Hong Kong The Canadian Trade Relationship
Home to seven million people, Hong Kong is one of the most densely populated cities in the world. A progressive centre for international business and finance, Hong Kong has ranked as the “World’s Freest Economy” for over a decade. One of Hong Kong’s chief trade relations is Canada, prompting a push from the Hong Kong Economic and Trade Office (HKETO) to urge Canadian businesses to explore the profitable possibilities of this Asian powerhouse.
Gloria Lo, director of HKETO, says that Hong Kong “is a world city and a hub for trading, logistics and financial services. It is not just a trade middleman, but a multiplier for capital and services in the region.”
Lo urges potential Canadian business investors to take advantage and profit from the vibrant and ever-expanding financial markets in Asia. “By 2025,” she says, “it is projected that the Asian consuming class will increase to more than two billion people who will account for one-third of global consumption.”
Given its density, Hong Kong offers foreign business investors a welcoming environment of potential commercial associates. “In Hong Kong, you can easily find partners whom you can trust,” Lo says. “Our vibrancy cannot be explained by mere efficiency and speed. Hong Kong people are highly praised for their tenacity and resilience, their vigor and drive.” Hong Kong finds itself in a unique and privileged position. “As the world’s freest economy, Hong Kong has no barriers to trade, no restrictions on investments and no foreign exchange control,” Lo says. “People are impressed by our unsurpassed efficiency, unfettered access to information, a low and simple tax regime and world-class infrastructure. Hong Kong enjoys close relations with Canada and is home to the largest Canadian business community in Asia.”
Many Canadian businesses currently operate in Hong Kong: among them are the Bank of Montreal and Scotiabank, Canadian Tire and Reitmans. Major Canadian companies establish their headquarters and regional offices in Hong Kong.
According to the Global Financial Centre Index, “Hong Kong ranks as the third major global financial centre, just after London and New York. As the eighth largest banking centre in the world and the second largest in Asia, more than two-thirds of the top 100 banks operate in Hong Kong. The city has a vibrant stock market – the second largest in Asia in terms of market capitalism.”
Canadian educational institutions also profit from Hong Kong’s emerging opportunities. “Hong Kong, Asia’s World City and a leading business centre that helps to drive the world economy, has become the site for the University of Waterloo’s first overseas regional office,” says Eva Cairns, director of the University of Waterloo’s Hong Kong Office. “This office plays a major part in uWaterloo’s continued global success.”
A Canadian Financial Mission to Hong Kong has been organized for January 2014 to assist Canadian businesses and financial institutions in profiting from the various investment opportunities in Hong Kong. The event is being organized by HKETO, the Hong Kong Trade Development Council (HKTDC), the M&A Club, the Investment Industry Association of Canada and the Consulate General of Canada in Hong Kong. “The mission,” says Andrew Yui, director, Canada, HKTDC, “will join 2,400 international participants to attend the Asian Financial Forum; as well, value-added programs are organized to help Canadian delegates find business partners, investors and investment projects.”
“We see much potential for the financial services in Asia given the strong growth in wealth in the region, and the continuous liberalization of the Chinese Mainland’s financial market,” Lo says. ““Hong Kong is well positioned to take advantage of all these developments, with our strategic location at the heart of Asia, our sound and robust financial system, and our highly internationalized market. We welcome Canadian companies and financial institutions to leverage Hong Kong for investment and financing as well as for facilitating further development of their financial services.”
Many Canadian companies have been operating from Hong Kong for decades. Sun Life Financial Inc. – the Toronto-based, international financial services company – began its operations in Hong Kong in 1892 and continues to thrive in the Asian market. “We believe that Asia, and particularly Hong Kong, is crucial to the success of any global operations in the future,” says Stephan Rajotte, president of Sun Life Financial Asia. “Hong Kong’s strategic location and continuing business-friendly attitudes and dynamism have helped make it a key location for our diverse businesses in Hong Kong’s own market.”
Order lies at the heart of the city’s effective business structure. “Hong Kong’s excellent financial system is underpinned largely by the rule of law, simple and low taxation, and transparent and sound regulatory regime,” Lo said.
The city, known as the “fragrant harbour”, is a bridge to Mainland China. “With the full support of the Chinese Central Government, Hong Kong has developed as the premier renminbi (Chinese currency) offshore business centre,” Lo says. “We enjoy easier access to the Mainland markets for various service sectors and industries with the bilateral free trade agreement – The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).”
The HKETO promotes financial opportunities for Canadian businesses and aims to facilitate access to ensure that Canadians benefit from the potential for profit. The economic connection between Canada and Hong Kong is not new, but a significant push is being made for additional investments.
“Over the years, Hong Kong has maintained a stable bilateral trade relationship with Canada,” Lo says. “The comprehensive double taxation avoidance agreement signed between Hong Kong and Canada in 2012 has been rectified and brought into effect. This is a major achievement to facilitate business and trade between Hong Kong and Canada.”