Doing Business in Hong Kong: Market Overview
With the recovery of the global economy, the opportunity for doing business in Hong Kong is growing fast. The drivers for the sustainability of Hong Kong’s economy includes retail, logistics, business services, financial services, real estate development and tourism. In addition, with world-class infrastructure, free flow of information, no restrictions towards inwards and outwards investment, no foreign exchange controls, no nationality restrictions on corporate ownership, low tax regime and world financial hub are increasing the opportunities for doing business in Hong Kong.
Companies that want to start a business in Hong Kong are supported by favorable conditions. In fact, Hong Kong enjoys a high degree of autonomy and has its own common law legal system, currency, and customs jurisdiction. Spread over less than 1,500km square kilometers, Hong Kong has established itself as a business center for organizations looking to expand across their borders. Within close proximity of key Asian cities, Hong Kong is a gateway to China and a magnet for global business. Below some necessary information for doing business in Hong Kong.
- Population: 7.241 million (end-year 2014)
- Visitors: 60.8 million (2014)
- GDP Per Capita: US$39,800 (2014)
- GDP Growth: 2.3 percent (2014)
- Trade to GDP Ratio: 351 percent (2014)
- Average monthly income: HK$ 23,500
- Major Trading Partners: China, United States, European Union, Japan, and Taiwan.
The Closer Economic Partnership Arrangement (CEPA) offers Hong Kong’s products and firms a preferential access to China’s Market. CEPA goes beyond China’s World Trade Organization (WTO) commitments, eliminating tariffs, barriers and allowing access to services. Additionally, foreign companies will also benefit from CEPA; as foreign investors can set up production lines in Hong Kong to produce and trade goods as long as the criteria of “Hong Kong Service Supplier” is met and satisfied.
Market Opportunities & Market Strategy
Hong Kong is recognized as an island with one of the most liberal economic systems thanks to to its free trade policy, no trade barriers and no limit for its foreign on and off-shore investments. Since there are no tariff quotas or fees for general import and export trade, capital just flows with trade and earnings. Moreover, Hong Kong provides a fair legal system that gives investors or business owners an advantage. The island is in favor of business environment by providing fair business surroundings at all times.
The public infrastructure of Hong Kong is valued at over USD $16 billion which includes Hong Kong International Airport Expansion Plan, Kai Tak Airport Redevelopment, West Kowloon Cultural District, University of Hong Kong Campus Expansion, Ocean Park amusement park enhancement, Harbor Area Treatment Scheme, Hong Kong-Macau-Zhuhai Bridge, multiple subway and light rail lines, and Guangzhou-Shenzhen-Hong Kong Express Rail link. The infrastructure facilities in Hong Kong makes the island well-known worldwide to business owners; the air and sea transport facilities also provide a world class service for all customers. Also, Hong Kong is located in the heart of Asia-Pacific region. To match this ideal location, Hong Kong holds an advanced telecommunication infrastructure that allows cost effective prices for frequent travelers due to the decline in communication costs.
Hong Kong possesses full autonomy in its external commercial relations, the island is a founding member of the World Trade Organization (WTO) and a member of the Asia-Pacific Economic Cooperation (APEC) forum which aims to achieve sustainable growth and development in Asia-Pacific region throughout the promotion of economic confidence and reduction of trade barriers.
In Hong Kong, there is no statutory requirement for businesses to have a certain percentage of local national employees or a minimum percentage to be paid to local national. However, all non-local nationals are subjected to the immigration controls and visa employment. The general rule is that a visa must be obtained from the Chinese Embassy on the island of residence of the applicant before the departure to Hong Kong which will be forwarded to the Immigration Department of Hong Kong for processing. Alternatively, the local sponsor may submit the employee’s application to the Hong Kong Immigration Department.
As Hong Kong is a gateway to enter China, it would be an advantage to work with different experts or distributors, given the size and diversity of the Chinese market. These experts and distributors often have major networks in the Chinese territory. Companies considering entering this market should understand Hong Kong’s fast-paced business environment. Decisions are made quickly, firms must respond immediately to inquiries or risk losing opportunities to competitors. Additionally, Hong Kong firms are eager to work with committed exporters. Foreign firms operating in Hong Kong can show commitment to success in this market by using metric measurements, meeting standards and visiting the market for first-hand understanding and relationship building.
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