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Speech by Beijing Vice Mayor Zhang Mao at the Cocktail Reception with the Beijing Organizing Committee for the 2008 Olympic Games organized by The Hong Kong Chamber of Commerce on Tuesday, October 29, 2002

Mr Cheng, Dr Woon, ladies and gentlemen,

Good evening

I am delighted to be here with all of you. As the oldest and largest commercial organization in Hong Kong, the Hong Kong General Chamber of Commerce has been playing an important role in enhancing economic development of both Hong Kong and Beijing. In fact, preparation for the 2008 Olympic Games is not only an opportunity for Beijing to accelerate its development in the new century, but it is also an event that has raised widespread interest in various sectors in Hong Kong, China and overseas. Many businesses in these areas are hoping to take part in preparations of the event. The participation of hundreds of Hong Kong entrepreneurs and government officials at this cocktail reception today signifies your strong support for our preparatory work.

Set up on December 13 last year, the Beijing Organizing Committee for the 2008 Olympic Games (BOCOG) quickly started preparations of the games in accordance to instructions of the Central Government as well as the requirements of the International Olympic Committee (IOC). We have achieved substantial progress over the last year and have laid a solid foundation for the work that will be carried out in the coming years.

1. Pre-preparations concerning Olympic venues and related facilities

In March this year, an Olympic Venues Construction Coordination Committee was set up by relevant commissions under the State Council in cooperation with the Beijing Government and local departments to organize and co-ordinate the planned construction work. In July, a masterplan was drafted for the Olympic Green and Wukesong Sports and Culture Centre. A total of 121 famous design companies from home and abroad participated in the bidding. They submitted a total of 89 design plans, among which more than half were from international design houses of the United States, Australia, Germany, and Japan. An assessment team comprised of experts from home and abroad selected thirteen outstanding proposals. One first prize, two second-prizes and five merits of honor were presented for the design of the Olympic Green, while two second prizes and three merits of honor were presented for the Wukesong Project. Most award-winning proposals were created through co-operation between local and foreign companies.

We exhibited the 89 plans for three weeks and succeeded in arousing great interest among residents and professionals. Around 4,000 to 5,000 people attended the exhibition every day. More than 10,000 attendants voted for what they thought was the best design. It was interesting to discover that the proposed design that visitors liked the best was the same one that was awarded first-prize by the assessment team. Recently, we conducted an in-depth study on the selected proposals and incorporated into them some of the advantages of other plans. Following the experiences of other hosts of the Olympic Games, we presented the final plan to the Central Government for approval.

For constructing the Olympic Green, a land development project involving removal of some houses was initiated. As of the end of September, more than 90% of the removal work had been completed. We expect to finish the project by the end of this year, which will allow us to then start installing underground pipelines.

After a lot of hard work, the pre-preparation stage for the bidding for the planning and design of Olympic venues and facilities was completed. We also enacted the "Management methods for bidding of Olympic construction projects" and the "Plan for bidding of Olympic construction projects," which cover design concepts, construction times and investment estimates of the venues.

With regards to the project's masterplan, we are emphasizing the management of such venues after the games and the cash flow for future operations. In addition, we must also ensure that venue owners can achieve the highest return. For example, we adopted a "tied-up" bidding method for nine projects, including the national stadium and exhibition centre. We closely monitored the bidding process to ensure it was open, fair and transparent according to the laws, rules and control mechanisms.

The bidding was split into five phases: the pre-preparation phase was from June to September 2002; the qualifications and intentions screening phase will last from October to December 2002; formal bidding phase from January to June, 2002; and the assessment phase from June 1 to 30, 2002. The project design and implementation phase started in July 2002.

2. Conducting in-depth research and numerous discussions to lay a solid foundation for marketing the games

In 2002, BOCOG started a three-pronged approach to marketing the games. Firstly, we are carrying out a survey on potential sponsors. We have commissioned China Enterprise Rating Association to conduct market research on industries and enterprises who are likely to interested in sponsoring the games. Taking into account the "exclusiveness" marketing principle of the Olympic Games, we decided to conduct research on 19 sectors that are not direct competitors to the existing TOP partner sponsors of the Olympics. The sectors include automobile, banking, petroleum and chemicals, communication service providers and facilities. We are now conducting comparative studies and the whole process will soon be completed.

Secondly, we are drafting a market development plan. This plan can be divided into three parts targeting sponsors, suppliers and franchisers, respectively. BOCOG will earn income and secure financial resources for the games by soliciting sponsorship and support of suppliers, and also grant franchise licenses. Supporting enterprises will be entitled to rights and benefits in accordance to their contribution to the games.

Thirdly, we assisted the State Council and the Beijing Government to stipulate two regulations to protect the intellectual property rights of the games. Later, the legal unit of the BOCOG worked closely with the State Administration for Industry and Commerce and General Administration of Customs to look into infringement cases and take appropriate legal action.

The IOC actively supports BOCOG. Seven sponsors have already signed the 6^th sponsorship agreements with IOC. In early August, Panasonic held an agreement signing ceremony with IOC in Beijing. Early next year, we will sign a market development agreement with IOC, and in doing so formally launch the marketing campaign of the Beijing Olympic Games.

3. Building smooth and effective working relations with IOC and its coordinating committees on the basis of mutual respect and communication

BOCOG held meetings with the IOC Coordination Commission, lead by Mr Hein Verbruggen, in early April and August. During the meetings, we briefed the commission on the
Olympic Action Plan" in addition to progress on such areas as sports, venues, environment, transportation and marketing. BOCOG also reported on the recent developments of race planning and provision of training. On August 29, we briefed IOC Executive Commission on our preparation through a teleconference. In the meantime, we are preparing for the IOC Coordination Commission's general meeting to be held in December.

Preparations for the 2008 Olympic Games are still in their early stage. A lot more need to be done. As a developing city, we need to come up with new ideas, learn from the successes of past games in other countries, and gain support from other places around the world, including Hong Kong, if we want to achieve outstanding results.

As an international trading, financial and shipping centre, Hong Kong is ideally positioned to play an essential role in China・s economic development. We can learn a lot from various sectors in Hong Kong. Hong Kong has always been an important partner for Beijing, and has helped push forward economic construction and growth, especially during the five years after the return of sovereignty. Hong Kong is the biggest source of direct foreign investment for Beijing. At the Beijing-Hong Kong Economic Co-operation Conferences, held in the last five years, the two places signed agreements for 231 co-operation projects relating to urban infrastructure, high technology, industry, commerce, logistics, tourism and real estate worth US$11.69 billion. This helped both places further leverage each other's advantages to accelerate economic growth.

We cordially hope that the Hong Kong business community can actively participate in various preparatory work for the 2008 Beijing Olympic Games, develop business and together enjoy the opportunities that have presented themselves.

We welcome Hong Kong businesses to participate in the construction of Olympic venues and infrastructure projects to create world-class facilities and enhance their own corporate image for China・s future. As everyone knows, Beijing will conduct a wide variety of large-scale construction projects, such as urban infrastructure, stadium facilities, environment management and raising information standards. The projects include constructing 13 permanent venues and 7 temporary venues, renovating or expanding 12 existing venues, building a host of permanent cultural, tourism and commercial facilities for big international activities -- including international exhibition centres, capital youth centres, national science museums, hotels and shopping malls. Regarding infrastructure, the city will construct Ba-Tong Subway Line, Subway Line No. 4 and No. 5, the Urban Light Rail, Olympic Subway Line, and the fast rail from Dongzhimen to Beijing Capital International Airport. Construction of the fifth and sixth circular roads is also planned to further improve the citys highway system. Hong Kong businesses can participate in the investment, management, design and construction of these projects. High-standard, quality work will create a good environment in which we will be able to host the Olympic Games and enable businesses to build a sound reputation in China and overseas.

We welcome the Hong Kong business sector to participate directly in developing the Olympic market and in doing so become a partner of the Olympics. The last 20 years have shown that successful market development is key to the success of the Olympics and an important area of businesses participation in the Olympics preparatory work. The Sydney Olympics and 2002 Salt Lake City Olympic Winter Games were mainly financed by market development income. The latter had six top sponsors from various industries, including long-distance telecommunications, local telecommunications, banking, brewery, automobile, gasoline and natural gas. AT&T (a U.S. telephone company) was the biggest partner, donating sponsorship amounting to US$80 million. There were another 16 sponsors coming from the insurance and computer sectors. Huge capital, material and service support provided by these sponsors was crucial to the success of the Winter Olympic Games.

Throughout history, the Olympics has always helped businesses and products expand into international markets. For example, Japans Seiko seized an opportunity at the 1964 Tokyo Olympics by showcasing its technological innovations and enhancing its scientific standards, which have it a well-known brand around the world today.

The Olympics unique business model and the global Olympic brand provide golden opportunities for Hong Kong businesses to raise their profile and internationalize their products. Preparing for the Olympics requires sufficient and reliable capital as well as material support, and Hong Kong has significant advantages in this aspect. Via bidding, Hong Kong businesses can become sponsors and suppliers of the Olympic Games by securing franchise licenses and the franchise rights to use the Olympic symbol on their products, as well as directly promote themselves and their products on the Olympic market.

We welcome Hong Kong businesses to leverage on their own strengths to participate in the Olympic service industry. Running the Olympics will set higher requirements for Beijing Citys integrated services and offer great opportunities for the development of the services sector. Industries such as tourism, finance, culture and sports will be the biggest and long-term beneficiaries of the Olympics. For tourism, for 10 years after the 1992 Barcelona Olympic Games, the Spanish citys visitors increased from 4 to 12 million. In the past five years, the number of overseas visitors to Beijing has grown at an annual average rate of 5%. The Beijing Tourism Bureau forecasts the number of overseas visitors to the city will grow at an annual rate of 6% to 8% over the next 6 years. That means, by 2008, about 4.5 to 5 million overseas tourists will visit the city every year, compared to the 3 million today. In terms of the spending, with each person expected to bring in US$1,000, tourism alone will bring in and additional US$1.5 to US$2 billion in foreign exchange. The expansion of the tourism market will also directly drive the development of financial, insurance, culture and entertainment, sports and fitness, as well as transportation and communications industries. Hong Kong・s developed service sector provides relatively advanced financial, insurance, convention and exhibition, tourist, legal and intermediary services. It also has a lot of knowledgeable talent well-versed in current international rules. As such, Hong Kong businesses can take advantage of their strengths to benefit from opportunities arising from the Olympics. These could include developing large logistics projects on a joint or individual basis, tourist attractions as well as tourist markets and products, and providing legal consultation services.

Furthermore, we welcome the Hong Kong business sector to actively participate in Beijings environmental protection efforts and promote sustainable development in Beijing and Hong Kong. In the new century, all cities should move towards sustainable development. Since 1998, Beijing has implemented dozens of measures to improve the environment, and has spent over RMB40 billion in environmental-protection related construction. As a result, the city environment has improved significantly. With the adoption of the "Green Olympics" concept, Beijing will invest RMB55 billion in construction projects related to environmental protection in the coming few years, and all of the 700 polluting enterprises in the city will be relocated or transformed into non-polluting ones. With the 2008 Olympic Games, Beijing will have a new look. By 2007, 20 major projects will have been completed, all urban garbage will be treated, urban sewage treatment will reach 90% and 40% of the city will be covered with greenery. To achieve these objectives, we need the support and participation of various sectors. We welcome Hong Kong people from different sectors to put forward valuable proposals for Beijing・s environment construction projects, to directly participate in ecological environment construction and to boost environmental protection cooperation between Beijing and Hong Kong.

Hong Kong enterprises also have valuable experiences and strengths in many other areas, such as new high-tech industries and real estate. When work in preparation for the Olympics starts, business opportunities for these sectors will become apparent. We welcome Hong Kong enterprises to take advantage of these opportunities, which will allow us to strengthen our cooperation and to develop together.

In the next few years, we will uphold a "door-opening" policy for the Olympic Games. We have formulated a series of preferential measures to encourage participation in Olympic construction. For example, we will set up a system to compensate for the investment return on infrastructure projects and exempt the infrastructure construction investors from land sale fees and urban public utilities construction fees. To comply with the rules of our WTO entry and fully raise Beijing's level of openness, the city has drawn up "Action guidelines for Beijing after WTO entry". The guidelines state that we must strengthen our ability to carry out reform involving the function of government, enhance administration, management standards and efficiency, and build an honest, diligent, practical and efficient government. It also calls for accelerating strategic adjustments in the economic structure. Vigorous development of new high-tech industries and promote modern manufacturing. Drive forward the process of opening different sectors, such as banking, insurance, telecommunications, commerce, logistics, tourism, conventions and exhibitions and professional intermediary services. Further develop the market system and consolidate and regulate the order of the market economy. Take full advantage of the roles played by industry associations and market intermediary service organizations. Create a market environment allowing fair competition among various businesses. Speed up the development and introduction of talent with a good knowledge of WTO rules and the system to resolve trade disputes, as well as management and technical skills. The advancement of such work will definitely create a better environment for Beijing to open up to the outside world, increase Hong Kong investors・ confidence and promote Hong Kong business sector's enthusiasm to participate in the Olympics-related construction projects.

To strengthen the close partnership between Beijing and Hong Kong, we have also worked out "Certain measures to enhance Beijing-Hong Kong cooperation". We will convene conferences regularly to improve communication and co-ordination between the two places. We will set up a new and user-friendly examination and approval procedure for examining and approving projects. This is aimed at facilitating foreign investments and expanding Beijing-Hong Kong cooperation in such areas as new and high technology, urban infrastructure, environmental protection, intermediary services, conventions and exhibitions, tourism, business and logistics. To promote the exchange of talent and development of human resources between both places, we held the first Beijing talent recruitment seminar this year, providing new development opportunities for Hong Kong's quality professionals. We welcome various sectors in Hong Kong to actively participate in the construction of Olympics-related projects and to offer their international and professional services. You can set up wholly-owned projects in Beijing, like engineering technical training, business and investment management, public relations enterprise planning and property management. The Beijing-China Cooperation Office of Beijing Municipal Foreign Economic Relations and Trade Commission will assist Hong Kong in strengthening ties and communication with the Olympics Organizing Committee. All municipal government departments will provide efficient and convenient services to help the Hong Kong business sector invest and develop businesses in Beijing, as well as continually expand the areas and the level of Beijing-Hong Kong cooperation.

When Beijing was applying to host the 2008 Olympic Games, we received strong support from different sectors in Hong Kong. I believe that we will continue to gain your support and help in preparing for the Olympics in the next few years. With support from the Chinese Government, people in China as well as Mainland and overseas friends from various sectors, Beijing will be able to host the best Olympic Games in history. Let us join hands and strive for the mutual development of Beijing and Hong Kong. Thank you.