Hong Kong
Content
Te Practical Application of China Business
Hong Kong
HEILONGJIANG Harbin Urumqi
JILIN R. R A. Changchun A A I A L G O Shenyang M O N M E R LIAONING N N I N BEIJING
XINJIANG UYGHUR A. R. GANSU
Hohhot
NINGXIA HUI A. R.
HEBEI Yinchuan
QINGHAI
Jinan
SHANXI
Xining
SHANDONG
Lanzhou Xi'an
Zhengzhou
SHAANXI
JIANG SU
HENAN
TIBET A.R. Lhasa
TIANJIN
Taiyuan
Hefei
SICHUAN Chengdu
G N I Q G N O H C
HUBEI
Nanchang Changsha
GUIZHOU
Fuzhou
FUJIAN
Kunming
GUANGXI ZHUANG A. R.
Taiwan
GUANGDONG Guangzhou
Nanning
HONG KONG MACAU
HAINANHaikou
ZHEJIANG
JIANGXI
Guiyang
YUNNAN
SHANGHAI
Hangzhou
Wuhan
HUNAN
Nanjing
ANHUI
香港
Produced in association with Dezan Shira & Associates
Welcome to Hong Kong Hong Kong has long served an important role as a gateway to southern China due to its geographic proximity proxi mity and shared language and culture. Leased Leas ed by the British until unti l 1997, today, Hong Kong is one of the two Special Administrative Regions of the People's Republic of China, along with Macau. Te Hong Kong territory covers Hong Kong Island, the Kowloon Peninsula and the New erritories. Dezan Shira & Associates has been advising international clients in Guangzhou since 1992. Our firm has been in helping investors Tis set up businesses in the city andcity, its development zones and handleinstrumental the local economic and foreign legal conditions. guide is our overview of the including demographic and economic details that our practice has compiled from our own local resources and experience. We We hope that you find it useful. An on-the-ground presence and years of business experience in a given city are essential to giving sound advice on foreign investment. At Dezan Shira & Associates, we can provide you and your organization with an in-depth understanding of local policies, regulations, costs and incentives. If you need assistance with corporate establishment, tax, accounting and payroll, or general business advisory work in the city or nearby, contact us. We look forward to hearing from you.
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HONG KONG Situated at the southeastern tip of China, Hong Kong is East Asia’s Asia’s logistics and financial hub and has long served as a bridge for f or investment into mainland China.
Fast facts 88 percent of the population speaks Cantonese as their first language Bordering Shenzhen, Hong Hong Kong is within two hours by train or car from all the major cities of the Pearl River Delta (notably including Guangzhou), in addition to 60 kilometers from Macau Hong Kong is the largest venture capital center in Asia - the Hong Kong stock exchange had a market capitalization of HK$20.9 trillion in 2010 and is the third largest in Asia after okyo and Shanghai Hong Kong by numbers Item
Unit
Population m people GDP At Constant (2000) Market Price Annual Growth Rate Rate (%) % GDP HKD100m HK Per Ca Capi pitta GD GDP P HKD HK D At Current Market Prices Prices Annual Growth Rate Rate % GDP HKD100m HK Per Ca Capi pitta GD GDP P HKD HK D Consumer Price Indices Composite Consumer Price Index (Oct. 2004Sep. 2005 = 100) Consumer Price Index (A) Consumer Price Index (B) Consumer Price Index (C) External rade Imports HKD100m Domestic Exports HKD100m Re-exports HKD100m HK erms of rade Index 2000=100 Container Troughput 1m EUs International Investment Position Net International Investment Position HKD100m Ext xter erna nall Fin inan anci ciaal As Asse sets ts HKD HK D10 100m 0m
2002
6.79
2003
6.8
2004
6.88
2005
6.94
2006
6.9
2007
6.95
2008
6.98
2 009 20
7.03
2010
7.09
1.8 3.2 8.6 7.3 6.9 6.3 2.4 -13.5 17.9 13,906 15,099 16,200 16,235 17,359 18,453 16,536 14,307 16,867 199, 19 9,80 8044 20 206, 6,60 6044 22 222, 2,58 5866 23 238, 8,28 2844 25 253, 3,15 1511 22 227, 7,00 0088 23 236, 6,98 9899 20 203, 3,51 5144 23 237, 7,89 8988 -1.7 -3.4 4.7 7.1 6.6 10.7 3.8 -3.3 7.0 12,768 12,340 12,914 13,827 14,743 16,126 16,769 16,223 17,353 189, 18 9,31 3155 19 193, 3,33 3344 19 190, 0,37 3777 20 202, 2,94 9411 21 215, 5,00 0066 23 232, 2,83 8366 24 240, 0,32 3277 23 230, 0,76 7688 24 244, 4,75 7533
102.4 101.4 102.6 103.3
99.8 99.3 99.8 100.3
99.4 99.3 99.4 99.6
100.3 100.3 100.4 100.3
102.4 102.1 102.4 102.6
104.4 103.4 104.6 105.3
108.9 107.1 109.5 110.2
109.5 107.4 110 110.9
112.1 110.4 112.7 113.2
16,194 1,309 14,296 102.1 19.14
18,058 1,217 16,208 101 20.45
21,111 1,260 18,931 99.3 21.98
23,295 1,360 21,141 97.9 22.6
25,998 1,345 23,265 97.9 23.54
28,680 1,091 25,784 95.8 24
30,253 908 27,333 96.4 24.49
26,924 577 24,113 97.5 21.04
33,648 695.12 29,615 95.9 23.7
26,773 80,,32 80 3277 External Financia Financiall Liabilitie Liabilitiess HKD100m HKD100m 53,553
30,598 92,0 92 ,023 23 61,424
33,017 106, 10 6,98 9877 73,969
34,819 116, 11 6,56 5655 81,747
41,508 153, 15 3,34 3466 111,838
40,707 212, 21 2,98 9888 172,281
48,006 55 55,,844 53,940 175, 17 5,66 6677 19 198, 8,11 1155 22 224, 4,31 3155 127, 12 7,66 6611 14 142, 2,271 271 170, 170,37 3755
All figures were obtained from data published published by the government of Hong Kong DEZAN SHIRA & ASSOCIATES
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U
nder China Chin a’s “one country, co untry, two systems” s ystems” policy, Hong Hong Kong’s existin existingg economic, econom ic, legal and social systems (legacies of British rule) will be maintained until at least 2047 and these provide many advantages for foreign enterprises considering investing in Hong Kong. In 2009, Hong Kong was named the second largest recipient of FDI in Asia, after mainland China, and the fourth largest in the world. Te territory has a liberal investment regime, no trade barriers, low taxation and no discrimination against overseas investors. It has a dependable legal system with an independent judiciary, making it one of the world's freest and most service-oriented economies. In addition, Hong Kong has double taxation relief arrangements with major trading partners.
Infrastructure Hong Kong is a major services center for the mainland, particularly Guangdong, providing supporting infrastructural facilities such as ports, airports and institutional services like banking, insurance and business services. Te city is currently undergoing an ambitious transport infrastructure program, and has a recent annual budget of HK$15.5 billion to be spent on major road and railway projects.Te entirety of this program is expected to be completed in 2020.
Road New major road projects will add around 50 kilometers of new roads, with at least one bridge and four tunnels to Hong Kong's transport network. he investment should alleviate congestion in urban areas and provide new links to the New erritories. Tere is also the Hong Kong-Shenzhen western corridor, corridor, a 3 mile, dual three-lane road spanning Hong Kong, Shekou, to Shenzhen, China, which serves as the port of entry to Hong Kong from the mainland with a capacity of 80,000 vehicles per day. day. Te long-awaited Hong Kong-Zhuhai-Macau bridge project began in 2009 and is set to be completed in 2016. Te proposed 50 kilometer bridge is expected to reduce traveling time between Hong Kong and Zhuhai or Macau from 4.5 hours to approximately 40 minutes. 4 | DEZAN SHIRA & ASSOCIATES
Railways Recently, five new rail projects expanded the network by 35 percent to over 200 kilometers with an increas increasee of public trans transport port from 31 percent to 39 percent. he city’s major rail projects include the 7.4 kilometer extension of the Kowloon-Canton Railway (KCR) from Sheung Shui to Lok Ma Chau Spur Line and the Guangzhou-Shenzhen-Hong Guangzhou-Shenzhen-H ong Kong Express Rail Link worth US$8.6 billion.
Air Te Hong Kong International Airport (HKIA) at Chek Lap Kok is the busiest airport in the world for intern internation ational al cargo with a capaci capacity ty for 45 million passengers and three million tons annually. annually. In 2011, the Hong Kong Airport Authority outlined a development project called the Airport Master Plan 2030. Tis major project aims to expand the services at HKIA HKIA’’s terminals within the next 20 year years, s, and includ includes es a possib possibility ility of building a third runway to accommodate increased air traffic. Each week, around 77 international airlines operate an estimated 4,200 flights to 140 destinations. Te marine cargo terminal located at the airport links with 18 ports in the Pearl River Delta.
Ports and waterways Te Hong Kong port is the force behind not only Hong Kong’s economy but south China’s as well. Te Hong Kong port handles about 72 percent of Hong Kong's total cargo throughput and is the world’s third busiest container port by cargo throughput (2010). Te expansion of Kwai Chung container port can accommodate the passage of 80 international shipping lines with over 500 container line services weekly to more than 500 destinations. In 2010, the port handled approximately 23.7 million twenty-foot equivalent units (EUs) of shipped goods. Tere are nine container terminals in Kwai Chung-sing Yi basin under the operation of five different operators; namely the Modern erminals, Hong Kong International erminals Ltd, COSCO-HI, COSCO-HI, DP World World and Asia Asi a Container erminals Ltd. Te container terminals occupy 279 hectares of land while providing 24 berths
City infrastructur infrastructure e
In June 2003, Hong Kong and Mainland officials signed the Closer Economic Partnership Arra Ar rang ngem emen entt (C (CEPA) EPA),, an ag agre reem emen entt wh whic ichh liberalized general trade and investment between the two areas. Under CEPA, Hong Kong companies were allowed to establish businesses in the Mainland with little restriction, and virtually all products of Hong Kong origin, except for a few prohibited articles, could be imported to
Hong Kong’s metro system is comprised of the Mass ransit Railway (MR) network, and is operated by the MR Corporation. Te system links Hong Kong Island, Kowloon and the New erritories by rail, and carries an average of 4 million passengers every weekday. Te MR system has about 218 kilometers of rail, and is currently undertaking the construction of five new extension plans. Tese include the West Island Line, the Shatin to Central Link, the Kwun ong Line Extension, the South Island Line and major extensions to the Guangzhou-Shenzhen
the Mainland tariff-free. Investment covers a wide range of activities ranging from traditional areas such as import/export, wholesale/retail, banking, transport and warehousing, to newer areas such as real estate, hotels, financial services, manufacturing and infrastructure developments. In 2010, retail sales were worth HK$34.9 billion, while total exports were HK$303.1 billion. Imports during the same period came to HK$336.5 billion. Te year also saw its trade deficit increasing to about HK$33.4 billion. Hong Kong’s Kong’s savvy global business environment
Express Rail Line. Te entirety of these projects is expected to be completed in 2015. Te government has spent more than US$6 million to improve infrastructure, including the construction of the t he Yuen Yuen Long southern bypass, the ing Kau Bridge, and the massive West Kowloon reclamation project.
has paired well with the Pearl River Delta’s competitive manufacturing base. An estimated 15 percent of the mainland’s foreign trade is handled through Hong Kong. According to China's customs statistics, Hong Kong is the country’ss third largest trading partner after Japan country’ and the United States, contributing to 9 percent of all total trade.
and 8,530 meters of deep water frontage. Tere are some 800 shipping-related companies in Hong Kong that provide comprehensive maritime services including ship registration, legal and dispute resolution services, ship finance and marine insurance, and ship-owning and ship management.
Economy and investment climate Hong Kong is the world’s 10th largest trading economy,, the 6th biggest foreign exchange market economy and with its service sector accounting for more
Development zones and ports
than 90% of o f GDP, GDP, it is the world’ wo rld’ss most servicesser vicesoriented economy economy.. Te territory has experienced steady economic growth in the years since the financial crisis of 2008. In 2010, Hong Kong’s GDP recovered from a loss, and grew by 7 percent to HK$1.74 trillion. Per capita GDP was HK$244,753, while the unemployment rate was at 4.3 percent. he economic sectors of Hong Kong are: trade and logistics, tourism, financial services, professional services and other producer services. Mainland China is Hong Kong's largest trading
busiest and most efficient. Te port is the force behind not only Hong Kong’s economy but south China’s as well; an estimated 80 percent of handled container traffic is connected to the latter latter.. Tere are nine container terminals in Kwai Chung-sing Yi basin under the operation of five different operators; namely the Modern erminals, Hong Kong International erminals Ltd, COSCO-HI, COSCO-HI, DP World World and Asia Container erminals Ltd. Te container terminals occupy 275 hectares of land while providing 24 berths and 8,530 meters of deep water frontage.
partner and its largest source of external direct investment.
Tere are some 800 shipping-related companies in Hong Kong that provide comprehensive
Hong Kong Kwai Chung Port Hong Kong’s port remains one of the world’s
DEZAN SHIRA & ASSOCIATES
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maritime services including ship registration, legal and dispute resolution services, ship finance and marine insurance, and ship-owning and ship management. For businesses, the Hong Kong Shipping register offers the most competitive package with its simple and fast registration process. It inspects ships that should comply with international standards for the safety and protection of marine environment. In addition, Hong Kong has double taxation relief arrangements with major trading partners.
Hong Kong Stock Exchange Founded in 1891 as the Association of Stock Brokers, the Hong Kong Stock Exchange is Asia’’s third largest stock exchange after okyo Asia and Shanghai. In terms of market capitalization, it is the world’s sixth largest. It took the name it has today in 1914, and by 1980, became the only stock exchange in the territory when the four exchanges in operation at the time were unified as the Stock Exchange of Hong Kong Limited. rading on the new, unified exchange commenced on April 2, 1986.Te Hong Kong Stock Exchange's leading index is the Hang Seng Index, which was introduced in 1969 and consists of the 33 largest companies traded on the exchange. It represents around 70 percent of the value of all stocks traded on the Hong Kong exchange.
Resources Government organizations
Te Government of the Hong Kong SAR of PRC Website: W ebsite: www.gov www.gov.hk .hk rade and Industry Department el: (852) 2392 2922 Email: [email protected]
General Gener al information Hong Kong rade Development Council Website: W ebsite: www.china.tdctr www.china.tdctrade.com ade.com
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