The move came within weeks of the signing of a free trade agreement between Hong Kong and the Chinese mainland. The FTA, known as the Closer Economic Partnership Arrangement (or Cepa) offers Hong Kong preferential access to China's goods and service sectors. A simple guide to CEPA

While telecoms has yet to be 'officially' added to the 17 Hong Kong service sectors which will enjoy easier access to the China market, the move is seen as adding a further gloss to the widely welcomed free trade agreement.

Other major provisions under Cepa, which kicks in on 1 January 2004, include zero tariffs on 90 percent of "Made in Hong Kong" products exported to the mainland.

Under the deal, which was signed on 29 June, countless local and international companies in Hong Kong regardless of nationality or size stand to benefit from CEPA's accelerated pace of market opening, for goods and services.

"The basic objective is to phase out tariffs, and phase in the liberalisation of trade and investment," Chinese Premier, Wen Jiabao said at the signing ceremony.

Many foreign companies will benefit from generous provisions

Eligibility requirements differ depending on whether you trade in goods or services.

For service providers, companies must have 'substantive activity' in Hong Kong. In other words, they must be incorporated in Hong Kong for a period of three-to-five years, pay profits tax, own or rent business premises here and employ 50 per cent of their staff locally.

For manufacturers or traders in goods, companies must satisfy a requirement that their products are "Made in Hong Kong". The exact rules, which are expected to be finalised by October, are likely to require that 25 to 30 percent of the product is made in Hong Kong.

"Simply put, the benefits are twofold: eligible companies based in Hong Kong will feel the immediate financial upside from zero tariffs on their products and increased access to the China market for their services; and companies who already have operations on the mainland will have more access to Hong Kong service providers," said Chief Economist of the Hong Kong Trade Development Council, Mr Edward Leung.

Overseas chambers of commerce in Hong Kong have responded positively to the opportunities presented by CEPA and to the inclusiveness of its eligibility criteria. For many, it was an even better agreement than expected. (Click here for comments by international chamber leaders)

The 17 other service sectors that will benefit from Cepa provisions are: management and consulting, exhibitions and conventions, advertising, accounting, construction and real estate, medical and dental, distribution, logistics, freight forwarding agency services, storage and warehousing, transport, tourism, audiovisual services, legal services, banking, securities and insurance.

Click here for more details on Cepa.