Connecticut companies exported $220 million in goods to Hong Kong last year, but economic development officials from the Asian territory say the potential for increased trade ties is significant.
Donald Tong, the Hong Kong commissioner for economic and trade affairs, visited Connecticut last week, making stops in Hartford and New Haven to spur more interest in Hong Kong-Connecticut trade and direct foreign investment ties.
Tong met or spoke mostly with political and economic development officials, including Gov. Dannel P. Malloy and Department of Economic Development Commissioner Catherine Smith, as well as the MetroHartford Alliance and Yale University.
Tong’s trip to Connecticut came just a month after Malloy made the first voyage by a Connecticut governor to China and Hong Kong in more than two decades.
That is one of the reasons Tong said he and his team decided to stop in Connecticut.
Tong said about 1,300 American companies have operations in Hong Kong including some Connecticut corporations like United Technologies Corp., Aetna, Cigna and General Electric.
Tong said the goal of his trip was to pitch the benefits of doing business in Hong Kong, which occupies a unique place in Asia.
The former British colony of about 7 million people gained its independence in 1997 and is now one of two special administrative regions of China. The designation allows Hong Kong to have different political, judicial, and economic systems from mainland China, which makes it an attractive place to do business, Tong said.
The region follows a free enterprise and free trade economic philosophy.
Hong Kong is the 16th largest trade partner for Connecticut companies, and businesses in the state shipped $220 million in goods there in 2011, mostly computer and electrical, manufacturing and transportation equipment.
Over the past decade, Connecticut exports to Hong Kong have nearly doubled.
Tong said one of the key attractions to Hong Kong is its growing service sector — including finance and insurance, real estate, and professional and business services — which generated 93 percent of its gross domestic product in 2010.
The area also serves as a major trading center and is pushing to be a primary hub in Asia for corporate headquarters, trade, logistics, shipping, aviation and tourism.
With a trade to GDP ratio of more than 400 percent, Tong said the economy there is driven less by manufacturing and more by trade, particularly for companies looking for a hub to send goods into mainland China.
The key attraction, Tong said, is that Hong Kong doesn’t have import tariffs on most products and doesn’t charge a sales tax either. It also has a free trade agreement with China and has become the largest offshore business center for Chinese currency, known as the renminbi.
“Hong Kong is a great geographic location because it is in the center of Asia and goods shipped out of there can reach half of the world’s population in five hours,” Tong said.
As a gateway to mainland China and the rest of Asia, Tong said companies see value in being located closer to a growing Asian customer base.
While Hong Kong is only Connecticut’s 16th largest trading partner, China and Japan are the state’s fifth and seventh largest export destinations, with $983 million and $580 million in goods being shipped to those countries annually.
Health insurers in particular are eyeing Hong Kong as the territory looks to expand its private health insurance market.
But it’s not just large companies Hong Kong is looking to attract. Tong said they are making a push to expand relationships with small and medium U.S. companies as well.
As Connecticut and Hong Kong increase business relationships, Tong said he and his team are eager to come back to Connecticut and meet with companies seriously considering an expansion there.
“We’ve made offers to come back and send a team to have discussions with companies,” Tong said.
