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| No.7 October, 2009 |
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Hong Kong's enduring advantages remain attractive |
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 Director-General of Investment Promotion Simon Galpin said Hong Kong's enduring advantages remained strongly favourable factors in attracting businesses to set up local representative offices.
The number of local offices established by Mainland Chinese companies rose 6% to 527 in June from last year's 499, although an Invest Hong Kong annual survey showed a 3.3% dip in the total number of non-local business operations in the city.
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Releasing the survey results (October 5), Mr Galpin said the global financial and economic downturn inevitably meant many companies have had to consolidate their international operations.
"The drop in regional headquarters and regional offices is largely due to consolidation and retrenching, with companies changing their status of regional operations down to local offices to cut costs, and for some companies, to focus on their short-term survival," Mr Galpin said. He added global foreign direct investment inflows dropped 14.1% last year, and will likely fall 29.4% this year.
The number of overseas, Mainland and Taiwanese regional headquarters, regional offices and local offices in Hong Kong fell to 6,397 from 6,612 last year. However, Mr Galpin considered this a fairly good result given the global economic crisis, reaffirming investors' confidence in Hong Kong's enduring advantages.
He said although there are fewer regional headquarters, they account for more jobs, with the average number of staff employed increasing from 109 to 114 per company on a year ago. The number of regional headquarters in financial services and banking also rose, from 119 to 129.
"This really reinforces Hong Kong's role as an international financial centre and means Hong Kong is closing the gap on London and New York," he noted.
Overseas, Mainland and Taiwanese companies are moving more functions and strategic responsibilities to their Hong Kong regional headquarters, reaffirming both the city's importance as a regional business hub and the value of the Asian market.
On the continued rise in the number of local offices from the Mainland, Mr Galpin believed these firms consider Hong Kong a great place for raising capital and for market testing. He added Invest Hong Kong will continue to persuade more Mainland companies to establish offices in the city.
On June 1, there were 1,252 regional headquarters, 2,328 regional offices and 2,817 local offices in Hong Kong representing parent companies outside the city. They employ a total of 354,000 people.
The US topped the list of countries/territories with regional headquarters as well as regional offices in Hong Kong, followed by Japan and the UK. The Mainland topped the regional offices list. The major lines of business are import/export trade, wholesale and retail, professional and business services, and finance and banking.
The companies surveyed found the simple tax system and low tax rate, free flow of information, corruption-free government, rule of law, and political stability and security as among the favourable factors for Hong Kong.
More than half of them thought the overall business environment in Hong Kong had remained the same or improved compared with last June, in spite of the difficult global business conditions and their effect on business perceptions.
Click here for survey details.
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