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Why Hong Kong?

Today, many investors and entrepreneurs are choosing to set up their businesses overseas – especially in jurisdictions like Hong Kong. The rationale behind this trend is to primarily facilitate entry into an international market and to benefit from tax friendly jurisdictions. Hong Kong is considered one of the best cities to establish and run a business, as it scores high on factors that matter to businesses. Strategic location, productive work-force, stable economic and political environment, attractive tax regime, pro-business environment, world-class infrastructure, an effective legal system are some of the factors that continue to contribute to its success.

Detailed below are some of the key benefits of setting up a business in Hong Kong and will serve to provide you with the answers to the question “Why choose Hong Kong to set up a business?”. To learn about how to setup a company in Hong Kong, please refer to Hong Kong Company Setup guide.

Strategic Location

Hong Kong is strategically located at the heart of the Asian continent. A five-eight hour flight will connect you to most markets in the Asia-Pacific region. If you need to tap into the Mainland Chinese market you will find that Hong Kong is perfectly situated on the southeast coast of Mainland China, flanking the mouth of the Pearl River Delta. This facilitates travel to and from Hong Kong to Beijing, Shanghai and other major Chinese cities within a single day.

The Hong Kong International Airport (HKIA) is the fifth busiest international passenger airport with 100 airlines servicing over 180 destinations, including major cities in the Asia Pacific, North America, Europe and the Middle East and to about 40 destinations in mainland China. Cross-boundary ferries provide speedy sea transport to and from six mainland ports and the coach service covers more than 90 PRD cities and towns. The HKIA is often ranked as the ‘Best Airport in the World’ and consistently receives accolades and awards. Hong Kong is also a focal point of all maritime activities in southern China and is one of the major ports of the world in terms of tonnage of shipping using its facilities, cargo handled and the number of passengers carried.

Ease of doing business

Hong Kong is renowned for being an easy place to set up a business. You can open your company in about two week’s time in Hong Kong. It is noted for its excellent infrastructure facilities and business premises are easily available. Intellectual Property protection is taken seriously, with strict regulations in place. There are various dispute resolution channels that businesses can avail of. The simple and business friendly tax system draws foreign investors to the city. Foreigners who wish to setup business in Hong Kong can easily relocate by applying for an appropriate work visa.
Ranking Category Hong Kong’s Rank Source
World’s easiest place to do business

5

World Bank Report: “Doing business 2016”
World’sBusiness Environment Rankings

3

Economist Intelligence Unit, Country Forecast, February 2014
Corruption Perception in Asia, US and Australia

4

Political & Economic Risk Consultancy, 2016
Best Nation for foreign trade and investment

2

The Globalisation Index 2007

Attractive Tax Regime

Taxes are the main concern for any entrepreneur who intends to set up a business in a given jurisdiction. In this regard, Hong Kong boasts of being one of the lowest tax jurisdictions in the world. Personal income tax, or salary tax as it is known, starts at 2% and goes up to 17% for income above HKD 120,000. Corporate tax is set at 16.5% of assessable profits for corporations and 15% for unincorporated businesses. There is no capital gains tax, nor any withholding tax on dividends and interest or collection of social security benefits. Furthermore, there is no sales tax or VAT in Hong Kong.

For more information on taxation in Hong Kong, refer to Hong Kong Tax Guide.

World’s freest economy

Hong Kong is one of the world’s most dynamic economies driven by the principles of free enterprise, free trade and free markets open to all. The robust economy over the past two decades has contributed to the GDP growth at an average annual rate of 5% in real terms. There are no restrictions on inward and outward investments, no foreign exchange controls and no foreign ownership restrictions. Factors such as a sound banking system, almost no public debt, a strong legal system, sizable foreign exchange reserves and a strict anti-corruption regimen serve to strengthen Hong Kong’s position as a business friendly region.

Furthermore, businesses that are set up in Hong Kong (i.e. any Hong Kong company regardless of nationality) can now benefit by gaining preferential access to the Mainland China market from the Closer Economic Partnership Arrangement (CEPA) – a free trade agreement between the Central People s Government and the Government of the Hong Kong Special Administrative Region. All goods qualified as Hong Kong origin may be exported to the Mainland tariff free. Moreover, Hong Kong service suppliers in 40 areas are eligible to receive preferential treatment in providing services in the Mainland.

Ranking Category Hong Kong’s Rank Source
World’s Freest Economy

1

The Heritage Foundation, Index of Economic Freedom, 2016

World’s Most Competitive Economy

2

IMD World Competitiveness Yearbook, 2015

Business Support & Assistance

A number of programmes have been established by the Hong Kong government and the private sector to help your company grow and improve in every aspect of your business. A number of business support programmes and financial incentives to foster the growth of SMEs have been established. Organisations such as the Hong Kong Trade Development Council help international companies do business in the Mainland and Asia, and also aid Hong Kong companies find new markets. The Hong Kong Productivity Council promotes increased productivity and the use of more efficient methods throughout Hong Kong’s business sectors. The Support and Consultation Centre for SMEs is a comprehensive information and advisory centre for SMEs. Financial assistance is available through a number of Government Funding Schemes.

Liberal Immigration Policy

Hong Kong follows a liberal immigration policy. Nationals of about 170 countries and territories are allowed visa-free visits to Hong Kong for periods ranging from 7 to 180 days. Short-term visitors may conduct business negotiations and sign contracts by entering Hong Kong on a visitor visa or entry permit. The government has introduced appropriate work visa provisions, anticipating the needs of business entrepreneurs who may wish to relocate to Hong Kong to run their business or who may want to hire foreign professionals to work in their company. There are various policies and schemes for the employment of foreign professionals, employment of Mainland talents and professionals, those wishing to enter for investment etc. Dependant visas are issued and allows the holder to undertake almost any type of lawful employment in Hong Kong. For more information, refer to Hong Kong Work and Business Visa Schemes.

Ranking Category Hong Kong’s Rank Source
World’s least restrictive immigration laws for foreign talent

6

IMD World Competitiveness Yearbook, 2008

Sound Legal Environment

Noted for its transparency, law and order is central to Hong Kong’s success. All are considered equal before the law. Hong Kong’s legal system is separate from Mainland China’s, and English common law prevails. With the establishment of the International Arbitration Centre in 1985, Hong Kong has become a key centre for arbitration in Asia and arbitration is now a popular method of dispute resolution in Hong Kong. The law is committed to the protection of Intellectual Property Rights (IPR) and enforces stringent regulations for patents, copyrights, trade marks and registered designs. The specially set up Intellectual Property Department monitors the IP regime in Hong Kong and is reputed to have extensive experience in handling IP matters. There are distinct rules and regulations concerning trade and commerce, employment, taxation and other business-related areas, making it an attractive place to setup and operate a business.

Ranking Category Hong Kong’s Rank Source
Best Judicial System in Asia

1

Political and Economic Risk Consultancy, 2008

Clean Governance

Hong Kong is a Special Administrative Region of the People’s Republic of China with a high degree of autonomy in all matters except foreign and defense affairs. According to the Sino-British Joint Declaration (1984) and the Basic Law, Hong Kong retains its political, economic, and judicial systems. This setup is often referred to as “One China, Two Systems”. Most businesses choose to set up operations in Hong Kong as it believed to be politically stable with a pro-business governance and free market principles. It is also cited as one of the most corruption-free economies in the world. Hong Kong has even set up an anti-corruption watch-dog – the Independent Commission Against Corruption (ICAC) – mandated to deal with both public and private sector corruption.

Ranking Category Hong Kong’s Rank Source
Most Politically stable country in Asia

2

Political & Economic Risk Consultancy, 2009
Least Bureaucracy and Red Tape in Asia

2

Political & Economic Risk Consultancy, June 2006
Asia’s Highest Integrity Government

3

Political & Economic Risk Consultancy, March 2006
Least Corruption in Asia

2

IMD World Competitiveness Yearbook, 2008

Productive Work Force

Hong Kong consists of a highly trained, well-educated and skilled wok-force. The workforce consists of a local talent pool of experienced and entrepreneurial professionals who are known to be especially well versed with the business culture in the fast-growing Mainland cities. Employees are generally considered to be hard-working, competitive and are constantly seeking to improve themselves. Although English is the language of communication in business settings, bulk of the workforce is also conversant with Cantonese and Mandarin, owing to the country’s link to China.

Ranking Category Hong Kong’s Rank Source
Best Labour/Employer Relations in Asia

12

The Global Competitiveness Report, 2015-2016, World Economic Forum
Most motivated workforce in Asia

3

IMD World Competitiveness Yearbook, 2008
Most Business conducive Labour Relations in Asia

2

IMD World Competitiveness Yearbook, 2008
Best Skilled Labour force in Asia Pacific

9

IMD World Competitiveness Yearbook, 2008

Robust Infrastructure

Hong Kong has taken endless measures to continuously upgrade its infrastructure in order to meet the growing demands of businesses. It is said to have one of the Best Airports and Busiest Ports in the world. Transportation services are efficient and cheap connecting all major centres. Hong Kong is also the preferred Exhibition and Convention Centre for most businesses in the region. The Hong Kong Exhibition and Convention Centre has received several awards and accolades. It is often voted as the ‘Best Convention and Exhibition Centre in Asia Pacific’. Hong Kong is home to world-class industrial/business parks like Cyberport and the Hong Kong Science and Technology Parks. These parks provide integrated infrastructure in one region that help reduce the per-business expense, and also help companies operate in a highly conducive, environment friendly setting.

Hong Kong s telecommunications infrastructure is one of the most technically advanced in the world. Broadband coverage is available to virtually all commercial and residential buildings. Hong Kong s open markets ensures there are several competitive mobile phone and Internet service providers. Broadband Internet connection is available to over 98% of households in Hong Kong.

Ranking Category Hong Kong’s Rank Source
Best Quality of Infrastructure

3

Global Competitiveness Report 2015-2016
Most Technologically Ready Nation

8

Global Competitiveness Report 2015-2016
Best Quality for Port Infrastructure

5

Global Competitiveness Report 2015-2016
World: E-readiness

7

Economist Intelligence Unit, 2010
World’s Most ‘Network Ready’ country

11

Economist Intelligence Unit, 2006
Quality of Air Transportation

3

World Competitiveness Yearbook, 2006

Quality of Life

Most foreign professionals and entrepreneurs who setup a business in Hong Kong tend to re-locate with their family. Consequently most individuals are concerned about the quality of life in Hong Kong – the social environment, cost of living, accommodation, education etc.

  • The social and ethnic fabric is a unique blend of cultures and people rendering a cosmopolitan lifestyle.
  • The city is considered modern and westernised but unfortunately experiences a high level of air pollution and traffic congestion.
  • In Hong Kong you will find that residential rentals are expensive and are considered in line with those in major international cities such as London and New York.
  • Hong Kong is commonly cited as the food capital of China with a wide array of Chinese regional cuisines. It also offers equally impressive gastronomical fare to suit international tastes.
  • The public transportation system is well connected, clean, safe, efficient, reliable and above all affordable. Getting around Hong Kong is easy, given its wide network of buses, trains, ferries and taxis.
  • Hong Kong is home to several international schools which follow a curriculum identical to those in their home country. Given the impetus to evolve into a knowledge based economy, great emphasis is placed on education in Hong Kong and it provides nine years of free compulsory education for its citizens.
  • Hong Kong offers world class private and public health services and expert medical practitioners. The health-care environment is clean, efficient, safe and affordable.
  • There are several recreational activities to indulge in and Hong Kong boasts of a vibrant and exciting Nightlife and is often quoted as the ‘city that never sleeps.’
  • Hong Kong is said to have one of the lowest crime rates in the world and is often cited as a safe place to live in.
Ranking Category Hong Kong’s Rank Source
Best Place to Live for Asian Expatriates

11

HSBC Expat Explorer Survey

Asia-Pacific Cities of the Future

5

fDi, Financial Times, 2015-2016
World-wide Quality of Life Index

18

The Economist, 2005
Best City Infrastructure in Asia-Pacific

8

Mercer’s City Infrastructure Ranking, 2009
World’s most expensive cost-of-living

5

Mercer Human Resource Consulting, 2007

World’s most expensive city for rental accommodation

1

ECA International 2007-2008

Use our range of Hong Kong company formation and incorporation guides to help you understand more about the rules and regulations of the market you will be entering. We also have answered common questions in our Hong Kong Company Formation FAQs.

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