddling the Yangtze River, makes it particularly attractive.
"Shanghai is developing very fast," Dong says. All of China’s major railways and roadways, as well as the Yangtze, go through Shanghai. China’s leading politicians, including President Jiang Zemin and Premier Zhu Rongji, are from Shanghai, and the government is keen to develop Shanghai’s infrastructure. Already its port can berth ships with a nine-metre draught, and 12-metre draughts will be able to berth by next year. In addition the government is planning to build a bridge from Shanghai to two islands 28 kilometres away which have excellent natural harbours.
"If this plan is approved, in 10 years’ time Shanghai will be a major competitor to Hong Kong," Dong predicts.
Dong shied away from questions about China’s privatization process. Semantics will remain important, he indicated, because the word 'privatization' remains taboo in Beijing. He notes in Taiwan, when the government sold off its stake in a shipping line, the Chinese euphemism it used translates as 'to be run by the private sector', not 'privatization' as such. "In China, the real meaning may be privatization of a state-owned enterprise. You can get this in practice but not in name."
