Dong Jiufeng, executive vice chairman and president of COSCO (Hong Kong) Group, says Hong Kongs role as Chinas trade entrep(t will erode as the mainlands transportation infrastructure improves. Shanghai in particular will threaten Hong Kongs lock on trade and trade services, he says.
COSCO is the mainlands 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 Kongs 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 Chinas primary international gateway. He believes Hong Kongs international character and expertise in management, finance and law gives it a huge edge over rival Chinese ports.
But while demand for Hong Kongs trade services will soar, Dong says its high property costs and wages will inevitably drive shippers toward lower-cost ports elsewhere in China. Furthermore, Shanghais central position in China, straddling the Yangtze River, makes it particularly attractive.
"Shanghai is developing very fast," Dong says. All of Chinas major railways and roadways, as well as the Yangtze, go through Shanghai. Chinas leading politicians, including President Jiang Zemin and Premier Zhu Rongji, are from Shanghai, and the government is keen to develop Shanghais 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 Chinas 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."