Hongkong market


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Hongkong market

  2. 2. Group Members  ARCHIT JAIN ST20023148  KURNIKA GUPTA ST20015634  NIKHIL CHATURVEDI ST20028708  YUSUF ALI ST20028751
  3. 3. Today’s Menu  History & Features of Hong Kong  PESTEL factors  The Cultural environment  Setting up a new business in Hong Kong  Imports, Exports and Trade Barriers  Tax structure  Foreign Direct Investment (FDI)  Key sectors attracting foreign investment  Why Hong Kong?
  4. 4. History & Main Features Of Hong Kong  Hong Kong is positioned at the mouth of the Pearl River Delta on the coast of southern China.  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 World.   Currency of Hong Kong is HK Dollar ($). 1 HK$ = 0.08 £ (United Kingdom Pound) = 0.12 $ (United States of America)
  5. 5. Consistent growth since past 2 decades with GDP reaching $243.7 billion in 2011
  7. 7. PESTEL ANALYSIS  Political section on Hong Kong provides inputs about the political system, key figures in the country, and governance indicators.  Economic section on Hong Kong outlines the economic story of the country to provide a balanced assessment on core macro-economic issues.  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 country.
  8. 8. Contd..  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 regime.  Environmental section provides information on environmental policies in Hong Kong and the performance in terms of important environmental indicators.
  9. 9. POLITICAL RELATIONSHIP Favourable political relationships:  Foster stable business environments  Increase international cooperation in many areas  Lead to increase business opportunities and lower risk
  11. 11. LANGUAGE  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 fluently
  12. 12. CUSTOM  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 globalization.  In weekends, people of Hong Kong like family gathering or yum cha, doing exercise, watching television, etc.
  13. 13. RELIGION  Hong Kong people are very religious. Different religions like Buddhism, Taoism, Protestant, Catholic, Muslim, Jew, Hin dus and Sikh prevail.  Buddhism is followed by about 90% of the total population  Traditionally, because of its early role in fishing, many Hong Kongers believe in Tin Hau, the protector of seafarers.  Christmas and Easter are still stipulated as official holidays.
  14. 14. EDUCATION  The education system has been maintained in Hong Kong nowadays, which is quite British with local properties  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
  15. 15. Setting up a new business
  16. 16. PROCEDURE:  Step 1: Application for Establishment  Step 2: Forward the application to MOFCOM-  Step 3: Application for Registration
  17. 17. CONSIDERATIONS FOR FOREIGN INVESTORS  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.
  18. 18. CAPITAL REQUIREMENTS  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;
  19. 19. IMPORT & EXPORT
  20. 20. Trade Benefits  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.
  21. 21. Procedure for ImportExport  Cash in Advance
  22. 22.  Documentary Credit
  23. 23.  Documents against Payment
  24. 24.  Open Account
  25. 25. Hong Kong Export Commodities  Electrical machinery and appliances  Textiles and apparel  Footwear  Watches and clocks  Toys and Plastics
  26. 26. Export Partners  China 48.5%  US 12.8%  Japan 4.3%  EU 8.0%
  27. 27. Hong Kong Imports Commodities  Raw materials and semi – manufactures  Consumer goods  Capital goods  Food stuffs  Fuel
  28. 28. Imports Partners  China 46.6%  Japan 9.8%  Singapore 6.4%  Taiwan 6.4%
  29. 29. Source: http://bso.hktdc.com/bso/BrokerServlet
  30. 30. Source: http://hong-kong-economy-research.hktdc.com/businessnews/article/Market-Environment/Economic-and-Trade-Information-on-HongKong/etihk/en/1/1X000000/1X09OVUL.htm
  32. 32. PERSONAL INCOME TAX RATE NET CHARGEBLE INCOME (HKD) RATE 0-40,000 2% 41,001-80,000 7% 80,001-120,000 12% ABOVE 120,001 17%
  33. 33. TAXATION The principal sources of revenue to the Hong Kong Government (apart from revenue from the sale of government land) are:  Salaries tax;  Profits tax;  Property tax; and  Stamp duty.
  34. 34. SALARY TAX  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 Kong”.
  35. 35. PROFITS TAX  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
  36. 36. PROPERTY TAX  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
  37. 37. STAMP DUTY  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 rent
  38. 38. TAXABLE BENEFITS  Accommodation and housing allowances  Meal allowance  Education benefits for children  Company gifted car  Transport allowance  Holiday journey allowances  Share rewards and share options
  39. 39. 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 government debt
  40. 40. TAX SYSTEM GOOD? YES..HERE’S WHY  Low level of taxation and public spending  Simplicity  Economic prosperity  Low, flat rates of tax  Generous allowances  Scheduler structure  Corporate profits and dividends
  42. 42. 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
  43. 43. 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 interference policy.  There is no investment approval procedure directed specifically towards foreign investors.
  44. 44. Contd..  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)
  45. 45. ATTRACTING THE FOREIGN INVESTMENT 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;  Acorruption-free government;  Absence of exchange control; and  Effective communication, transport and other infrastructure.
  46. 46. Source: UNCTAD; for further information on data and methodology, see www.unctad.org/diae.
  48. 48. KEY INDUSTRIES OF HONG KONG Four Key Industries in Hong Kong are:  Financial services, Trading and logistics, Tourism, and  Professional and producer services
  49. 49. FEATURES  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.
  50. 50. Contd..  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.
  51. 51. Value added & Employment in key industries http://www.censtatd.gov.hk/hkstat/sub/sp80.jsp?productCode=FA100099
  52. 52. DEVELOPING INDUSTRIES Emerging industries are:  Cultural and creative industries,  Medical services,  Education services,  Innovation and technology,  Testing and certification services and,  Environmental industries, These industrieshave been identified asenjoying advantages for further development.
  53. 53. Value added and Employment in developing industries http://www.censtatd.gov.hk/hkstat/sub/sp80.jsp?productCode=FA100099
  54. 54. 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
  55. 55. Contd..  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 China
  56. 56. Contd..  <http://www.youtube.com/watch?v=d9m_ILu7rH0>
  57. 57. THANK YOU!!