January 2011

Quarterly Issue : 1/2011

NEWSLETTER

The International Business Center... IBC is approaching its 25th Anniversary this year. Breakthrough advancements have taken place throughout the IBC Group in the past years so we feel that the time is now right for even more change! To reflect the practical needs of existing and potential clients of IBC in the ever-evolving global business world our newsletter will be transformed to be more attractive as a valuable source of information for all our clients and business partners.

Hong Kong is THE gateway to Mainland China so that the many benefits to be derived from establishing a company in Hong Kong can be optimised with the help of IBC Group services for effective and professional support of your business.

We are beginning the first Newsletter issue of this New Year with a profile of Hong Kong together with some identified business opportunities chosen by industry category and have added some useful points to note when doing business in Hong Kong. We also explore why you need to set up a company in Hong Kong when transacting business in China and describe other professional services that we offer as part of being a long established International Business Center.

Profile%20hk

The climate is subtropical monsoon; cool and humid in winter, hot and rainy from spring through summer; warm and sunny in Autumn. The Hong Kong "Island side" and parts of Kowloon are hilly to mountainous with steep slopes and lowlands and wetlands in the New Territories to the north near to the Mainland Border. The environment is dominated and made famous as a tourist destination by an outstanding deepwater harbour that provides the setting for Hong Kong as Asia's World City.

The Hong Kong Special Administrative Region of the PR China is a very competitive metropolis that is recognised as one of the freest economies in the world for the past 15 years. The city of Hong Kong was rated globally the 3rd easiest place to do business in 2010 while as the largest trading economy and the largest exporter of commercial services Hong Kong is ranked 11th globally.

Hong Kong is ranked as the 3rd largest stock market in Asia and the 7th largest on the globe.  It is the 2nd largest recipient of foreign direct investment in Asia and is the home to the regional headquarters and regional offices of nearly 4,000 multi-national companies. It is also the home of more than 80,000 small to medium sized enterprises (SME’s)  

With an area of 1,104.3 sq. km. Hong Kong comprises Hong Kong Island, Kowloon, the New Territories, and numerous small islands. With 7.089 million inhabitants (Est.July2010) Hong Kong has the 39th biggest GDP in the world and is bigger than Israel, New Zealand and Singapore generating per capita GDP of USD30,000 (2009) with an estimated growth rate of 5% - 6% (2010).  The services sector accounts for over 90% of GDP in the world’s most services-oriented economy.

The age structure is 0 – 14 years 12%, 15 – 64 years 75%, 65 years and above 13% with a population growth rate of 0.476% (2010 estimation).  The gender ratio is 0.95 male / female (2010 estimation).  The ethnic groups are Chinese 95%, Filipino 1.6% Indonesian 1.3%, Others 2.1% (2006 census).  The religions are: eclectic mixture of local religions 90%, Christian 10%.

The Constitution and “Basic Law” is Hong Kong’s Charter since the handover from the British administration in 1997. The legal system is still firmly based on English common law.

The exchange rate of Hong Kong dollars which is pegged per US dollar is – 7.75 (2009), 7.751 (2008), 7.802 (2007), 7.7678 (2006), 7.7773 (2005).

The communications and transportation infrastructures are world class with telephone main lines of 4.188 million (2009) mobile cellular telephones reaching 12,207 million (2009), Internet hosts of 817,701 (2010); 1 airport (2010), 9 heliports (2010) together with extensive rail, light rail, tram, MTR, road, bus, light bus, taxi and ferry services. These services are all benefitting from continuous investment.

(Source of information: The World Factbook, Central Intelligence Agency and British Consulate-General Hong Kong)

Hong Kong is well known as being the “Pearl of the Orient” because of its geographical position on the Pearl River Delta and its hub status in relation to China and the APAC region. It is now one of the most affluent Chinese cities having progressed in line with the strong economic growth and development of the Chinese Mainland. Business opportunities in Hong Kong, the Mainland and the Region abound and we use the following sectors as examples:

  1. Financial & Professional Services
  2. It is Hong Kong SAR Government and Mainland Government policy to maintain Hong Kong as a leading international finance centre.  Hong Kong is currently ranked 3rd only behind London and New York and is recognised as particularly strong in insurance, banking, and asset management. The Stock Exchange business and the Hang Seng Index are seen as global economic performance indicators The banking, and financial services sector was well secured by the Hong Kong Government during the financial crisis of 2008 – 2010 and suffered minimal effect.

    Hong Kong is also the regional centre for international capital raising through IPOs and listings especially for Hong Kong and Mainland Chinese owned corporations.  At the same time Hong Kong based service companies are best qualified and ready to assist multinational corporations to expand into the Mainland Chinese market where hurdles related to tax, currency and Company regulations still exist.

    The recently announced new service in China for RMB bond issuance and trade settlement as well as the emergence of Islamic finance present further opportunities for overseas accountancy, financial, legal, and professional services. There is also strong demand for expertise in mergers and acquisitions, corporate finance, business restructuring, due diligence, manpower planning and risk management.

    hkgov

      Opportunities in Legal Services: -

      • Commercial
      • Corporate finance 
      • Listing law
      • Arbitration and medication 
      • Intellectual property protection 
      • IT law
      • Projects, energy and construction law 
      • Anti-monopoly law

      Opportunities in Financial Services: -

      • Banking and insurance products
      • Loan financing
      • Foreign exchange dealings
      • RMB bond issuance
      • Private equity funding
      • Mergers acquisitions
      • Financial services training 
      • Financial skills training
      • Islamic finance

  3. Construction & Engineering
  4. Over the next decade, the Hong Kong SAR Government has committed USD34 billion for new urban infrastructure to stimulate the economy. 

    Projects include the West Kowloon Cultural District and a new cruise terminal and other developments at the former Kai Tak Airport.  There is also good progress evident in the planning and tendering stages of the Hong Kong-Zhuhai-Macao Bridge, which is a cooperative project involving the HK Government the Guangzhou Provincial Government and the Mainland Central Government that will see a huge change in access to and from cities in the Pearl River Delta.  There will also be a very large project for development of land situated between the boundaries of Hong Kong and Shenzhen that will include new boundary crossing facilities.

    Consultancy assignments and capital works are anticipated in relation to the Central Market and Murray Building, the Central Police Station and the Former Police Married Quarters. Planning progresses for the the redevelopment of Kwun Tong town centre and the extension of Science Park; new private hospitals, independent private schools and expansion of the major universities.

    Opportunities in Construction & Engineering: -

    • Masterplanning, architecture, interiors, urban design and landscape architecture
    • Heritage architecture and conservation engineering
    • Construction and project management
    • Building and architectural finishes
    • Design, construction and fitting-out of museums, concert halls and other performing arts venues
    • Reinforced concrete building repair technology
    • Sustainable construction process and technique
    • Energy efficient and intelligent building products, systems and technology

  5. Education & Training
  6. The Hong Kong SAR Government invests heavily in education which is an area that enjoys the largest single share of any public spending amounting to USD7 billion in 2009 – 2010.  Business opportunities are therefore plentifull in the presence of: -

    • 964 Kindergartens for 137,600 pupils
    • 582 Primary schools (including 42 international schools) for 365,100 pupils
    • 503 Secondary schools (including 25 international schools) for 483,700 students
    • 61 Special education schools (including 1 international school) for 7,900 students
    • 18 Vocational Training Council centres for 62,600 students
    • 2 Approved post-secondary colleges for 1,700 students
    • Other colleges for 7,500 students
    • Project Yi Jin (Associate Diplomas level) for 12,200 students
    • 7 Universities and 1 institution of education for 172,000 students
    • The Hong Academy for Performing Arts for 900 students
    • The Open University of Hong Kong for 17,100 students
    • Medical courses organised by Hospital Authority for 700 students
    • The Prince Philip Dental Hospital for 100 students
    • Construction Industry Training Authority for 800 students
    • Clothing Industry Training Authority for 300 students
    • Institute offering adult education / tutorial / vocational courses for 231,500 students

Information and communication technology (ICT) is widely deployed in education where bilingual capability in written Chinese and English, and trilingual capabilities in spoken Cantonese, Mandarin, and English are seen as essential to the curricular of the current education system.  Vocational training, overseas education, early learning, curriculum reform, special education needs, gifted education, corporate training and lifelong learning are advocated by the Hong Kong SAR Government with practical schemes and funding.

    Opportunities in Education Training:

    • Information & communication technology 
    • Language education
    • Vocational training
    • Overseas education
    • Early learning
    • Special education 
    • Gifted education  
    • Corporate training
(Source of information: UK Trade & Investment of British Embassies)
HK_Government_House_Ball_Room

Hong Kong is recognised as an easy place to do business because of the strong rule of law, openness, transparent Government and free flow of information with a free press and media benefitting from freedom of speech.  English, Cantonese and Mandarin are widely used in the business world which makes Hong Kong a natural springboard to Mainland China and the Asia Pacific region.

The 4 traditional pillars of the economy are trade & logistics, financial services, tourism, and professional services.  The Hong Kong SAR Government is now also promoting 6 new pillars of the economy, covering medical services, education services, testing & certification, innovation & technology, creative industries, and environmental technology.

The Closer Economic Partnership Agreement (CEPA) between the Mainland and Hong Kong gives Hong Kong registered businesses preferential access to China’s market of 1.3 Billion potential consumers.  With a sound legal and international business structure and excellent communication network with English and Cantonese as official languages, Hong Kong is home to people of many nationalities and cultures who find that they can do business both locally and internationally with very little difficulty.

The cities of the Pearl River Delta, an area which is now known as “the workshop of the world” are easily accessible by an excellent railway system, road and air transport links making Hong Kong a regional hub to all its neighbouring cities and an attractive market in itself.

Of particular concern in the development of businesses in Asia, Intellectual Property Protection and Intellectual Property Rights laws together with Patent and Copyright laws are based firmly on English law in Hong Kong where enforcement is considered to be more practical to companies dealing in high-value goods and property.  Commercially experienced Hong Kong agents and distributors together with their existing business links, extensive connections throughout the region, common language and culture make excellent partners for overseas firms wanting to access Hong Kong, China and the Asia Pacific region and have the necessary knowledge of commercial practice and laws.

The HK Basic Law is founded on English law with the legal and judicial systems administered by an independent judiciary.  Practically Hong Kong benefits from: -

  • A freely convertible currency pegged to the US dollar
  • Strong foreign currency reserves
  • Effective copyright and patent system
  • Separate trade / customs territory (Generally a Free Trade Zone)
  • Independent status as an economic entity, separate from the rest of China, participating as a full member of international organisations including WTO and APEC.

Importantly, Hong Kong has one of the lowest tax rates and simplest tax structures in the world with only three direct taxes... on profits, salaries and property while none of them exceed 17% and all allow multiple deductions. There is no VAT or sales tax in Hong Kong. 

Imports to Hong Kong are generally duty free with exception of liquors (30% and above alcohol by volume... which e.g. excludes wine), tobacco, hydrocarbon oil, and methyl alcohol.  When importing these goods an import and export licence is required and a removal permit is required on re-exportation.

A large pool of highly educated and trained people available for local employment most of whom are English and Cantonese proficient with an increasing number also fluent in Mandarin. Recruitment can be accomplished through the Labour Department, numerous recruitment agencies, the Saturday edition of the South China Morning Post, and the many advertisement sources on the Internet.

Investing in the establishment of a Hong Kong business is really straightforward with the process being the same for a foreigner as it is for a local.  There is no restriction on nationality of the ownership or directorship of a company.  When setting up a representative office, a branch office or a private limited company, an application must be made to the Inland Revenue Department for Registration.

However, to commence a business or be employed you must obtain a visa, such as a work visa, an investment visa, a dependent visa, or qualify for one through the Capital Investment Visa Scheme.  Upon application a local sponsor may be required in some circumstances.

Real estate and property prices in Hong Kong are some of the most expensive in the world and could represent one of your major operating costs.  Serviced offices offering short term leases and virtual offices that simply provide a mailing address and a telephone operator are possible options.  In case you need an online presence a domain name can be registered quickly and at low cost..

(Source of Information: UK Trade & Investment of British Embassies)

Why you need to establish a Company in Hong Kong when doing Business in Mainland China

Setting up a company in Hong Kong while transacting business in Mainland China maximises corporate benefits under the “One Country, Two Systems” mechanism between Hong Kong and the Chinese Mainland.  You can simultaneously enjoy both the business advantages of being based in Hong Kong with easy access to the developing Mainland Chinese business world.

Here are some points to note...

Hong Kong is the major business transportation & logistics hub linking China with the rest of Asia, Europe and the Americas.  It is easy to get to every global market from Hong Kong which also boasts the availability of all necessary expertise for entering the China market.

The introduction of RMB Bond issuance in Hong Kong and the city’s role in being an RMB Offshore Clearing Centre provide an additional and unique financial facility to cement its place as the third largest financial center after New York and London.

The Hong Kong – Zhuhai - Macao Bridge, the Guangzhou-Shenzhen-Hong Kong Express Rail Link, and the many other infrastructure and development projects in Hong Kong and China offer great business opportunities.

Interestingly a large variety of auto parts and accessories are exported from Hong Kong.  In fact 98% of the total exports of auto parts and accessories were re-exports to Mainland China.  This reflects the significant business possibilities in dealing with auto parts and accessories in Hong Kong for the China market. The use of Logistics Centers for collection, assembly and re-export is a growing trend.

In the retail and consumer goods sector Hong Kong has benefitted from a huge increase in the number of tourist shoppers from Mainland China.  At the same time Hong Kong is a good starting point for consumer goods to enter Mainland China because of the solid network that has been well built by Hong Kong distributors to access a consumer market of 1.3 Billion...and growing!

Also having a growing population the Hong Kong SAR Government is committed to promoting environmental protection by working with the Guangdong Government to transform the Pearl River Delta region into a greener and better quality living area.  The pollution problems are being actively addressed in the region and throughout China.

Hong Kong’s development is geared towards the provision of quality services to Mainland China and the rest of the world.  It is the Hong Kong SAR Government’s aim to equip all students with English, Mandarin (Putonghua) and Cantonese.  There will be no communications barriers when stepping into the business world of China with the support of our high calibre Hong Kong personnel.

(Source of information: InvestHK, Threadneedle, UK Trade & Investment of British Embassies)

Recent Activities

148149_157446507633988_135981363113836_288902_8124475_n


Community Service.

International Business Center has been an active participant in community events over the past 25 years.

Apart from our participation in the famed Hong Kong Dragon Boat races we are particularly proud that on 27th – 28th of November, 2010, we sponsored and took part in the charity activity “Rehab Power Grow Go Goal” for the disabled held at the Victoria Park.

On 2nd – 4th of December, 2010 we participated in the World SME Expo 2010 in the Hong Kong Convention & Exhibition Centre at to show our support to the organiser on the one hand.  We carry on letting our corporate identity be present at the public activities on the other hand.

 

 

 

 

 

 

 

Should you need to know anything more about Hong Kong and our International Business Center, please contact us at our website.  Alternatively you are always welcome to call us at +852 2268 6888 (Hong Kong is GMT +8:00 hours).

 

As a long established business center we provide information and support to our clients for matters related to all of the above mentioned topics.  As our core business we offer business center facilities on very flexible term leases for a wide choice of fully serviced offices. In addition we provide Business Identity Programmes (BIP) to cater for the needs of those companies or individuals who simply require a virtual office.  With support from the 14 IBC (International Business Center) Group Companies we are also able to render a comprehensive range of professional services:


  • All Accountancy Services
  • Secretarial services
  • Business Plans / Marketing Plans
  • Franchise Building & Development
  • Brand Building & Development
  • Marketing Services / Event Management
  • Profitability Consultancy
  • Mergers & Acquisitions
  • Organisation & Methods
  • Operating Procedure Manuals
  • Due Diligence
  • Internal Control Review
  • Website Building & Maintenance
  • Short Video Production
  • 2D & 3D Media Design Services
  • Data protection and Storage

149676_157446470967325_135981363113836_288901_5115973_n


Disclaimer
The information contained in this Newsletter is for reference purposes only, and is provided by International Business Center as a complimentary service. Many sources are used in the compilation of this information, and where necessary the relevant credits and/or copyright acknowledgements are made. Due diligence must be exercised and additional research should be conducted before acting on any of the opinions expressed herein.
In accordance with the Personal Data (Privacy) Ordinance, Chapter 486, Laws of the Hong Kong Special Administration Region of the People's Republic of China, International Business Center (IBC) hereby informs the recipient of this Newsletter that he or she has the right to demand that IBC discontinue sending such material to him or her. In the event the recipient makes such demand, IBC will be obliged to discontinue and shall discontinue distributing to that person.
Subscription Cancellation and Removal from our Circulation List
Any requests for subscription cancellation and removal from our circulation list should be made by e-mail addressed to info@ibchk.com with the words "Cancel Subscription" in the Subject line.
© 2004 Carlway Holdings Limited