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Moving North Takes Planning And Strategy(HKTDC Hong Kong Trade Services, Vol 02,2002)

Vol 2, 2002

Professional, Training & Others

Moving North Takes Planning And Strategy

Positive Labour Relations

Cosmetics Must Endure Multitude Of Tests

Knowing Rules And Procedures Essential In Guarding IPR

Moving North Takes Planning And Strategy

Accelerated economic opening prompts an increased two-way flow of entrepreneurs and workers across the mainland-Hong Kong border, including at Lo Wu.

AS the Chinese mainland develops culturally and economically, many SME entrepreneurs think positively of pursuing business opportunities there. In most cases, the optimism is justified. Nevertheless, there are important things to remember before moving north of the Hong Kong border.

Business Basics

Choosing among various business modes on the Chinese mainland will determine how any company is organized and who has strategic decision-making power. International accountants Grant Thornton say the most common methods are joint ventures, wholly foreign-owned enterprises and via foreign companies' representative offices.

New trends in prominent mainland industries also demand attention. Usually, the government encourages foreign investors to enter particular sectors.

Incentives, like preferential tax rates, are available to foreign enterprises in the following activities:

  • production and manufacturing
  • developing export markets
  • high-end innovative technology
  • infrastructure projects
  • development of communications industries
  • exploitation of energy resources
  • agricultural, forestry and animal husbandry operations in remote locations.

Proper preparation also helps in dealing with immigration procedures. Find out the relevant immigration requirements and ensure you and any representatives fulfil all the visa requirements necessary to work or conduct business on the mainland. Lodge the applications and await approval before relocating.


Communication is the single greatest problem for executives and workers living on the Chinese mainland for the first time. This is true even for individuals from Hong Kong, whose Cantonese mother tongue is unlikely to promote understanding much beyond Guangdong Province.

Although English standards are rapidly improving in Beijing, Shanghai, Guangzhou and other large cities, the "most international language" is rarely adequate outside hotels and business meetings.

Considering the Chinese mainland's sheer size, spanning five time zones, it causes no surprise to find numerous distinct local dialects. Fortunately, Putonghua (Mandarin), the national version of Chinese, is widely used and understood (if not always spoken) throughout the country.

Anyone pondering a prolonged stay should learn basic Putonghua to help overcome language barriers. Even a rudimentary course will enhance life and work.

Conversing in the local language prevents misunderstandings and reduces time requirements to make arrangements. It also promotes a deeper understanding of Chinese culture and society.

The Cultural Divide

Cultural differences can cause problems and embarrassment to migrant workers. Etiquette and protocol of business practices do vary.

Misunderstandings can arise from simple nuances in how people handle business cards (best given and received using both hands) and in the less-formal means by which business meetings are conducted and contracts devised.

Understanding such differences is crucial to avoid any serious faux pas. One good way to achieve this is by sharing experiences with someone who has worked on the mainland.

Gain By Planning

Doing business or working on the Chinese mainland can be complicated, but need not be all guesswork. Careful planning helps save time and money.

"If management trainers can provide more information on the tactics and preferences of different cultures, trainees can increase their performance efficiency by choosing the right tactics. This is especially beneficial for companies with employees from different cultural backgrounds," says Professor Fu Pingping, from the Chinese University of Hong Kong's department of management.


Useful Contacts

Hong Kong Public Relations Professionals' Assn Ltd
Tel: (852) 2818-5628
Fax: (852) 2816-0877
E-mail: enquiry@prpa.com.hk
Web: www.prpa.com.hk

Hong Kong Management Assn
Tel: (852) 2526-6516
Fax: (852) 2868-4387
E-mail: hkma@hkma.org.hk
Web: www.hkma.org.hk


Adjusting To Hong Kong

MANY of the difficulties that bosses and migrant workers face when arriving on the Chinese mainland hold equally true for mainlanders debuting in Hong Kong.

Hazards swirl around immigration issues, language barriers and cross-cultural understandings.

Government Schemes

Hong Kong's government has various options, like the Importation of Labour Scheme and the Admission of Talents Scheme, allowing employers to bring in technicians, crafts people and experienced operators from the Chinese mainland.

Recently, the government advocated hiring mainland professionals under the Admission of Mainland Professionals Scheme, regulated by market demand. To use the scheme, employers must prove the newcomer meets company operational needs while enhancing effectiveness. Candidates must have skills and knowledge unavailable locally.

In all cases, employers must lodge applications through a registered company in Hong Kong. Direct applications from workers are not accepted. Any mainland resident working or studying in Hong Kong must return north of the border and reapply to work under the scheme. If approved, he or she can re-enter Hong Kong.


Day-to-day talk in Hong Kong involves Cantonese. But Putonghua-speaking newcomers may gain more by learning English, which is rapidly becoming the lingua franca for business purposes, even in some Chinese mainland companies. Candidates are well advised to take an English course before arriving in Hong Kong.

Business Culture

Some analysts say the culture of Hong Kong is business. But newly arrived executives and workers must know more than that to succeed.

Cross-cultural difficulties may arise from different management tactics. Professor Fu Pingping, from the Chinese University of Hong Kong's department of management, recently conducted a study showing clear differences in how managers from the Chinese mainland and Hong Kong deal with subordinates. Hong Kong managers are likely to use rational persuasion, a tactic much less popular among mainland counterparts.

Mainland workers in Hong Kong must understand such differences to help them rapidly assimilate Hong Kong work cultures.

By taking a strategic approach, such newcomers can achieve better efficiency when starting their new jobs. They will settle into Hong Kong life more comfortably.

Positive Labour Relations Are Possible

People-friendly workplaces help to maintain positive relationships.

AS economies cope with a global downturn, countless SMEs seek ways to minimize costs. Ideas of retrenchment and wage reductions may leap to directors' minds, but chopping at wages or jobs can seriously damage staff relations and productivity. Extreme measures should be a last resort.

Even if downsizing is unavoidable, companies should first try introducing voluntary exit schemes.

Effective two-way communication is the key. Many employees are feeling insecure at work, which can lead to negative attitudes. Companies should establish effective channels for employees to express concerns and allay doubts. This can prevent needless misunderstandings, especially during times of uncertainty.

Managers should consider employees' viewpoints. Staff should be kept informed not only of company policies, but also directions, goals and obstacles. Regular management-staff meetings, formal or informal, should be held, with employee feedback welcomed. Consider creating working groups or quality circles to encourage candid exchanges.

Why not practice participative management, allowing employees at all levels a say? Design suggestion forms for use by staff to raise problems or recommend solutions.

All this promotes the formation of teams to share tasks and information. Teamwork builds mutual trust and heightens job satisfaction. Teammates empowered by a role in joint decision-making and problem-solving can work harder and more effectively.

With more responsibilities loaded onto employees, overtime becomes inevitable. Excessive workloads can affect health and family life while hindering job performance. Managers should divide work fairly and equally. Job sharing may be considered, with employees encouraged to work harmoniously so such arrangements succeed.

People-friendly workplaces and human resources (HR) policies help to maintain positive relationships. Companies might organize after-work social activities for employees and their families to consider attending.

An effective HR department might notice birthdays. Staging a birthday party for employees born in the same month, or sending birthday cards, nurtures a friendly atmosphere.

When drafting HR policies, companies could strive to offer terms beyond statutory requirements - by increasing sick leave entitlement, for example. Although staff benefits may not always take precedence, companies should always consider their employees' welfare.

Outstanding work deserves a reward, but not always money or promotion. Companies can offer intensive training to employees with strong potential. Many employees savour chances to apply talent or learn new skills. Simultaneously, companies must measure performance fairly using an effective appraisal system.

Staff morale needs regular checking. High turnover, lateness, absenteeism and surging complaints all indicate problems. Questionnaires and interviews may help to gauge morale levels. Regular measurement and appropriate corrective action can ward off productivity declines.

Always remain familiar with labour laws. Hong Kong SMEs must fully understand the Employment Ordinance, updated Sex Discrimination Ordinance, MPF Schemes Ordinance, Disability Discrimination Ordinance and Personal Data Privacy Ordinance. Policies must never violate any of these.

The bottom line on human resources is that any bias-free workplace offering equal opportunities is always a good one.

By Grace Yip
consultant with Staff Management Consultancy Ltd of Hong Kong

Cosmetics Must Endure Multitude Of Tests

Cosmetics and other beauty-related products inspire rising demand, including on the Chinese mainland.

BEAUTY products are popular the world over, and the Chinese mainland is no exception. Demand is so high for foreign-produced beauty aids that the government appears eager to provide investors with incentives.

According to New Beauty Era, a mainland cosmetics magazine, relevant customs duties reached as high as 150% of product value as recently as early 1996. That figure dropped to 70%, then 55%, and now stands at 35% for cosmetics and 25% for skin and hair products, as well as for tooth-whitening items.

To enter this lucrative market, one must obtain an all-important Hygiene Permit for Imported Cosmetics, which allows the sale of cosmetic products on the mainland.

Securing this document is not easy. There are two ways to obtain it: by going directly to the Ministry of Public Health or by using an intermediary (much easier).

Three entities are authorized to perform testing of imported cosmetics, namely: the Institute for Environment, Hygiene and Health Related Product Safety under the Chinese Centre for Disease Control and Prevention; and the Centres for the Prevention of Disease and Illness in Guangdong Province and Shanghai. Intermediaries include the quality and technology certification and consultation services of such organizations as the Guangdong Hair Dressers and Beauticians Assn (GHDBA).

The association specializes in obtaining hygiene permits for clients, says Wang Yi, head of its quality and technology certification and consultation services centre. The clients may be cosmetics makers or import agents.

"Clients need to contact the centre in Guangzhou and complete necessary documentation. If a client signs a consignment agreement, we will assist in the evaluation and examination of products by the Ministry of Public Health," says Wang.

The list of necessary documents is lengthy, and Wang urges companies to study it carefully since the Ministry of Public Health is strict on requirements like:

  • Product-registration application (available from the ministry or GHDBA);
  • Directions for manufacture;
  • Product diagram;
  • Quality-approval document;
  • Packaging, label and explanation on product use;
  • Chinese-language product label;
  • Document of trust;
  • Product-inspection report; and
  • Illustrations of product composition and effectiveness.

An intermediary, apart from acting for clients, will help translate any English-language materials provided by the client.

Product testing may take 60-240 days, during which document registration is possible. Total time needed for Ministry of Public Health approval should not exceed eight months.

Test fees vary among the three authorized entities (see the list overleaf for guidance only). There are also fees of RMB2,000 for a hygiene permit, and a notarization fee of around RMB300 for each product.

If an application fails, GHDBA will refund consulting charges and provide free service for subsequent applications until a hygiene permit is attained. Unless something is seriously wrong with a product, eventual approval is likely.



Product Testing Services

NOTE: Prices set by the Ministry for Public Health are standard in Guangdong Province. In other provinces, prices may vary.

REQUIRED (Bottles)
General hair care
(eg hair oils)
General skin care
(eg whitening cream, make-up powder)
Facial washes
Eye make-up (eg eye shadow)
Lip balms and lipsticks
18 (tubes)
Toe and nail care
Fragrances (eg perfume)
Hair dyes
Permanent wave
Sunblock products
Spot and blemish removers
Hair removal items
Weight loss and breast beautifying
Hair growth


Knowing Rules And Procedures Essential In Guarding IPR

Intellectual property rights are among the most lucrative assets in many Sino-foreign joint ventures. To protect IPR, the Chinese mainland has strengthened several relevant laws.

MASTERING the protection of intellectual property rights (IPR) is a critical issue. Often intellectual property rights are among the most lucrative assets in Sino-foreign joint ventures. To deal with any infringement problems, the Chinese mainland government has stepped up efforts to formulate and enforce several intellectual property laws.

These laws govern the protection of registered patents, copyrights and trademarks. In addition, the mainland has its Anti-Unfair Competition Law with provisions to protect unregistered trademarks.

"When dealing with IPR issues, companies should be aware of the differences between mainland intellectual property laws and those enforced in Hong Kong. They should avoid common mistakes that are easily overlooked," says the Design Protection Centre of the Federation of Hong Kong Industries manager Edward Wong.

Patent Applications

Revised and implemented in mid-2001, the mainland patent law covers inventions, utility models and designs.

"Companies applying for patents on the mainland should take note of the term 'absolute novelty', as stated in provisions of the patent law," says Wong, who is experienced in representing companies involved in IPR applications and infringement disputes.

"The provisions require that products used to apply for patents cannot be released to the public before respective patent offices accept the applications. That means patent holders cannot pre-release products by way of marketing, publicity or give-away samples, catalogues or magazines," he explains.

There are many precedents of patent holders losing disputes for failure to comply with provisions.

"The term 'absolute novelty' is a very convenient and efficient argument employed by interested parties in IPR infringement disputes," Wong says.


When IPR disputes concerning consumer products arise in Hong Kong, inventors can employ copyright law to prove ownership of patent rights, even if they are not actually patent holders.

Wong says no such copyright law applies to consumer products on the mainland. "The best way to protect IPR is to have products properly registered under applicable patent law," he says.

Hong Kong companies may also choose to register for a China patent in Hong Kong.

Trademark Words And Logos

When applying for trademarks, companies should avoid using common trade names or words that are too descriptive. Trademarks bearing a direct relation to the products are also not accepted. For example, the logo of a handbag cannot resemble a handbag.

"These criteria are set to avoid misleading, or creating misunderstandings among, customers and to protect fair competition," says Wong.

Anti-Unfair Competition Law

The mainland's Anti-Unfair Competition Law prohibits the unauthorized use of names, packaging or decorations similar to well-known items, if the use causes confusion or misleads buyers. In addition, this law prohibits the infringement of commercial secrets, like production formulas.


The mainland applies a dual-track system for IPR protection. When infringement disputes arise, interested parties can institute legal proceedings directly with the People's Court or request the relevant administrative authorities to handle cases.


Useful Contacts

Intellectual Property Department
Hong Kong Government
Tel: (852) 2961-6901, 2803-5860 (hotline)
Fax: (852) 2838-6276
E-mail: enquiry@ipd.gov.hk
Web: www.info.gov.hk/ipd

The Law Society of Hong Kong
Tel: (852) 2846-0500
Fax: (852) 2845-0387
E-mail: sg@hklawsoc.org.hk
Web: www.hklawsoc.org.hk

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