Many enterprises in Hangzhou and Suzhou have applied for or are planning listings in Hong Kong after the China Securities Regulatory Commission said it will support qualified and leading Chinese mainland firms to go public and raise funds in the special administrative region to boost the city’s status as a global financial hub by attracting more international funds.

Financial Secretary Paul Chan Mo-po made the remarks in his regular Sunday blog following his trip to Hangzhou in Zhejiang province and Suzhou in Jiangsu province last week.

The CSRC – the mainland’s securities watchdog – announced five measures on Friday to cooperate with Hong Kong’s capital market, such as broadening the scope of eligible products for exchange-traded funds under the Shanghai-Shenzhen-Hong Kong Stock Connect, as well as real-estate investment trusts under the Shanghai-Shenzhen-Hong Kong Stock Connect.

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The commission also pledged to support the renminbi-denominated stock trading counter to be included in stock connect trading programs, optimize the funds under the mutual recognition of funds arrangement, and back eligible mainland enterprises to list and raise funds in the SAR.

“All these Hangzhou and Suzhou firms have identified the institutional advantages of the Hong Kong market and its seamless connection with international standards, and believe that through overseas financing, they can accelerate their development on the mainland and international markets,” Chan said.

The companies hope to lay out plans in various aspects, such as logistics and transportation, marketing and sales, investment and factory setting, and overseas procurement, to achieve better development by using overseas resources while coping with the challenges of geopolitics and unilateralism.

Paul Chan Mo-po, Financial Secretary, HKSAR

He stressed that these innovation and technology companies based in the Yangtze River Delta hope to make full use of the YRD Economic Circle and the Guangdong-Hong Kong-Macao Greater Bay Area – two major national development strategies – to push company business to a new level through regional linkage by focusing on the synergy advantages between Hong Kong and other cities in the GBA.

During this mainland trip, Chan visited private companies in Hangzhou and Suzhou that are engaged in artificial intelligence, the Internet of Things, biotechnology, new energy, new materials, and other fields, and met with the leaders of both cities.

“Next month, Hong Kong and Hangzhou will jointly establish a technology collaborative innovation platform, focusing on scientific and technological research and development cooperation, and the transformation of scientific and technological achievements, scientific and cultural exchanges; and set up an exchange mechanism to link the resources of both cities,” the finance chief said.

Some of Hangzhou’s technology companies will also settle in Hong Kong to build research-and-development centers or expand their overseas businesses.

Many mainland firms see Hong Kong as having a lot of advantages and as their preferred springboard and platform to enter the international market by setting up a treasury center and even international business headquarters in the city.

The advantages include the free flow of funds, goods, data and talents; the city’s ability to connect the mainland and world financial markets and services; having a fair and open business environment with simple and low tax rates; extensive and close international links; efficient and high-quality professional services; familiarity with international rules and practices; and talent recruitment from all over the world.

The companies also hope to establish scientific research centers in the SAR by capitalizing on the city’s complete intellectual property protection system to develop new business forms of “patent operations”, and cross-boundary data flow in the Greater Bay Area that provides important basic elements for scientific research.

Hong Kong can further help mainland companies in managing their transnational industrial and supply chains and offshore trade financing, Chan said.

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“The companies hope to lay out plans in various aspects, such as logistics and transportation, marketing and sales, investment and factory setting, and overseas procurement, to achieve better development by using overseas resources while coping with the challenges of geopolitics and unilateralism.”

He added that Hong Kong can provide various one-stop services, such as supply chain management, trade financing, business consulting, and talent and corporate training.