Country GuideHong Kong

From Global Connections

Hong Kong is an extremely attractive location for many overseas investors. According to the UNCTAD World Investment Report 2015, Hong Kong ranked second in the world for global FDI inflows, behind only Mainland China; FDI inflows amounted to USD163 billion in 2015.

Hong Kong ranked fifth in the World Bank's 2016 Doing Business rankings, retaining the same ranking as the year prior. The government enacted a number of reforms during 2015 which helped it to maintain its position as one of the easiest countries in the world in which to do business. This included making starting a business easier by eliminating the requirement for a company seal, making paying taxes easier and less costly for companies by simplifying compliance with the mandatory provident fund obligations and increasing the allowance for profit tax.

Key facts about starting a business in Hong Kong:

  • It takes two procedures and approximately 1.5 days to start a new business in Hong Kong; this process is detailed in the Doing Business in chapter
  • Obtaining a work permit typically takes around four weeks to process; employment regulations are discussed in detail in the Labour chapter
  • Obtaining approval for a construction permit takes approximately 45 days and costs HKD57,103
  • All Hong Kong incorporated entities must prepare statutory financial statements in accordance with the Hong Kong Financial Reporting Standards (HKFRSs); further details can be found in the Audit chapter
  • Companies that wish to list and trade securities on the HKEX must, amongst other conditions, have a trading record of not less than three consecutive financial years preceding application for admission; this is discussed further in the Finance chapter

Hong Kong's attractiveness as a business destination can be attributed to a number of factors, including its strategic position, its simple tax regime and its strong legal system. Nevertheless, in order to make an informed decision, it is critical to understand the nuances of any local regime. The manner in which people conduct business in Hong Kong may differ from the home countries of investors. Furthermore, variations on these distinctions may exist depending on the industry in which a company operates.

Chinese and English are Hong Kong's official languages. However, English is the lingua franca of business. Hong Kong businesses are typically hierarchical and dress codes in the workplace are conservative. A handshake is the typical business greeting and business cards will usually be presented at the initial meeting. Gift giving is traditional as part of Chinese culture.

Those looking to establish a business in Hong Kong may look across Asia for alternative options. However, Hong Kong can be differentiated on the following factors:

  • Hong Kong is the world's freest economy
  • Hong Kong is strategically located at the heart of Asia and offers easy access to Mainland China business opportunities
  • The city only levies three direct taxes; the tax regime is detailed in the Tax chapter
  • Hong Kong ranked first for its infrastructure in the WE Forum Global Competitiveness Report; further details can be found in the Infrastructure chapter
  • The city is one of the world’s major international sea and air cargo hubs, accounting for almost a third of exports in and out of Mainland China; trade policy is discussed further in the Trade chapter
  • The government offers a grant of up to HKD250,000 or 90 per cent of the sum of the cost of patent application to encourage local companies to register patents; intellectual property rights are discussed in the Legal chapter

Despite the myriad strengths of Hong Kong as an investment location, the city is facing economic challenges. In 2015, Hong Kong saw a drop in consumer spending amongst a decline in tourist arrivals. Exports of goods and services also fell, in part due to the challenging foreign trading environment. Furthermore, the city continues to be affected by the slowdown in China.

This guide has been developed to provide businesses with an overview of Hong Kong, its legal regime, start-up and market entry considerations, tax and customs requirements and a general summary of the factors that may affect the decision to do business in Hong Kong. However, the information contained in this document is generic in nature and you should not act or rely on it without obtaining specific professional advice.

Please note that the Country Guides may only be available in English.

Useful Links

1 Companies Registry
2 Inland Revenue Department
3 Customs and Excise Department
4 Immigration Department
5 Intellectual Property Department
6 Office of the Privacy Commissioner for Personal Data
7 InvestHK
8 Labour Department

 

Sources

1 FDI Statistics
2 Doing Business Rankings
3 Work Permit - Used Practical Law which is a legal service Grant Thornton subscribes to
4 2016 Index of Economic Freedom
5 WE Global Competitiveness Report
6 Hong Kong accounts for almost a third of exports in and out of Mainland China

 

Download Country Guide - Hong Kong (2.41MB, PDF)

Disclaimer

This document is issued by The Hongkong and Shanghai Banking Corporation Limited (the Bank). This guide is a joint project with Grant Thornton. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. It is not intended for distribution to anyone located in or resident in jurisdictions which restrict the distribution of this document. It shall not be copied, reproduced, transmitted or further distributed by any recipient. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining specific professional advice. Whilst every care has been taken in preparing this document, the Bank and Grant Thornton makes no guarantee, representation or warranty (express or implied) as to its accuracy or completeness, and under no circumstances will the Bank or Grant Thornton be liable for any loss caused by reliance on any opinion or statement made in this document. Except as specifically indicated, the expressions of opinion are those of the Bank and are subject to change without notice. The materials contained in this document were assembled in January 2016 and were based on the law enforceable and information available at that time.

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HSBC retains all responsibility for the translation of the content of this guide. In the event of any discrepancy or inconsistency between the English and translated versions of this Guide, the English version shall apply and prevail.

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