By Ben Simpfendorfer    Source: China Daily    Published: 2015-11-30

Ben Simpfendorfer writes that to exploit the opportunities of a new economic era, HK must not only be the gateway to China but also the country`s springboard to the world.

If Hong Kong understands anything, it is the value of the trade routes. For over a century, the city has acted as the world`s gateway to China. That is still a good business model, but it is no longer the only model; China`s Belt and Road Initiative means Hong Kong must also learn to be the country`s springboard to the world. It is a 180-degree change that will reshape the city`s business landscape.

Over the past 12 months I have visited cities in Kazakhstan, Pakistan and the United Arab Emirates, among other countries in Asia and the Middle East. I have been speaking with local industrialists and Chinese business owners about how China`s Belt and Road Initiative is impacting business at the ground level. The stories are mixed. And yet what is consistently striking is how rarely Hong Kong is part of that conversation.

To be fair, that should not be a surprise. Hong Kong has naturally focused on the mainland`s fast-growing economy over the past decade. In that period, the mainland`s GDP has expanded by $8.9 trillion, notching up a bigger increase than the rest of the Silk Road region combined. And the growing dependence on the mainland`s economy shows up in all parts of Hong Kong`s economy, from finance to tourism.

But it has also resulted in a more myopic Hong Kong, a city overly focused on a single economy. And that is why the Belt and Road strategy is a potential game changer in the way Hong Kong does business.

Helping mainland firms to navigate what are the Silk Road`s complex markets will be central to Hong Kong`s ability to exploit this opportunity. For all that mainland companies have expanded into more distant markets, such as Africa or Latin America, the learning curve has been steep. And in my experience many companies have struggled to build truly sustainable global organizations.

I saw this only recently on a visit to Karachi, Pakistan`s biggest city. Leading Chinese companies have notched up some genuine successes. But when speaking to the local industrialists and other professionals, I also heard plenty of anecdotes about miscommunication and failed deals. Hong Kong`s multinationals and internationalized firms should be playing a guiding role.

The idea of a private sector solution fits well with Hong Kong`s free-market philosophy. The fact that a growing number of mainland companies are setting up regional or international offices in Hong Kong is evidence of the city`s important role as a springboard. They are attracted by many well recognized advantages, from flight connections to professional service firms.

But the private sector will equally have to adapt. The idea of providing a global - or Belt and Road Initiative - solution looks good on paper to Chinese firms. But it is much harder to put into practice. Multinationals are often split by geography, meaning senior executives in Almaty (Kazakhstan), Beijing, or Dubai, for instance, will each report to separate regional head offices - which weakens lines of communication.

To this end, Hong Kong might initially want to compartmentalize the more profitable opportunities offered by the Belt and Road strategy. At its broadest, the initiative includes over 60 countries, or some 65 percent of the world`s population. It is a stretch to argue that Hong Kong`s business sector can help mainland companies navigate all these markets.

Why not then focus on the nearest? The Greater Mekong region, including Cambodia, Laos, Myanmar, Thailand and Vietnam, is as much a part of Belt and Road as more far-flung regions.

That might seem disappointingly straightforward, but Belt and Road is about near markets, not just distant ones. The Greater Mekong is also one of the region`s largest economic blocs, with a population of 234 million and a GDP of $700 billion. That is more than three times the size of Central Asia. The Greater Mekong also has a significant head start on other Belt and Road countries given that the region`s factories in low-cost countries such as Cambodia and Vietnam are already part of China`s vast supply chain.

The SAR government clearly has a role to play - bringing together experts, holding conferences, and generally creating the type of connectivity that will support the private sector.

However, it is Hong Kong`s private sector that will lead the charge. It will require those in the business community to ask tough questions about which parts of the Silk Road they can serve. It will also need mainland companies to recognize the importance of seeking good advice, much like any multinational. However long that takes, Hong Kong`s role as the country`s springboard is clear.