The reason why Foreign Firms Often Choose Hong Kong As Their Business Headquarters in Asia?

Hong Kong is a popular hub for international firms keen on setting up businesses in Asian countries. Its’ physical and political closeness to China coupled with modern infrastructure, internationally accepted and transparent lawful system based on English law plus lower tariff structure have rendered it into one of the world’s leading financial and business centres.

According to an annual survey conducted by Invest Hong Kong and the Census and Data Department, the region situated on the the southern part of coast of China is sought after simply by multinationals and inland companies looking to expand their business operations in East Asia. The survey recognizes new investment trends wherein worldwide firms have made Hong Kong a focal point for their, both regional and worldwide operations while inland companies through China have relocated here to benefit from numerous business opportunities.

A versatile work culture adept in both The english language and Mandarin languages makes for easier transactions saving companies time plus translation costs in the process. Besides, the particular free floating currency of Hong Kong dollar, the absence of good and services tax, and a flat profit tax rate of 17. 5% for company operations based in Hong Kong translate into hefty financial gains to get multinational corporations. Also, the Hong Kong based companies gain from the supply of re-invoicing.

Re-invoicing involves international trading between the buyer and vendor companies through an intermediary company based in regions that exempt tax on import and export processing. The companies that want to trade goods and services from abroad to China or vice versa set up an intermediary firm in Hong Kong, which invoices the particular buying or selling price at higher than the original production costs. This way they are able to display reduced or zero profit margins while at the same time masking the original procurement costs. Reduced or zero profit margins as documented by the intermediary company allow it to retain maximum profit margins while minimizing the profit tax. The financial gains are substantial especially for the foreign firms keen to trade in goods and services in Chinese markets.

Exactly what boosts their business strategy more is the special trade agreement among Hong Kong and main land Cina. The bilateral free-trade agreement called Closer Economic Partnership Arrangement (CEPA) allows Hong Kong based businesses easy access and reduced tariff rates to market goods in the Chinese markets. Charges on 273 categories of goods including textiles, electronic and electric products, jewellery and clothing have been exempted. Further, 90 percent of Hong Kong’s total export to Cina has been waived off the tariff duty from year 2006. Even though China’s ascension to World Trade Company (WTO) has warranted a chain of trade liberalisation measures to allow business with other WTO members Hong Kong enjoys special privilege in becoming allowed the first opportunity to capture landmass China’s budding markets.
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In addition the ongoing liberalization of various service areas including infrastructure development, housing, banking, logistics and commodities, and real estate promise newer opportunities for Hk based companies. Their business possible is enormous considering some of the advantages that Hong Kong based companies take pleasure in in China are accrued because of its’ special relationship with Cina especially since no such provisions are allowed by WTO in the long run. The ongoing inward investment in the People’s Republic of China along with Hong Kong’s zero-tariff status will attract foreign companies especially all those selling service-sector based goods to establish and operate their headquarters out of this region.

Last but not the least the vibrant and cosmopolitan culture associated with Hong Kong accommodates both local plus Western tastes. Living in the city is really a pleasure for both local and expats as this southern port city of China celebrates Chinese New Season, Dragon Boat racing and mid-Autumn festival with as much aplomb since Christmas, Valentine’s Day and Halloween. Besides, an efficient transport network, rich night life and cultural waterholes make it an attractive destination for international companies looking to set up their business operations in East and South East Asia as well as for their relocating staff. This enhanced by political stability, strong law and order, greater independence of information, and availability of business plus professional support services makes living in Hong Kong equal to living in any other locale in the world.

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