Tradelink Talk: In your capacity as Chairman of the Federation of Hong Kong Industries, you've been instrumental in fostering e-commerce among members. What additional steps can the Federation take?

We've been a strong supporter of e-commerce and of Tradelink from the beginning, and I think we're pushing it so that it makes sense commercially. The price and everything must be right for the user. The Federation has always supported using technology to improve the efficiency of our members. In doing so we not only backed Tradelink but we also invested in Tradelink, both as a strategic investment and as a way of pushing it along. E-commerce in Hong Kong is still in its early stages. You need a lot of infrastructure, and I think you still need a critical mass to build on. Unless it reaches a critical mass, people are reluctant to move ahead because it is new and unknown. Nevertheless, the Federation fully supports making Hong Kong a digitally advanced place using e-commerce. That is the reason why we are pushing hard on DTTN, the digital super highway. We're behind it and are leading the way to make sure that the superhighway will be built in the shortest time possible but also in a way so that users will find it economical and helpful in running their day-to-day businesses.

Tradelink Talk: Textile companies in Hong Kong must deal with a lot of paperwork. How has e-commerce helped them handle this necessary documentation more efficiently? Are they a model industry?

As you know we in the textile industry have to apply for a lot of documents, export licences and import licences. There are so many documents you have to have before you are allowed to ship your goods. So we were one of the first industries to fully embrace e-commerce. Parts of the licencing arrangements are now paperless. And since the onset of Tradelink, the whole thing has become fully e-commercial. A clerk can handle a lot of tasks now without filling out paper. You don't need to have couriers carrying documents to and fro. That's why the textile industry is fully behind the concept. Of course, the industry is not totally paperless yet. For example, the banks are not fully integrated. That's one reason why we are quite interested in the DTTN - so that the banks can come on board. But applying for licences for the import and export of goods is a lot easier now. On the whole it is probably cheaper too, but you would have to break things down to find your savings on manpower; it may not look a lot cheaper at first glance.

Tradelink Talk: One of the Hong Kong Productivity Council's own surveys earlier this year showed that many small to medium-sized companies (SMEs) in Hong Kong were still reluctant to use e-commerce. What is the council doing about it?

It is true that many SMEs are still hesitant about using e-commerce. A lot of them are small companies with maybe two or three people. The owner has to run his business but without any knowledge of e-commerce, so he might be hesitant to get into it.

According to our "Survey on e-Business Adoption in Hong Kong," conducted during the first six months of 2003, we found that the adoption rate has increased slightly from 49 per cent to 53 per cent. But applications are mostly confined to e-mail; only four per cent have conducted actual online transactions. To help them we have just launched the Linux Business Adoption Campaign to promote a reliable, cost-effective and secure system to encourage wider business use. We also give awards and sponsor seminars so that the winners can share their experiences with others. That's one thing we're doing.

The second is the IT Solution Directory, which offers industry-specific applications for SMEs to automate processes, solve operational problems and enhance efficiencies. The SMEs can conduct free, online searches for IT solutions from about 500 service providers in Hong Kong. We also offer "WebEC", a one-stop shop design service to help SMEs develop their e-businesses. With this user friendly and reasonably priced website building service, SMEs can design and maintain their own websites and create their own e-markets.

Tradelink Talk: The government proudly proclaims Hong Kong to be a "digital city." But is it doing enough to encourage the use of e-commerce?

Hong Kong has a long way to go to achieve that [being a digital city]. But it is more advanced than a lot of places already. You can pay to park your car with your Octopus card, without having to make any direct payment. You can even buy a can of soft drink using your Octopus card. You go around the world and there are not a lot of cities that have that sort of infrastructure. So I think we're on the way. But the infrastructure still needs to be developed. The new smart ID card is coming on which you can record a lot of information with. You can have e-commerce incorporated as well. But our belief is to let the commercial side define the pace of it. Government should not interfere too much in that area. We are well on the way, but we still have to get to the critical mass. Hopefully we'll see it in 10 years or so. We also feel that the law is lagging a little. Consumers need to be better protected. Money has been drawn from bank accounts without them actually getting the funds.

Tradelink Talk: It's been four months since the Economic Partnership Arrangement (CEPA) was signed with China. How does it look to you now?

I think people now have had time to think about what to do with CEPA. They are making plans to establish production lines back in Hong Kong. According to a survey undertaken by the Productivity Council in June, nearly half of those in the manufacturing sectors said they would consider relocating parts of their production operations in Hong Kong. There is certainly a lot of interest in CEPA from around the world. The Trade Development Council has led delegations to Korea and Japan, and there seems to be a lot of interest in that. The Federation believes strongly that CEPA is not something that was bestowed on Hong Kong. Businesses have to grasp this opportunity to suit their needs. We're quite optimistic that within six to nine months the "CEPA effect" will contribute to the economy. Since September I think things have definitely become a lot clearer. The rules of origin are in line with what we expected. Most of them are using the existing Hong Kong rules, which for textiles is quite important. We think that "Made in Hong Kong" products with high value-added content, and high levels of intellectual property content, will benefit the most from the reduced tariffs and liberalised market access.

Tradelink Talk: Back in the spring the economy looked pretty bleak. But the Hong Kong Productivity Council's latest business survey is unusually optimistic. What are the factors behind this optimism?

The main reasons are the signing of CEPA and more mainland Chinese visitors coming to Hong Kong. The feel-good factor has returned, and people are spending again. The manufacturing sector was not as seriously affected by SARS, since most of the production is on the mainland, but because of the feel-good factor, buyers are coming back to Hong Kong. Our latest survey on "The Business Operating Environment Index for SMEs" recorded the highest figure - 10.36 per cent - since the index was introduced in 1998. (The index comes from subtracting the number with a negative view - 44.8 per cent - of the business climate from those with a positive view - 55. So you see people in the services sector are a lot happier. The manufacturers are more stable. But it was really the service sector that was feeling the pinch. Also, the economies of America, Japan, and Europe are brighter, and more orders are coming in. Obviously we benefit from those factors.

Tradelink Talk: Many people in Hong Kong worry about competition from Shanghai. Do you share this concern?

The Federation feels that the competition between the Pearl River Delta and the Yangzi River Delta is basically friendly competition. We have a role, and they have a role. Competition will only make the two regions grow faster together. We have a lot of advantages like our infrastructure, rule of law and the way we are attracting talent. And if you look at the figures, we're still responsible for about 40 per cent of their foreign direct investment in the Shanghai area. So we're also looking forward to more cooperation between the two regions. We witnessed that a little while ago when Shanghai's mayor signed cooperation agreements with the Hong Kong government.