Hong Kong has a population of over 7 million people, 95% of whom are ethnically Chinese. It has been a British colony and is now a special administrative region of China. Hong Kong has a free market economy with low taxes and little government intervention. It uses the Hong Kong dollar and has strong international trade links as a supply chain connector between China and the rest of the world. The city is also a major global financial center known for its free trade policies and low taxation system.

2. HISTORY & MAIN FEATURES OF HONG KONG
• Hong Kong is located at the mouth of the Pearl River
Delta on the coast of southern China.
• Hong Kong was formed in the year 1842.
• 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 Hong Kong Dollar = 8.55 Indian Rupee

3. Denominations

4. Imports and Exports
Trade benefit:
• Hong Kong is major international financial center.
• It features a free trade policy with low taxation.
• Lesser intervention of government.
• HK is full time member of WTO and Asia specific
Economic Cooperation Frim.
• The government has singed free trade agreement with
china.
• The corner of HK’s free trade approach is a strong and
credible multilateral trading system.

6. 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.
• Hk budget has a budget surplus and a very little
government debt.

7. Trade Practices
• Hong Kong follows the economic policies of free enterprise and
free trade.
• The first of these factors relates to history. By 1950, Hong Kong,
had accumulated a long history of free Trade after colonising it, the
British adopted free trade policies in Hong Kong as early as 1840s.
Free-trade status of these economies resulted in a large expansion of
re-export trade
• There is no customs tariff on goods imported into or exported from
Hong Kong.
• Hong Kong, China had a larger domestic market for manufactured
goods than the majority of the developing countries.

8. • The second reason why free-trade policies could be sustained
in these two economies during the past half-century is the
absence significant agricultural activity there.
• Hong Kong is a founding member of the World Trade
Organization (WTO) as well as a member of the Asia-Pacific
Economic Cooperation (APEC).
• Most products do not need licences to enter or leave Hong
Kong.

9. Standard Component 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr.
Current Account -1333 -28419 34964 22648 -913 1515421 48444
Credit 1377237 1536188 1602720 1596575 1422814 -1513421 1548256
Debit -1378570 -1564607 -1567756 -1573926 -14723727 -74332 -1499812
Goods -79266 -84958 -23970 -45499 -70853 942470 -463
Credit 899394 973873 1069286 1084265 914192 -1016802 -1025737
Debit -978660 -1058831 -1093256 -1129764 -985043 52028 51490
Services 72096 52408 57085 53143 70006 192446 201553
Credit 210827 192038 209179 210323 210302 -140418 -150063
Debit -138731 -139630 -152094 -157180 -140396 29103 2765
Primary Income 10690 8876 7047 19993 5590 378237 319106
Credit 264878 368111 322016 299727 296068 -349134 -316341
Debit -254188 -359235 -314969 -279733 -290478 -4799 -5348
Secondary Income -4853 -4745 -5198 -4989 -5656 2268 2323
Credit 2138 2166 2238 2260 2252 2268 -7671
Debit -6991 -6911 -7436 -7249 -7909 -7067 -19769
Capital and Current Acount 22424 8914 -57242 -47881 -27600 -28538 -78
Capital Account -64 -160 -41 -483 -76 176 1
Credit 0 0 0 2 1 254 -80
Debit -64 -160 -41 -485 -76 -78 -19961
Financial Account 22487 9074 -57200 -47398 -27534 -28714 51829
Financial Non-Reserve Assets 54672 21296 10821 -20736 8763 47941 52692
Direct Investment -156609 160624 -97454 7721 181512 560529 125751
Assets -362351 -48373 -454328 -227451 -372715 99913 -145237
Liabilities 205741 208998 356873 235173 554227 460616 -113126
Portfolio Investment -38225 -45842 112439 -92756 -282841 -395163 -32111
Assests -48800 -118493 -47620 -61230 -186421 -206773 11940
Liabilities 10575 72650 160059 -31526 -96520 -188392 111012
Financial Derivatives 26933 28441 14119 48866 53114 33548 -99072
Assets 99635 116930 69139 163389 168443 133870 132164
Liabilities -72702 -88489 -55020 -114522 -115329 -100322 329613
Other Investments 222573 -121927 -18283 15432 56979 -150971 -197449
Assets -333333 -448570 -14947 -128227 -34332 -288686 -7520
Liabilities 555906 326643 -3335 143659 91311 137715 -28675
Reserve Assets -32185 -12221 -68021 -26662 -36288 -76655 -71520
Net Errors and Ommissions -21091 19505 22278 25233 28530 26538 -28675
2014 2015
Balance of Payment
figrures in HK$ Million

10. PEST ANALYSIS
Political
• The most significant opportunity for McDonald is that Hong Kong is
politically stable, so there would rarely be any political factors that
will interrupt and slow down the company’s growth.
• Another significant opportunity is that there isn’t a well- established
minimum wage policy in Hong Kong, which allows McDonald to hire
workers at a lower wage to maximize their profit.
• There isn’t a goods and services tax in Hong Kong and this allows
McDonald to have lower expenses.

11. Social/Culture
• Hong Konger’s lifestyle influenced by the Britain colonization gives
McDonald a great advantage. Hong Kongers are used to western food, so
McDonald has a large customer base.
• McDonald is a fast food restaurant company, so they can perform their
services in a short period of time and this fits with the fast paced lifestyle
in Hong Kong.
• Hong Kong people are more aware of healthy eating, so they stay away
from high calories and high cholesterol food. McDonald tries to prevent
the loss of customer by including healthier food in the menu, such as
salads and sandwich.

12. Economic
• The economic collapse that was triggered by the Lehman
Brothers has caused Hong Kong to enter the recession stage in
the economic cycle. Therefore, the demands for low price food
increases tremendously and this benefited McDonald, since the
food are cheap and the quality is guarantied.
• In the long term, if the inflation continuously increase, it will
create a threat to McDonald because the meal prices will be
raised to a point that it will be too expensive and McDonald
will lose it’s large customer base that is from the lower class.

13. Technological:-
• Hong Kong has a well developed transportation system,
especially the airport that have airlines that connects to different
part of the world. This is a significant advantage to McDonald
because their food supplies can be delivered in a short period of
time and at a low cost.

14. Presented By
Arpan Gosh (PGDM 2)
Shivam Shrivas (PGDM 2)
Sadhu Prudvi (PGDM 2)
Shrey soodh (PGDM 2)
Saurabh (PGDM 2)
Vamsi Krishna (PGDM 2)