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History & Features of Hong Kong
The Cultural environment
Setting up a new business in Hong Kong
Imports, Exports and Trade Barriers
Foreign Direct Investment (FDI)
Key sectors attracting foreign investment
Why Hong Kong?
History & Main Features Of Hong Kong
Hong Kong is positioned at the mouth of the Pearl River Delta on the coast of
Hong Kong was formed in the year 1842 and became a part of British colony.
Handed back by the British in the year 1997.
The population of Hong Kong was 7.072 million in 2011 out of which 95% are
Chinese & rest 5% percent are non-ethnic Chinese.
Hong Kong acts as a supply chain connection between China & Rest of the
Currency of Hong Kong is HK Dollar ($).
1 HK$ = 0.08 £ (United Kingdom Pound)
= 0.12 $ (United States of America)
Consistent growth since past 2
decades with GDP reaching $243.7
billion in 2011
Political section on Hong Kong provides inputs about the
political system, key figures in the country, and governance
Economic section on Hong Kong outlines the economic story
of the country to provide a balanced assessment on core
Social section on Hong Kong enables understanding of
customer demographics through the income
distribution, rural-urban segmentation and centre of
affluence, healthcare and educational scenario in the
Technological section on Hong Kong provides strategic inputs on
information communications and technology, technological laws and
policies, technological gaps, patents data and relevant laws.
Legal section on Hong Kong provides information about the legal
structure, corporate laws, business set-up procedures and the tax
Environmental section provides information on environmental policies
in Hong Kong and the performance in terms of important
Favourable political relationships:
Foster stable business environments
Increase international cooperation in many areas
Lead to increase business opportunities and lower
The official languages in Hong Kong are Chinese
and English blending cultures of East and West
Every well-educated person in Hong Kong must
command Cantonese, Putonghua and English
The local Chinese are mainly living with the
traditional Chinese principle
The Hong Kong spirit means hard working, facing
new challenges, high degree of adaptability and
In weekends, people of Hong Kong like family
gathering or yum cha, doing exercise, watching
Hong Kong people are very religious. Different religions
Buddhism, Taoism, Protestant, Catholic, Muslim, Jew, Hin
dus and Sikh prevail.
Buddhism is followed by about 90% of the total
Traditionally, because of its early role in fishing, many
Hong Kongers believe in Tin Hau, the protector of
Christmas and Easter are still stipulated as official
The education system has been maintained in Hong
Kong nowadays, which is quite British with local
At the higher education levels, both British and
American systems do exist
The University of Hong Kong, the oldest institution of
tertiary education, has traditionally been based on
the British model
Step 1: Application for Establishment
Step 2: Forward the application to MOFCOM-
Step 3: Application for Registration
Foreigners are free to be the sole directors and
shareholders of a Hong Kong company.
There are no local resident requirements.
Although their is no requirement to be physically
present at the time of company registration, physical
presence may be required for the purpose of opening a
bank account, depending on the bank chosen.
The minimum registered capital of a limited liability company is
Rmb30,000 while that of a joint-stock limited company is Rmb5 million.
The minimum registered capital of a foreign or JV bank is Rmb300
million worth of freely convertible currencies
The minimum registered capital of a JV international freight forwarding
agency is US$1 million;
Hong Kong is a major international financial centre
It features a free trade economy with low taxation
Lesser intervention of the government
HK is a full time member of WTO and Asia Pacific
Economic Cooperation forum
The government has signed a CEPA, a free trade
agreement with China.
The corner stone of HK’s free trade approach is a
strong and credible multilateral trading system.
PERSONAL INCOME TAX
The principal sources of revenue to the Hong Kong Government
(apart from revenue from the sale of government land) are:
Property tax; and
There is no capital gains tax, no dividend tax and no
inheritance tax in Hong Kong.
Hong Kong follows a territorial principle of taxation. Individuals
are taxed only on income that has been “earned in Hong
An individual carrying on trade, profession or
business in HK is chargeable to profits tax
Profits sourced outside HK are not taxed in HK even
if remitted to HK
The rate of profit tax is 16.5% for corporations and
15% for taxpayers other than corporations
Property tax is charged at the rate of 15% of net
assessable value of any land or buildings in HK
Corporations carrying on business in HK can elect to
be exempted from property tax
Leases of property not exceeding one year - 0.25%
of the total rent payable over the term of the lease
Leases of property exceeding one year but not
exceeding three years - 0.5% of the average yearly
Accommodation and housing allowances
Education benefits for children
Company gifted car
Holiday journey allowances
Share rewards and share options
THE TAX SYSTEM
Low rate optional flat tax of 16% on personal income
No Pay-as-you-Earn in HK
Corporate income tax is at a flat rate of 17.5%
No payroll taxes in HK
No death tax in HK
HK budget has a budget surplus and a very little
TAX SYSTEM GOOD?
Low level of taxation and public spending
Low, flat rates of tax
Corporate profits and dividends
FDI IN HONG KONG
FDI flows in HK exceeded US$83 billion in 2011, an all
time high (World Investment Report, 2012)
FDI stock remained stable at US$1.14 trillion in 2012
as compared to US$1.09 trillion in 2010
Globally, HK ranked 4th in FDI inflows after the
US, CHINA and BELGIUM respectively
LAW & POLICY
The Hong Kong government encourages foreign investment
Itplays an important part in building Hong Kong as an
international financial centre
It supports a free market economy and adopts a low
There is no investment approval procedure directed
specifically towards foreign investors.
Hong Kong’s economy scored 89.9%, making it the freest
economy in the world.(Index of Economic Freedom, 2012)
The two exchanges, namely, the Stock Exchange of Hong
Kong Limited &the Futures Exchange of Hong Kong Limited
are currently owned and operated by Hong Kong Exchanges
and Clearing Limited (HKEx)
Factors that have been identified are:
Rule of law and protection of property rights;
Free flow of information;
Low taxation and a simple tax system;
Absence of exchange control; and
Effective communication, transport and other infrastructure.
Source: UNCTAD; for further information on data and
methodology, see www.unctad.org/diae.
KEY INDUSTRIES OF HONG
Four Key Industries in Hong Kong are:
Trading and logistics,
Professional and producer services
The Four Key Industries in the Hong Kong economy
generated value added of HK$1,113.1 billion and
employed 1 703 600 persons in 2011.
The share of the total value added of these industries in
Gross Domestic Product (GDP) was 58.5% in
2011, higher than that of 57.8% in 2006.
The trading and logistics services industry is the largest
among the Four Key Industries, in terms of both value
added and employment
Being an important global business hub, professional
services and other producer services in Hong Kong
together generated value added of HK$235.9 billion and
provided jobs for 469 400 persons in 2011.
Value added & Employment in
Emerging industries are:
Cultural and creative industries,
Innovation and technology,
Testing and certification services and,
These industrieshave been identified asenjoying advantages for further development.
Value added and Employment in
WHY HONG KONG??
Strategically located for business in Asia
Low and simple tax regime
International, transparent and efficient
World-class business infrastructure
Easy recruitment of skilled staff
Government support for companies
The world’s freest economy
The world’s most competitive economy
The world’s most services-oriented economy
The world’s second highest per capita holding of
foreign exchange reserves
The second largest source of FDI in Asia after Japan
The second largest recipient of FDI in Asia after