By opening the market further to Hong Kong service suppliers, the mainland will gain more foreign direct investment from Hong Kong, said Woon, who chaired a workshop on the impact of CEPA on Hong Kong business.

CEPA will help the mainland adjust to the challenges of WTO implementation, through pilot-testing market openings, and gaining regulatory experience. The arrangement will also help expose domestic enterprises to outside competition, and hence build up the capacity of China's own industry in preparation for foreign competition, said Woon.

Ruby Zhu, assistant economist of HKGCC, said that Hong Kong trade companies will benefit a lot from the zero tariff provided by CEPA. If the price of the commodity exported remains unchanged, the tariff saving will go directly to the manufacturer or exporter as additional revenue from an expanded profit margin.

She said that the tariff saving offers the manufacturer or exporter a margin to reduce prices to make their products more competitive. A reduction in price will induce a bigger demand on Hong Kong products and enable Hong Kong manufacturers to expand their market share.

W K Chan, HKGCC's director in charge of business policy, said that many companies in Hong Kong do not offer a "pure" service in any single sector. The existing sectoral linkages among the various service sectors of Hong Kong will enable CEPA's benefits to multiply, through the "producer chain".

This will reinforce the industrial clustering of Hong Kong's service sectors and reinforce the comparative advantage of our pillar industries, for instance, the financial, logistics, professional, and tourism service sectors, said Chan.

(Xinhua News Agency July 8, 2003)