Hong Kong Manufacturing SMEs: Preparing for the Future

28One important area of cooperation is on therestructuring and upgrading of the exportprocessing trade. The Agreement calls on HongKong and Guangdong to engage in:i assisting Hong Kong-owned processingenterprises to extend their production chain,encourage them to establish research sections,improve innovation capability, build their ownbrands, and increase value-added.ii supporting Hong Kong-invested enterprises inopening up the Mainland domestic market andbuild brands in the domestic markets.iii encouraging Guangdong and Hong Konginvestors to participate the construction ofrecycling industrial parks and industrial relocationparks in the development zones designatedby the nation. Promote Hong Kong-investedenterprises to invest in Guangdong’s industrialrelocation parks if these enterprises have suchneeds.The major initiatives on manufacturing industries for2010 include:i The two places will carry out the policies thatpromote the development of manufacturingindustries, including Direction of GuangdongProvince for the Operation of Original PremiseTransformation of Enterprises Engaged inProcessing with Supplied Materials withoutProduction Suspension, and Guiding Opinionof Guangdong Province on the Work ofPromoting Foreign Invested and Processing TradeEnterprises to Expand Domestic Sales. Fulfillingthe Cooperation Agreement of Guangdong andHong Kong on Promoting the Conversion andUpgrading of Hong Kong-invested ProcessingTrade Enterprises.69 Opinions on Promoting the Stable and HealthyDevelopment of SMEs (Yue fu [2008] no. 104)70 Circular on Several Policies and Measures of Guangdongto Support Hong Kong, Macau, and Taiwan-investedEnterprises to Combat the International Financial Crisis toSpeed up Conversion and Upgrading (Yue fu ban [2009]no. 3, 16 January 2009)ii Guangdong will hold the Guangdong Expositionof Products by Foreign-invested Enterprises (forDomestic Sales) to facilitate foreign-investedenterprises in Guangdong to build connectionsand cooperate with purchasing groups,commercial circulation enterprises, and retailersto expand into domestic markets.In addition, the Agreement called for Hong Kongand Guangdong to pioneer the introductionof electric vehicles to Hong Kong, Guangzhou,Shenzhen, and others and to foster the research anddevelopment, manufacturing, general applicationand development of the auto parts industry forelectric cars in the Greater PRD Region.Guangdong Initiatives for SMEs in Response tothe Economic CrisisSince the onset of the financial crisis, GuangdongProvince has also instituted a series of policiesto support SMEs. On 2 December 2008, theGuangdong Government issued the “Opinions onPromoting the Stable and Healthy Developmentof SMEs” (Yue fu [2008] no. 104) in an attemptto ease the financing difficulties of SMEs and tostrengthen fiscal and tax support for SMEs. In 2009,the Guangdong Government started to arrangeRMB 2.2 billion to subsidise technology upgradesand innovation by SMEs, to expand the exportcapabilities of SMEs, and to provide other servicesand support for SMEs. 69In January 2009, the Guangdong Governmentpublished policies aimed at helping SMEs fundedby investors from Hong Kong, Macao, and Taiwancombat the financial crisis. 70These includedincreased fiscal support; reductions or exemptionsfrom taxes and fees; simplified administrativeprocedures; support for independent innovation;ensuring supplies of water, electricity, and naturalgas; and support for labour training efforts. Acommitment was also made to try to secure CentralGovernment support for policies to support HongKong, Macao, and Taiwan invested SMEs. In April2009, Guangdong outlined a series of measuresintended to help SMEs expand into domestic