Bang a Gong for Hong Kong
Over the past two decades, Hong Kong’s economy has more than doubled in size and its GDP has grown at an average of 4.5 per cent for the past 10 years in real terms. Hong Kong’s government runs a good surplus and its current fiscal reserve is large enough to cover almost two years of operating expenditure. On top of that, Hong Kong enjoys almost full employment. The people of Hong Kong work hard but they also play hard and enjoy life.
A Strong Work Ethic and Talent Everywhere You Look
Many visitors to Hong Kong are impressed by its hustle and bustle, speed and efficiency. But the people of Hong Kong are also praised for their tenacity and resilience. Just think of all the difficult challenges Hong Kong has faced over the years – from the financial turmoil in Asia to a series of public health crises and the last global financial crisis. With each struggle, Hong Kong not only survives, but thrives.
Hong Kong continues to enjoy a degree of autonomy under the “one country, two systems principle” and has maintained the basics of its social fabric — legal system, independent judiciary, financial system, clean government, independent anti-corruption authority, level playing field, simple and low tax regime. This is reassuring for business and trading partners. Hong Kong is a decent and caring society. There is a great freedom, freedom of expression and press freedom. Nowadays there are vigorous debates in Hong Kong’s media on various issues. The government has to be more open, transparent and accountable. This means that civil servants must work harder but this is good for Hong Kong, not just for people living there, but for those who do business with Hong Kong.
In fact, Hong Kong is actually moving forward and doing better than ever. Hong Kong is consistently ranked as the freest economy in the world. It is easier to do business in Hong Kong than in most other places. In 2012, it introduced legislation implementing stronger consequences for anti-competition conduct, it modernized mediation and arbitration laws and regarding taxes, Hong Kong signed an agreement with the Canadian government in 2012 for comprehensive avoidance of double taxation. The agreement is expected to come into effect in early 2014.
Hong Kong also has strong protection of intellectual property rights with its World Trade Organization-compliant IP legislation and strong enforcement. Many technology companies do business in Hong Kong because of its effective platform for IP trading and IP exports to the Mainland. Hong Kong has good business sense for customizing a new product or technology to cater to Mainland markets. Seen as the trendsetter in Asia, Hong Kong is an ideal first stop for international brands to test market their products before moving into Mainland China.
Hong Kong is an important market for technology products, with expertise in sourcing and marketing, innovation and commercialization. Its Science Park and Cyberport will continue to provide nurturing ground for R&D and the running of Information and Communications Technology /digital content business. Start-ups and small enterprises will continue to enjoy financial incentives and more land will be made available for the development of data centres.
With a city of 7.1 million people, Hong Kong has a vibrant cultural and arts community and Lo says promoting culture and creative industries, in particular film production, is another priority. The ongoing West Kowloon Cultural District project will build a cluster of arts and performance venues in hopes that there will be more international cultural exchanges. And if wine is your thing, it should be noted that Hong Kong is the world’s largest wine auction centre and the key wine trading and distribution centre in Asia.
Gateway to Mainland China’s markets
Hong Kong is the prime gateway to Mainland markets supported by a huge population of 1.3 billion. Taking the first-mover advantage to tap into Mainland markets since the late 70s, Hong Kong’s business community has accumulated vast experience and established strong connections to the Mainland. Its strategic location also enables access to the fast developing Pearl River Delta Region, which is modernizing production and promoting service industries. Upon completion of a cross-border express rail link and a cross-harbour bridge in the next two years, the traveling and turnaround time between Hong Kong and other parts of the Pearl River Delta Region will be substantially reduced.
Above all, Hong Kong-based companies enjoy easier access to the Mainland with Closer Economic Partnership Arrangements, the bilateral free trade agreement between Hong Kong and Mainland China. This means that companies in Hong Kong can use duty-free imported raw materials and components to manufacture goods of Hong Kong origin for export to the Mainland on a zero tariff basis, while service companies could enjoy easier access to 48 service sectors in Mainland China, with lower entry requirements, less restriction on the scope and geographical location of business. Foreign companies operating in Mainland China through Hong Kong could also enjoy tax benefits and have more flexibility in controlling the flow of capital from the Mainland. In short, there are a host of benefits for a foreign company to do business in Mainland China through Hong Kong.
While businesspeople have growing interests in attracting investments from Mainland China, let’s not miss the point that Hong Kong is also a platform for Mainland enterprises to go global. Many companies in Mainland China choose to list in Hong Kong or to set up local offices or regional operations there, using Hong Kong as the platform for fund-raising, market intelligence, and professional services for overseas investment.
Think Asia, Think Hong Kong
Hong Kong is also the platform to access other markets in Asia. The 10 countries covered by the Association of Southeast Asian Nations (ASEAN) are Hong Kong’s second largest trading partner. This underlines our strong presence and experience in other Asian markets.
Hong Kong is indeed a world city in Asia and a hub for trading, logistics and financial services in the region. More than just a trade middleman, it is also a multiplier for capital and business. If you are interested in Asia, if you want to advance your long-term interests, and if you are looking for a stable, safe and favourable environment for business, think Hong Kong.
Gloria Lo is the Director of the Hong Kong Economic and Trade Office