bonsai
01-05-2004, 01:29 PM
2 China Regions in a Port Rivalry
The rise of Guangdong's Pearl River Delta has led to a mainland challenge to the historical air- and sea-traffic dominance of Hong Kong.
By Alexandra Harney, Financial Times
HONG KONG — When Beijing and Hong Kong signed a free-trade pact last summer, it was hailed as the beginning of a new era of cooperation between the former British colony and Guangdong, the neighboring province on the Chinese mainland.
"We are as close as brothers," Huang Huahua, Guangdong's governor, said recently. "We depend on each other like lips and teeth."
But this era of cooperation will also be one of increasing competition. The rise of Guangdong's Pearl River Delta, which absorbs a quarter of China's foreign direct investment and produces a third of its exports, is changing the balance of power between Hong Kong and its hinterland.
In at least two key areas — airports and seaports — Guangdong is mounting a serious challenge to Hong Kong's historical dominance. If not deftly handled, that threat could affect Hong Kong's wider economy, industry executives and analysts said. The rivalry already is hindering efforts to coordinate the development of much-needed infrastructure in the region.
The Baiyun International Airport on the outskirts of Guangzhou, Guangdong's capital city, is due to open in June. Located about 95 miles north of Hong Kong, it will have two 2-mile-long runways and four passenger concourses. Baiyun expects to have capacity for as many as 27 million passengers and 1 million tons of cargo a year by 2010.
Hong Kong's Chek Lap Kok airport handled 34 million passengers and 2.48 million tons of cargo in 2002.
Baiyun officials say competition with Hong Kong is inevitable. "We do think we will pick up some passenger business volume from Hong Kong," said Rena Huang, an official at the airport's foreign affairs office.
So far, only Air France, which will start flying into Guangzhou's older airport this year, is expected to schedule international flights into Baiyun. Other carriers are awaiting agreements that would allow more flights into Guangzhou.
But industry executives expect the new airport to offer favorable terms to international carriers that agree to fly there.
Baiyun's location in the center of the Pearl River Delta may be an additional attraction. In September, FedEx Corp. signed a letter of intent to explore making the airport a hub for its regional operations.
In Shenzhen, across the border from Hong Kong, there is a similar story. Kenneth Tse, director of Yantian International Container Terminals, part of Hutchison Whampoa Ltd., predicts that the city's ports this year will handle about 10 million TEUs, or 20-foot equivalent units of container space.
Shenzhen's container handling charges are believed to be about 20% to 30% cheaper than Hong Kong's. Because the port is closer to the Pearl River Delta's factories, exporters can save $25.80 a box in transport costs by using Yantian port in Shenzhen, Merrill Lynch said in a recent report.
Exporters say Hong Kong's longer history and free port status make it not only more efficient but also more reliable.
Despite these advantages, Merrill forecasts that throughput at Shenzhen will grow 13% a year from 2002 to 2015; Hong Kong's is expected to rise 2%.
Erik Bogh Christensen, managing director of Modern Terminals Ltd., a port operator at Hong Kong's Kwai Chung port, said that within five years Shenzhen or Shanghai would replace the former British colony as the world's busiest seaport.
This cross-border competition has complicated talks about potential areas of cooperation.
Talks about a possible joint venture between Chek Lap Kok airport and Shenzhen airport, which has been attracting more cargo recently, have been bogged down because of some Shenzhen airport officials' reluctance to pair with Hong Kong when the city's traffic is growing so quickly, according to people close to the negotiations.
Discussions about dredging a deep-water channel in the Pearl River to ease traffic around western Shenzhen ports have been similarly bogged down.
Still, Hong Kong and Guangdong have made strides in other areas. One example: officials from Hong Kong, Macao and Guangdong are discussing a proposed bridge that would link Hong Kong with Macao and Zhuhai in the Pearl River Delta.
The rise of Guangdong's Pearl River Delta has led to a mainland challenge to the historical air- and sea-traffic dominance of Hong Kong.
By Alexandra Harney, Financial Times
HONG KONG — When Beijing and Hong Kong signed a free-trade pact last summer, it was hailed as the beginning of a new era of cooperation between the former British colony and Guangdong, the neighboring province on the Chinese mainland.
"We are as close as brothers," Huang Huahua, Guangdong's governor, said recently. "We depend on each other like lips and teeth."
But this era of cooperation will also be one of increasing competition. The rise of Guangdong's Pearl River Delta, which absorbs a quarter of China's foreign direct investment and produces a third of its exports, is changing the balance of power between Hong Kong and its hinterland.
In at least two key areas — airports and seaports — Guangdong is mounting a serious challenge to Hong Kong's historical dominance. If not deftly handled, that threat could affect Hong Kong's wider economy, industry executives and analysts said. The rivalry already is hindering efforts to coordinate the development of much-needed infrastructure in the region.
The Baiyun International Airport on the outskirts of Guangzhou, Guangdong's capital city, is due to open in June. Located about 95 miles north of Hong Kong, it will have two 2-mile-long runways and four passenger concourses. Baiyun expects to have capacity for as many as 27 million passengers and 1 million tons of cargo a year by 2010.
Hong Kong's Chek Lap Kok airport handled 34 million passengers and 2.48 million tons of cargo in 2002.
Baiyun officials say competition with Hong Kong is inevitable. "We do think we will pick up some passenger business volume from Hong Kong," said Rena Huang, an official at the airport's foreign affairs office.
So far, only Air France, which will start flying into Guangzhou's older airport this year, is expected to schedule international flights into Baiyun. Other carriers are awaiting agreements that would allow more flights into Guangzhou.
But industry executives expect the new airport to offer favorable terms to international carriers that agree to fly there.
Baiyun's location in the center of the Pearl River Delta may be an additional attraction. In September, FedEx Corp. signed a letter of intent to explore making the airport a hub for its regional operations.
In Shenzhen, across the border from Hong Kong, there is a similar story. Kenneth Tse, director of Yantian International Container Terminals, part of Hutchison Whampoa Ltd., predicts that the city's ports this year will handle about 10 million TEUs, or 20-foot equivalent units of container space.
Shenzhen's container handling charges are believed to be about 20% to 30% cheaper than Hong Kong's. Because the port is closer to the Pearl River Delta's factories, exporters can save $25.80 a box in transport costs by using Yantian port in Shenzhen, Merrill Lynch said in a recent report.
Exporters say Hong Kong's longer history and free port status make it not only more efficient but also more reliable.
Despite these advantages, Merrill forecasts that throughput at Shenzhen will grow 13% a year from 2002 to 2015; Hong Kong's is expected to rise 2%.
Erik Bogh Christensen, managing director of Modern Terminals Ltd., a port operator at Hong Kong's Kwai Chung port, said that within five years Shenzhen or Shanghai would replace the former British colony as the world's busiest seaport.
This cross-border competition has complicated talks about potential areas of cooperation.
Talks about a possible joint venture between Chek Lap Kok airport and Shenzhen airport, which has been attracting more cargo recently, have been bogged down because of some Shenzhen airport officials' reluctance to pair with Hong Kong when the city's traffic is growing so quickly, according to people close to the negotiations.
Discussions about dredging a deep-water channel in the Pearl River to ease traffic around western Shenzhen ports have been similarly bogged down.
Still, Hong Kong and Guangdong have made strides in other areas. One example: officials from Hong Kong, Macao and Guangdong are discussing a proposed bridge that would link Hong Kong with Macao and Zhuhai in the Pearl River Delta.