Why Foreign Business Owners Often Choose Hong Kong As Their Business Headquarters In Asia?


Why Foreign Business Owners 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 Asia. Its’ physical and politics proximity to China in conjunction with modern infrastructure, internationally accepted and clear legal system predicated on English laws and lower tariff structure have rendered it into one of the world’s leading financial and business centres.

A flexible work culture adept in both English and Mandarin languages makes for easier transactions saving companies time and translation costs in the process. Besides, the free floating money of Hong Kong money, the lack of good and services taxes, and a flat profit taxes rate of 17.5 percent for company functions located in Hong Kong translate into hefty financial gains for multinational companies.

Also, the Hong Kong based companies gain from the provision of re-invoicing. Re-invoicing entails international trading between your buyer and seller companies through an intermediary company based in areas that exempt tax on transfer and export handling. The companies that are looking to trade goods and services from overseas to China or vice versa set up an intermediary company in Hong Kong, which invoices the buying or selling price at greater than the initial creation costs.

This way they could show reduced or zero profit margins while at the same time masking the original procurement costs. Reduced or zero income as recorded by the intermediary company allow it to retain maximum profit margins while reducing the profit tax. The financial gains are substantial specifically for the foreign firms keen to operate in goods and services in Chinese markets.

What increases their business strategy further is the special trade agreement between Hong Kong and main land China. The bilateral free-trade agreement known as Closer Economic Partnership Arrangement (CEPA) allows Hong Kong centered businesses easy access and reduced tariff rates to market goods in the Chinese markets. Tariffs on 273 categories of goods including textiles, electric and electronic products, clothing and jewellery have been exempted.

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In addition the ongoing liberalization of varied service sectors including infrastructure development, housing, banking, logistics and commodities, and real property guarantee newer opportunities for Hong Kong centered companies. Their business potential is enormous considering some of advantages that Hong Kong structured companies enjoy in China are accrued due to its’ special relationship with China especially since no such procedures are allowed by WTO in the long term.

The ongoing inward investment in the People’s Republic of China coupled with Hong Kong’s zero-tariff status will attract foreign companies especially those selling service-sector centered goods to establish and operate their headquarters out of this region. Last however, not minimal the cosmopolitan and vibrant culture of Hong Kong accommodates both local and Western preferences.

Living in the town is a pleasure for both local and expats as this southern port city of China celebrates Chinese New Year, Dragon Boat race and mid-Autumn celebration with as much aplomb as Christmas, Valentine’s Day and Halloween. Besides, an efficient transport network, wealthy night time life and cultural waterholes make it a nice-looking destination for international companies looking to setup their business operations in East and South East Asia as well for their relocating personnel. This improved by political balance, strong law and order, greater independence of information, and availability of business and professional support services makes residing in Hong Kong add up to living in any metropolis in the world.