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Hong Kong: Asia's Business Super Market |
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For more than 150 years, Hong Kong has been the world's gateway to doing business in China and Asia. Then, as now, its success was dependent on a good location, a competitive workforce, an open trading environment, and access to key trading routes. It has grown to become the most important economic crossroads in the world - linking east and west, north and south, the developed and the developing worlds.
Hong Kong is now established as one of the most dynamic, innovative and powerful economies on earth - with a global reach that belies its size. Its people are acknowledged to be some of the most formidable entrepreneurs in modern business.
Their skills and faith in self-advancement have built Asia's most dynamic trading, financial and services centre. A territory of only 1,100 square kilometres, with 6.8 million people, supports the world's second busiest container port, the busiest international freight airport, and the freest and most service-orientated economy in the world.
This entrepreneurial spirit is supported by a 21st century infrastructure, an open, international business environment, and an emphasis on education and skills - particularly languages.
In 1997, Hong Kong marked another milestone in its history, as it became a Special Administrative Region of China. The record so far shows that the territory has always profited from the opportunities of history. As a new chapter opens, Hong Kong people are once again looking ahead, confident that their city is well positioned to take up its new role - Asia's business capital for the 21st century.
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Thousands of foreign companies and more than 270,000 local firms do business in Hong Kong, confirming the city's position as Asia's leading business location. Many more businesses world-wide have chosen to shop for services here, as they explore the Chinese and Asian markets.
Hong Kong's competitive advantage rests on a package of qualities which has created an environment uniquely favourable to business. Minimal government intervention, low corporate and personal taxes, top-class infrastructure, excellent communications, an enthusiastic and skilled multinational workforce, specialist knowledge of regional markets, and a dedication to the needs of trade and commerce. That's why more than 800 multinationals have settled their regional headquarters here - with more arriving all the time.
There are few import/export controls or other restrictions on trade. Costs are kept competitive by high levels of efficiency and reliability. Companies established in Hong Kong also benefit from an independent legal system, low crime rate and respect for the rule of law.
One of the greatest strengths of Hong Kong's economy is its capacity to continue evolving, while remaining successful. The services sector has been growing very fast since the 1980s and today the city boasts the world's leading services economy. This sector accounts for over 85 percent of GDP, with exports growing at 13 percent a year.
At the same time, Hong Kong's manufacturing sector has never been healthier. Hong Kong firms now lead the world in cross border manufacturing. A workforce of about 5 million is employed in Southern China by Hong Kong manufacturers, making products for the world's markets.
High quality skills like sourcing, design, marketing, distribution and
financing, which rely on modern communications and a good infrastructure,
have been retained and strengthened in Hong Kong.
World's 9th
largest trading entity
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Companies based in the territory also profit from Hong Kong's unique business relationship with China. Since China opened its doors in 1978, Hong Kong has come to handle over 40% of all mainland China's foreign trade. More than 170,000 Hong Kong-funded projects have been set up throughout China. In turn China has become one of the leading investors in the territory - about US$18 billion so far. When it comes to doing business in China, Hong Kong companies offer an unequalled level of experience, contacts and expertise, which can reduce risk and increase profits.
Hong Kong's combination of East and West has also made it the gateway to
the newly emerging economies in the rest of Asia. You will find an
unrivalled level of specialist knowledge on regional markets and business
opportunities. And Hong Kong is at the centre of a vast network of
business connections across the region.
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Hong Kong is Asia's premier location for finance and related services. A well-regulated and transparent system, backed by international standards of "due diligence" and a tough anti-corruption regime has attracted 426 banking institutions - including 284 from overseas - and 209 insurance companies to the territory. On shore and off shore institutions are treated equally, and there are no restrictions on the movement of capital.
Hong Kong's financial services sector offers an impressive level of international experience in banking, insurance, fund management, corporate finance, stockbroking and investment. This cluster of expertise makes the territory an efficient and highly competitive place to do business.
Because of its sophisticated financial markets and infrastructure, Hong Kong has grown to be Asia's second largest source of foreign direct investment (FDI) . The territory is a leading foreign investor in both the ASEAN and APEC regions. The depth and breadth of this investment gives Hong Kong companies tremendous influence and opportunities for trade.
As the principal gateway to China, Hong Kong accounts for 51 percent of actual utilised FDI in the mainland, helping to build the world's fastest-growing economy. Of the approximately 300,000 foreign-funded projects in the mainland, 55 percent involve Hong Kong investors. In turn, China has invested US$18.3 billion, and some 1,800 mainland companies are represented in Hong Kong.
Shares in mainland companies ("H" shares) now account for about one percent of market capitalisation on the Hong Kong stock exchange - Asia's second largest and the world's 10th. The territory is also Asia's leading centre - outside Japan - for raising venture capital. Hong Kong is well established as Asia's leading fund management centre. It is also developing an important new role as a centre for debt financing. Its Forex and futures markets are the third largest in Asia.
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Upgrading Hong Kong's own infrastructure for the 21st Century has made us Asia's leading centre for designing, financing, building and operating such projects. East Asia would require US $ 720 billion investment in infrastructure projects by 2005 . Nowhere is better placed to provide the skills, financing and expertise needed than Hong Kong.
Hong Kong companies have two decades of experience in infrastructure projects on the mainland and have now emerged as a major player in development of the entire region because of their unique ability to "package" all the skills needed. Hong Kong's property and construction firms paved the way for the territory's builders, architects and financiers to also get involved.
At any one time more than half of Hong Kong's architectural firms are working on projects outside the territory, creating an unbeatable combination of contacts and experience.
High costs and difficult building conditions at home mean that Hong Kong's building contractors have to be efficient and innovative. They helped pioneer the concept of build-operate-transfer (BOT), whereby the private sector works with governments to provide ports, roads, power stations, mass transit systems or housing. Such hybrid projects, involving the integration of private and public money are increasingly common in Asia, as governments rush to keep pace with their growing economies and their competitors.
Getting such complex projects off the ground requires not just technical skills, but experience in sourcing from developing countries, working in different cultures, easy access to information, and the knowledge to assess changing conditions quickly. Hong Kong's ability to "package" such diverse and exacting requirements is unsurpassed.
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Hong Kong offers one of the world's finest and most advanced telecommunications networks, making it the most competitive location from which to manage operations in Asia's new century.
Hong Kong was the first city in the world to have an all-digital network and also boasts the globe's most advanced fibre optic system. So Hong Kong-based firms are well placed to take full advantage of futrue developments in information technology. Recent years have also seen significant investment in infrastructure, including additional optic fibre land lines into China and submarine cable links, making Hong Kong the telecoms hub for the mainland and Asian region. The territory has also become the largest teleport in Asia, offering links via 36 satellite earth station antennas.
This investment in technology has made the telecoms market highly efficient and cost-effective for consumers. Uniquely in Asia local calls are free. Instead there is a low fixed monthly service charge. International call costs are much cheaper than other major regional business centres. This combination of state-of-the-art technology and low prices gives an important strategic advantage to Hong Kong firms trading both locally and internationally.
The increasing number of service providers - encouraged by an aggressive market liberalisation policy - ensures that businesses and consumers will continue to get a good deal. Hong Kong is alone in offering choice of four fixed line operators, 11 mobile phone network, 27 paging operators, and more than 130 internet providers. Call back and leased line resale opportunities for international traffic are expanding rapidly too.
Not surprisingly Hong Kong people are some of the most enthusiastic users of telecommunications and IT in the world. The local telecoms market is estimated to be worth around US$5 billion a year. There are 55 telephone lines and five fax lines for every 100 people, plus 0.5 million radio pagers and more than three million mobile phones for a population of 6.8 million. Together business and domestic users generate 1.7 billion minutes of outgoing international telecom traffic a year, almost as much as the entire ASEAN region put together!
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A vital component of any top class business location is ease of access. So a speedy and reliable transport system is crucial. Hong Kong has capitalised on its excellent location, and is continuing to invest billions of dollars in a transport network worthy of the 21st century.
Half of the world's population live within 5 hours flying time of Hong Kong. The Hong Kong International Airport has some of the most extensive international air links in the world today, with three home airlines and 66 foreign carriers offering around 400 flights a day. In 1998, Hong Kong handled 27 million people, and 1.6 million tons of cargo - making it the world's busiest airport for handling international cargo and the fifth busiest for handling international passengers.
The new Hong Kong International Airport at Chek Lap Kok was opened in July 1998. This new airport has two runways and immediately doubles Hong Kong's air cargo capacity and boosts passenger numbers to 35 million a year. A continued development programme will buttress Hong Kong's status as Asia's premier air transport hub, eventually handling 87 million passengers and 9 million tons of cargo a year.
Hong Kong is blessed with one of the best natural harbours in the world. As China's economy grows, so will the importance of easy access to the Pearl River region. Hong Kong, one of the busiest and most efficient container port in the world, handled around 15 million TEU's in 1998. The port development plan includes equipment upgrades and more container terminals, to raise capacity by 3 million TEUs over the next few years. The port will remain privately run, so competition among operators keeps real costs down and efficiency up.
Hong Kong boasts superb road, rail an public transport networks. A new railway line and a new motorway are being planned to provide even better links into China. Public transport systems are among the cheapest and most efficient in the world, moving more than three million people a day - half Hong Kong's total population.
Together these integrated systems provide a fast, efficient and cost-effective network that can move a package across town, a manager from home to office, or time sensitive cargo to another continent, with a speed and reliability that those based in other Asian locations can only envy.
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Trading has been Hong Kong's lifeblood for centuries. And while its pre-eminent position in Asia hasn't changed, its role certainly has. There are about 100,000 trading companies in Hong Kong, sourcing and supplying literally any product on earth. They also offer financing, logistics, design, marketing and accounting services. And these skills are backed by Hong Kong's position as the region's top communications and transport hub.
Using specialist local knowledge, Hong Kong firms can source manufactured products in China or anywhere else in the world - wherever is most advantageous for the customer. Already 50% of Hong Kong's exports are manufactured on the mainland, and over 40% of China's external trade is shipped through Hong Kong.
As the demands of international markets have become more sophisticated, Hong Kong has responded with a new specialisation - global middleman. Raw materials from one country can be processed in a second and delivered to a third - sometimes only the paperwork from these "triangular trade" will enter the territory. And Hong Kong is becoming increasingly important as a middleman in the licensing of production of branded goods as well.
Hong Kong has also developed as Asia's premier location for trade fairs and conventions. It has the finest convention and exhibition facility in Asia, with a new extension more than doubling its size. Many of the largest trade fairs in Asia are held here. Huge international conventions are accommodated in this state-of-the-art facility, which is flanked by world class hotels, restaurants and shopping areas.
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If you want to market a product or service in Asia, then Hong Kong has the expertise.
The fusion of eastern and western marketing skills concentrated here gives a competitive edge; both to Hong Kong based companies wanting to attract Asian consumers, and to Asian producers targeting western markets.
Advertising, market research and public relations are all highly developed in Hong Kong. As well as local firms, most of the big multinationals are represented with many choosing the city as their regional headquarters.
Many advertising agencies and market research companies based in Hong Kong have regional networks extending throughout mainland China, enabling them to produce results that meet the highest professional standards.
Design is another areas where Hong Kong lead Asia. Companies from across the world use Hong Kong talent and ideas to develop innovative and practical designs for products, packaging, interiors and fashion. Many well-known names from the US, Europe and Japan use Hong Kong designers for all types of products, including:
Throughout China and South East Asia, Hong Kong's interior designers are using their unique mix of eastern and western taste to create stylish hotels, shops, clubs and apartments.
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Quick and easy access to reliable information is vital for any business. As an information centre Hong Kong is without equal in Asia:
Hong Kong also has one of the world's largest film industries. Increasingly, cable and satellite TV companies are using Hong Kong as their base for expansion throughout Asia.
As well as being the centre for entertainment products aimed at the Chinese community world-wide, Hong Kong has become South East Asia's leading facilities house, providing technical and creative facilities world-wide, and acting as a gateway to low cost production resources on the mainland.
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When you do business in Hong Kong, you will be living and working in one of the most vibrant, most entrepreneurial cities in the world.
It's not just easy to do business here. It's quick and convenient to set up a base in Hong Kong. Personal taxes are a maximum of 15 percent. Corporate taxes, 16 percent. Consequently Hong Kong is a competitive location for off-shore companies.
Hong Kong's commitment to free trade means there are few restrictions on what you can import or export. Duty is imposed on only a handful of items. The Government of Hong Kong Special Administrative Region's policy of non-intervention means that red tape is cut to a minimum.
Most of Hong Kong's office accommodation is of a very high quality. Rents for prime office space can be high - on a par with other international business centres. But many major companies site their headquarters outside the central districts, and Hong Kong's compact layout means cheaper areas are never far away. The rental costs of both offices and flats are tax deductible.
A low cost, clean, safe and efficient public transport network cuts most commuting times to minutes. Taxis are cheap, plentiful and easy to use. A well developed system of ferries links the main business districts and outlying islands - which are becoming increasingly popular with those looking for somewhere quieter and greener to live.
The standard of basic everyday services matches Western countries. Hong Kong schools and hospitals are comparable with their European or North American counterparts. A variety of international schools offer British, French, Swiss, German, American or Japanese curricula. There are seven universities to serve a population of 6.8 million, producing 16,000 graduates a year.
Hiring qualified staff locally is no problem. Many employees have received at least some education abroad, and can offer two, three or more languages. If you want to bring in specialists, visas and work permits usually present no problems. Domestic help is also plentiful, and affordable. The minimum wage for a live in helper is less than US$500 a month.
Hong Kong also offers some of the best cultural and sporting facilities in Asia, and nowhere will you find a wider choice of good restaurants. Despite its high population density, the territory also boasts 21 country parks, protecting 60 percent of the total land area.
Shopping combines the best of East and West - in food, fashion or household goods. Many shops are open seven days a week, until 8 or 9pm. Hong Kong is one of the few international cities in the world where one can feel safe walking in any district, day or night.
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"BNP is confident of building on its success in Hong Kong as this dynamic international financial centre remains the heart of the world's most promising region."
"Serving our customers' needs locally and internationally has driven our business growth in Hong Kong since 1902; and, together with Hong Kong, we look forward to another 100 years of growth and success."
"We believe Hong Kong will continue to make history as one of the world's greatest economic success stories, and Kodak will be there to help record it."
"Hong Kong has provided Marks & Spencer with a firm foundation upon which to build our profile in the future, both within Hong Kong itself and further afield in the Asia Pacific region."
"A key success factor for Hong Kong has been a stable, predictable environment for business to operate under the rule of law. I am confident this proven formula for success will continue."
"With its liberal economic policies, efficient infrastructure and reliable administration, Hong Kong is a very business friendly city. We believe this will continue, and look forward to a wealth of new business opportunities in the years ahead."
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