HONG KONG – LEADING GLOBAL FINANCIAL CENTRE

Hong Kong is one of Asia’s most fashionable cities. It’s expensive; flashy; crowded. It houses superior talents, extreme weather, and overcrowding. But these are mere symptoms of the attraction Hong Kong offers so many. If you read the rankings awarded to Hong Kong, you might think the former city-state was contending for world’s top jurisdiction in just about everything:

• Economics – In 2011, Hong Kong was named the freest economy in the world for the 16th consecutive year.
• Finance – Hong Kong placed 3rd-largest receiver of FDI in 2010.
• Politics – Out of 173 jurisdictions assessed, Hong Kong’s government was perceived as 13th-least corrupt in the world.
• Government – Measuring business regulations, Hong Kong is the world’s 2nd-easiest place to do business, following Singapore.
• Society – Hong Kong “very high” on the Human Development Index, at 21st place in 2011.
• Infrastructure – Hong Kong International Airport was named ‘the world’s best airport’ in 2011, by the World Airport Awards.
• Property – In 2011, The Economist named Hong Kong housing the most overvalued in the world, while Forbes named Hong Kong office property as the world’s most expensive.

The preceding list is by no means exhaustive!

What makes Hong Kong rank so high?
Hong Kong’s inception as a trading port created its international reputation as the point where ‘East meets West’. It has been a multicultural jurisdiction for over 150 years, and has developed an autonomous government, legal code, and economy, adapted from the British system. As a leading global financial centre, the forms of capitalism and free market economy practiced in Hong Kong are comfortable for Western investors, making it easier to entice and accept FDI. A Western business environment at the doorstep of the developing Chinese economy, this ‘gateway to China’ packs a powerful punch for attracting businesses and investors.

Hong Kong’s cornerstone of growth has been entrepreneurs undertaking Hong Kong company formation. This vehicle has allowed vector growth for foreign direct investment into Hong Kong since colonial times.
• Investors own 100% of a Hong Kong company
• 100% control is retained over investments
• 100% of profits can be repatriated to home countries
• Company profits sourced outside of Hong Kong are legally tax exempt

“One country, two systems”
Hong Kong is considered to be part of ‘one country, two systems’ with People’s Republic of China, since the early 1980s. Because of Hong Kong’s unique history as an independent region, allowing Hong Kong to continue to thrive under its own legal, political and economic systems, including finances, commercial and cultural agreements with foreign countries.

Hong Kong Company for all levels of business
There are significant advantages to doing business through Hong Kong, and the high rankings are a testament to this end. FDI, international business turnover, and rankings have steadily climbed during the last 3 years in the midst of the global financial meltdown. It came out of that on a winning growth streak.

Below are just a few examples in which a Hong Kong company benefits at varying levels of business.

Businesses – Hong Kong has one of the lowest corporate tax rates in the world, at 16.5%. Macau is lower but does not provide the global pulse point that belongs uniquely to Hong Kong. The strong tax advantage is most useful for a Western corporation’s Hong Kong branch company or offshore company, as repatriation of profits is permitted. These subsidiary Hong Kong company structures can be registered as their own legal entities, which many companies find to be the best way to manage regional operations. The international reputation and strong commercial centre that is Hong Kong is unbeatable in Asia, especially if Mainland China is part of a company’s business strategy.

Entrepreneurs – Because of the western style infrastructure, it is very easy for entrepreneurs to set up and run a business.
• The style of capitalism and Western legal infrastructure facilitate ease of business setup and company formation that many international business people are familiar.
• Because Hong Kong is the gateway to China, entrepreneurs can reduce their cost base sourcing products and services nearby. China’s advantageous supply sources for manufacturing, natural resources, and labour are attractive for an entrepreneurial company set up.
• Hong Kong banking centre infrastructure is first-rate and world-class. Entrepreneurs can fund their enterprises with Hong Kong banks’ financial backing, which is secure and successful.

Individuals & Investors – Incorporating a Hong Kong company and opening a Hong Kong bank account allows individuals and investors safety and security in an international location to meet their financial objectives, such as:
o Refinancing mortgages for foreign property outside of Hong Kong.
o International consultants can house revenue from clients with one cohesive cost and tax entity/structure.
o Hong Kong’s financial hub affords individuals banking safety and security in an international location, and can potentially offer more flexible liquidity currently than banks in European and American jurisdictions.

Hong Kong financial hub and banking benefits everybody – from conglomerates and large corporations, to self-made entrepreneurs and individual investors.

The Hong Kong company affects you more than you know
Historically, tax rates increase on repatriating funds during bleak financial times in hopes of bringing in cost-free revenue stream. A country’s nationals are less likely to repatriate their funds onshore if it becomes costlier. This prevents income from returning to the mainstream economy, and money is kept offshore and/or moved to secure jurisdictions. This also explains the continuous growth stream to Asia, an area of jurisdictions experiencing growth. A Hong Kong bank account is relatively easy to obtain, with the necessary due diligence, and provides advantages similar to other offshore jurisdictions.

While Western countries are continuing to fight the effects of the 2008-2009 global economic crises, investment opportunities are continuing to grow in Asia, and much of this managed through financial centres such as Hong Kong and Singapore.