Entering the Market in Hong Kong
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Hong Kong Entering the Market
The cliché of east meets west is a term that is often overused. The former British colony and current Special Administrative Region of the Peoples Republic of China, Hong Kong is a prime candidate for such a maxim. One of the worlds leading financial centers, Hong Kong's reputation for its brash capitalist trading environment sits alongside the traditional Chinese cultural roots of its past. With space at a premium on the peninsular, there are 7,650 skyscrapers, making Hong Kong the recipient of the unusual title of The World's Most Vertical City, due to the amount of its residents living and working above the fourteenth floor of a building. With a large area reserved for country parks and nature reserves, there are also opportunities for anyone with a phobia of heights to escape the urban sprawl.
Why Expand to Hong Kong?
Known as a springboard to the Chinese market, Hong Kong boasts a massive market of its own. With a dynamic and open trading environment, and its historical links to Britain, the region is a strong trading partner. Hong Kongs business language is English and its legal system is alike to Britain's, so setting up a business in Hong Kong is very similar to operating in the UK market. Government investment incentives, a strong communications infrastructure and good business support services make Hong Kong an attractive destination for expansion. Licensing or incorporating a business in Hong Kong are also valuable options.
Main Industrial Growth Sectors and Business Opportunities
With its location linking China to the rest of Asia, Europe and America, Hong Kong is a regional centre for aviation, with over 3.6million tons of freight and 48.6million passengers passing through its airports. With HKIA (Hong Kong International Airport) exploring the acquisition of a third runway and various over business opportunities for the UK aerospace industry, Hong Kong is a huge market. The main opportunities for companies expanding a business in Hong Kong in this sector involve:
- Aero-engine maintenance and repair
- Training on aircraft engineering
- Aircraft conversion
- Private/Business jet aviation
- Base and line maintenance, repair and overhaul (MRO) of aircraft.
With the rapid development of China, the demand for plastics has increased dramatically. Hong Kong is a major trading centre for chemicals and plastics. Plastics in primary and non-primary forms are in the top ten UK export commodities to Hong Kong and there are strong opportunities in the following areas:
- Raw materials
- Specialist chemicals
- Engineering plastics
The Hong Kong government has pledged £20billion in construction over the next ten years as part of its economic stimulus package. Planned projects include a new cruise terminal and the Hong Kong-Zhuhai-Macao Bridge. The main opportunities for companies expanding a business in Hong Kong in the construction sector cover the following disciplines:
- Architecture and planning including urban design, interiors and landscape architecture.
- Construction and project management
- Events management
- Museums, concert halls and other performing arts venues. (design, construction and fitting out)
- Conservation engineering and heritage architecture
- Sustainable construction (processes and techniques)
- Energy saving construction (products, systems and techniques)
UK suppliers have a tradition of success in the Hong Kong consumer goods market. With Hong Kongs GDP the second highest in Asia, there is a large shopping culture and buyers from the lucrative Chinese market often visit the region. Clothing, fashion, footwear and the gifts market are seen as key areas for UK investors interested in starting a business in Hong Kong.
The Creative Industries are a priority of the Hong Kong government, with its HK$100million investment in the Hong Kong Design Centre an indication of its intentions. Coupled with its proximity to the potentially enormous Chinese branding and design market, and an existing strength and reputation in the field, Hong Kong has a strong creative industry, with its blending of eastern and western styles highly regarded across the region. UK investors interested in expanding a business in Hong Kong will find investment opportunities in the following areas:
- Film and video
- Interior, graphic and product design
- Architectural and building design
- Arts, antiques and crafts
- TV and Radio
Education and Training
With Hong Kong's historic relationship with English education, there is still a strong connection, increasingly with the teaching of English language. UK services enjoy a good reputation and opportunities for expanding a business in Hong Kong exist in the following areas:
- Vocational Training (specific government funded courses)
- Specialized English Language Training (such as English for Engineers)
- Online educational content
- SEN (Special Education Needs to cater for disabilities)
- Gifted and talented education for exceptional students
- Proffessional development schemes (for education staff such as teachers)
- Early Education
- Overseas School Partnerships
The environment is a concern in Hong Kong, with waste management and disposal, air quality and sustainable energy all important issues. The government offers various tax and financial incentives to businesses looking to invest in the sector and openings exist in the following disciplines:
- Renewable Energy - Wind, solar and bio gas.
- Climate Change - Carbon audits, project development and trading related services.
- Water - Increasing the efficiency of water use.
- Electric vehicles
- Environmental impact assessments and management assessments
- Waste recycling and recovery
- Design and finance for waste and water projects
- Remediation of contaminated land (reversing environmental damage)
Financial and Professional Services
The economic downturn has affected the Hong Kong banking system less than in western economies. However, the resultant increase in competition has provided openings for UK expertise in corporate finance, risk management, business restructuring (including manpower) and general business health checks, as Hong Kong looks maintain its competitive edge over its rivals. Hong Kong is also a financial hub for Chinese enterprises as they look to raise funds, with access to the London markets, venture capital and private equities channeled through the market. Hong Kong is also a centre for insurance, with the largest number of Asian Insurance companies in the world concentrated in the city. With a system that virtually replicates the City of London model, Hong Kong enjoys a strong relationship with the UK finance industry.
With its legal similarities to the British system, openings exist in the following Legal Services:
- Corporate Finance
- Listing Law
- Intellectual property protection
- IT law
- Construction, property and energy law
There are also opportunities in the following financial services
- Banking and insurance products
- Foreign exchange services (particularly for Chinese currency)
- Insurance and medical protection products
- Private equity funding
- Mergers and acquisitions
- Financial services and financial skills training
- Loan financing
- Food and Drink
Hong Kong is a cosmopolitan and advanced place, where food and drink are an important part of everyday life. With a sophisticated and diverse market, there are opportunities in the following avenues:
- Unique British products for the expatriate community
- Sauces, herbs, spices and flavourings
- High quality meats and seafood
- Organic products
- Dairy products
ICT (Information Communications Technology)
Hong Kong has a sophisticated market with a rapidly expanding market for mobile data technology. Although the mobile subscriber market has reached saturation, there is investment potential in the following areas:
- Mobile and wireless applications
- Mobile commerce applications
- Infotainement (games, digital media)
- Information technology business applications
Hong Kongs healthcare is modeled on the National Health Service. Consequently, the UK has a history of conferring with the Hong Kong people regarding all areas of healthcare, from clinical matters to administration. Tradition Chinese Medicine is a huge potential market, with Hong Kongs relationship with China allowing a unique advantage for the commercialization of Chinese herbal drugs. There is also a strong demand for healthcare staff, training and technology in the local market.
The government is set to invest £11billion in the countrys railways over the next decade, with investment opportunities across the industry, from station design to track maintenance.
Challenges Foreign Companies Face
Since becoming part of China in 1997, Hong Kong's one country, two systems policy has been successful, with the economy remaining free and open with low taxation. There are few challenges for foreign investors interested in licensing, incorporating or registering a business in Hong Kong.
Organisations that can assist with Entering the Market
When expanding your business to Hong Kong, donít forget to protect your brand. We provide Trademark Registration Services in Hong Kong and in all Asian countries
TopSource Worldwide offers a complete range of employer services that allows you to employ and pay people promptly, consistently and compliantly ó locally and internationally to suit your business needs. Our systems and processes are designed to work with your technology, and we bring decades of experience and a track record of success to our operations.
Need to register a company or setting up a company?
Simplified Global Payroll Managing payroll in multiple countries is complicated with different systems, deadlines, and languages in each country, lack of reporting, and constantly changing laws and regulations. Trying to manage global payroll via fax and email with excel spreadsheets leads to data security issues, fines, and penalties for non-compliance. Blue Marble has solved global payroll challenges with cloud-based technology, customized aggregated monthly reporting, and a hybrid service model in 150+ countries around the world.
Do you need advice from an expert in your field, on the ground? Need help finding the best route to market for your product or service?
Sovereign offers a range of advisory and support services to assist companies of all sizes to establish successful business operations in foreign markets.