Why Hong Kong?

Why Hong Kong? 

Hong Kong is one of the most competitive economies in the Asia-Pacific region and the most investment friendly city that can grant a profit tax exemption to offshore private equity. Being as one of the world’s leading financial centre, many investors come to Hong Kong as a gateway to China and a springboard to other Asian cities. Even mainland Chinese companies are attracted to conduct their public offerings and listings in Hong Kong. During 2010 and 2018, there are 73% of mainland Chinese companies done the initial public offerings (IPO) in Hong Kong. Statistics also show that Hong Kong is by far the largest source of capital for Chinese companies seeking outside investment through IPO. 

Hong Kong is an irresistible choice to do business for foreign enterprises as they enjoy 0% taxes on profit sourced outside Hong Kong for offshore companies. This friendly tax system allows maximum earnings and minimum costs in the business. In addition to the seamless company formation, the simple Hong Kong business entities provide foreigners with 100% control of their companies. This makes Hong Kong an attractive place to park their money and business under stability, protection, and secrecy.  

Could Hong Kong be easily replaced?

Could Hong Kong be easily replaced?

While there are a few political events happened in the past few months, Hong Kong is believed to continue to play an important role in the global financial services industry. There is NO OTHER Chinese city that is close to being able to replicate Hong Kong. Commentators often compare between Shanghai or Beijing and Hong Kong. However, neither one is ready to replace Hong Kong’s unique function – freedom of movement of goods, people, services, capital, the rule of law and the freeform of speech. These six freedoms are exactly what other cities in China do not have. 

Although the growth of Shanghai or Beijing reflects the growth of the Chinese domestic market, it does not show a decline in the importance of Hong Kong. Still, many foreign firms continue to have their Asia Pacific headquarters in Hong Kong. Shanghai doe does not have the same connections as Hong Kong and its relationship to the rest of the world is also different. In 2018, Hong Kong has ranked “the top worldwide in linkage to both London and New York.”

Why do business leaders like Hong Kong?


Priorities for business leaders

The political legislative framework

One-country, two systems; Rule of law

Legal system

Transparent guidelines; Property rights; Capitalist; Freedom of speech and movement


Government transparency; Business friendly policies; Tax incentives


Availability of talents; Access to national or regional market

Tax Rate

Low tax rate; Safe and regulated tax system; Corruption-free government

Tax Reporting System

Simple process; Free flow of information

Linked Exchange Rate System

HK Dollar to US Dollar currency pegged

Meyer, D. 2018. ‘Hong Kong, Shanghai, and Beijing: China’s Contenders for Global Financial Leadership.’ In Cassis, Y. and Wojcik, D. International Financial Centres after the Global Financial Crisis and Brexit. Oxford: Oxford University Press. pp. 126-153.

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