Overseas Companies in Hong Kong Increased by 4.3%

The number of business operations in Hong Kong with parent companies overseas and in Mainland China reached an all-time high of 7,250 in 2012, up by 4.3% from a year ago, according to the results of an annual survey released by Invest Hong Kong and the Census and Statistics Department. The survey findings also showed a 5.7% rise in the number of people employed by these companies, an increase of about 20,000 compared to a year ago.

Mr Galpin, Director-General of Investment Promotion at Invest Hong Kong, said, “We are delighted to see growth in the number of foreign and Mainland companies running business operations in Hong Kong, which is proof of the city’s continued appeal as an ideal business hub in Asia.”

However, Mr Galpin was cautious regarding global economic trends and their likely impact on Hong Kong. He said, “We have to recognise that a difficult global environment and the slowdown in Mainland China’s economy may have a negative impact on the number of foreign companies setting up in Hong Kong in the short term. We are confident, though, that in the long run Hong Kong will continue to attract investors who plan to start or strengthen their operations in the region.”

Mr Galpin noted that Hong Kong’s strategic location at the heart of Asia makes it an ideal platform for start-ups to take their first steps into the Asian market, he said, and added that the city’s proximity to the Mainland offers a dual platform from which overseas companies can access Mainland markets and Mainland companies can “go global”.

The “2012 Annual Survey of Companies in Hong Kong Representing Parent Companies Located Outside Hong Kong” aims to collect information on the profile of these companies and their views on the business environment of Hong Kong. Of the 7,250 companies responding to the survey, 1,367 operated as regional headquarters (RHQs), 2,516 as regional offices (ROs) and 3,367 as local offices (LOs).

Analysed by country/territory where the parent company was located, the US topped the list, followed by Japan and Mainland China.

The 7,250 companies together employed about 388,000 people, compared to 368,000 last year. In terms of size, the majority of the respondent companies were of small and medium size, with 4,843 companies employing fewer than 20 people and 1,193 companies employing 20 to 49 people.

The top three lines of business engaged by these companies are ‘import/export trade, wholesale and retail’, ‘professional, business and education services’, and ‘financing and banking’. Of particular note is the 8.8% in the number of companies engaged in financing and banking, which reflects the increasing appeal of Hong Kong as an international financial centre and its role as the Mainland’s official offshore Renminbi centre.

When choosing a location to set up RHQs/ROs/LOs, the top five factors rated as most important by respondents included: (1) simple tax system and low tax rate, (2) free flow of information, (3) corruption-free government, (4) political stability and security, and (5) rule of law and independent judiciary.

Source: Invest Hong Kong