1. Introduction

    The Mainland China and Hong Kong Closer Economic Partnership Arrangement ("CEPA") signed on 29 June 2003, offers Hong Kong entities (individuals and companies) preferential treatment for doing business in the PRC. Successive supplements have expanded and clarified these privileges. The most recent supplement, known as the "fifth supplement", has been in effect since it was signed on 29 July 2008.

    It improves market access for Hong Kong service suppliers in the following 17 business sectors: (1) accounting, (2) construction, (3) medicine, (4) services incidental to mining, (5) personnel placement and supply services, (6) related scientific and technical consulting services, (7) printing, (8) convention and exhibition, (9) distribution, (10) environment, (11) banking, (12) social services, (13) tourism, (14) maritime transport, (15) air transport, (16) road transport and (17) individually owned stores.

  2. Highlighted areas

    Three areas are highlighted below.
  1. Convention and exhibition services
    Subject to the approval of the China Council for the Promotion of International Trade, Hong Kong service suppliers can establish a wholly foreign-owned enterprise, equity joint venture or contractual joint venture in Beijing, Tianjin, Chongqing and Zhejiang Province to organise overseas exhibitions.
  2. Mining, related scientific and technical consulting services
    Hong Kong companies can engage in oil and gas development services (only in petroleum and liquefied petroleum gas). They may also provide prospecting and surveying services in iron, manganese and copper, including geological, geophysical and other scientific prospecting services, and sub-surface surveying services.
  3. Environmental protection services
    The Guangdong provincial government is authorised to approve the application of Hong Kong service suppliers for setting up enterprises to operate environmental pollution control facilities in Guangdong.

    Foreign companies would do well to consider the privileges provided by CEPA, because establishing a Hong Kong subsidiary can allow access to certain sectors that are otherwise off-limits to foreign investors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.