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HK's Role As Asian Business Hub Confirmed

Thursday, October 21, 2010

The number of overseas and Mainland Chinese companies running business operations in Hong Kong has increased 2.6% over the past year, to a total of 6,561 companies, according to an annual survey released by Invest Hong Kong and the Census and Statistics Department.

Invest Hong Kong is the department of the Hong Kong government established to take responsibility for foreign direct investment and support overseas, Mainland and Taiwanese businesses to set up or expand in Hong Kong. The “Annual Survey of Companies in Hong Kong Representing Parent Companies Located outside Hong Kong" aims to understand the profile of those businesses and their views on the business environment in Hong Kong.

Director-General of Investment Promotion, Simon Galpin, said: "The results are very encouraging and reflect the rebound of Hong Kong's economy in the wake of the global financial crisis. Hong Kong continues to be an attractive city for these companies to base their operations in this part of Asia."

Of the total number of companies surveyed, 1,285 are regional headquarters (RHQs), 2,353 are regional offices (ROs) and 2,923 are local offices (LOs). This represents a year-on-year growth of 2.6%, 1.1% and 3.8%, respectively. Galpin disclosed that the survey had shown “the highest increase in the number of LOs. We work with these companies to help them set up and expand their business and to, hopefully, fulfil their potential as the RHQs and ROs of tomorrow."

Of the companies surveyed, 20% indicated that they may expand their businesses in Hong Kong in the next three years, either by increasing staff, expanding the scope of business functions or increasing office size.

In terms of sectors, finance and banking demonstrated the most robust growth and, it was said, reinforced Hong Kong's status as a world-leading international financial centre. Finance and banking regional headquarters increased by 5% to 135, while local offices increased by 3% to 622.

With regards to country of origin, roughly half the parent companies came from four countries. The US tops the list with a total of 1,263 companies, followed by Japan with 1,085, Mainland China with 789 and the UK with 505.

Galpin added that "we are seeing greater numbers of overseas companies setting up in Hong Kong as a base from which to expand into the Mainland and beyond. The same is also true of Mainland companies that use Hong Kong as a springboard from which to go global. This phenomenon highlights the strategic importance of Hong Kong to access business opportunities in the Mainland as well as offer geographical proximity to north and south-east Asian markets."

When choosing to set up RHQs, ROs or LOs, the top five factors in Hong Kong rated as most important were its simple tax system and low tax rate, free flow of information, corruption-free government, absence of exchange controls, and political stability and security.

"We are delighted to see a more optimistic outlook from the companies surveyed this year,” Galpin concluded. “Compared to 12 months ago, 77% of them now consider Hong Kong's outlook as a business location has improved or not changed."