Transcript John Rutherford

Maximise your China
business through a Hong Kong base
John Rutherford
Associate Director-General
Invest Hong Kong
[email protected]
Agenda
• Hong Kong as a business location – 10 key advantages
• Hong Kong & Mainland China
 The Greater Pearl River Delta
 CEPA
• The UK business community in Hong Kong
• How Invest Hong Kong can help
One Country, Two Systems
Post 1997, Hong Kong retains its competitive advantages:
 Rule of law
 Level playing field
 Currency convertibility, separate from Renminbi
 International business practices
 Free flow of information
At the same time, Hong Kong is an integral part of China
Relationship advantages including CEPA, GPRD, 9+2
Hong Kong - 10 Key Advantages
 Rule of law – including rigorously enforced IP legislation
 Unrivalled location
 Low and simple taxes
 World’s freest economy
 International finance centre
 Free flow of information
 World class infrastructure
 Skilled workforce
 International lifestyle
 Gateway to the Mainland
Business infrastructure
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Mature legal infrastructure
Robust intellectual property protection
Level playing field
Transparent and corruption free
Simple tax regime with low taxes*:
Corporate tax rates
17.5%
Personal tax rates
Top marginal tax rate is 20%, capped at
maximum average rate of 16%
VAT/GST
Nil
Income not subject to tax
Offshore income; dividends; capital
gains; tax exemption for interest income
from deposits placed with authorised
financial institutions
Source: * KPMG
Where to Start in China?
Bohai Region
Yangtze
River Delta
Greater Pearl
River Delta
“The fastest growing
large region of the
fastest growing large
economy”
Source: Professor Michael Enright
Centres of economic activity in Asia
Hong Kong and the Pearl River Delta
GDP of Greater PRD is
more than Singapore,
Malaysia & the
Philippines combined
Retail sales in
Greater PRD is 25%
higher than Beijing &
Shanghai combined
Over 60,000 HK firms
employ over 11 million
workers in Greater PRD
Hong Kong handles 80%
of PRD’s imports and
exports
Hong Kong and the Pearl River Delta –
a winning combination
Hong Kong provides the capital, management skills, technology,
market knowledge, mature business infrastructure and access
to international markets.
Mainland PRD cities provide world-class,
low-cost manufacturing, and access to a new, demanding
consumer base
Closer Economic Partnership Arrangement
(CEPA)
• China’s - and Hong Kong’s - first free trade agreement
• WTO compliant but many benefits go beyond WTO
commitments
• Available to people and businesses of ALL nationalities
• By investing in Hong Kong to export to the Mainland:
• For goods – you save money (zero tariffs apply)
• For services – more markets are open to you and many
entry barriers are lower
• Confirmation of Beijing’s support for Hong Kong as the gateway
to the Mainland
Closer Economic Partnership Arrangement
(CEPA)
• To be eligible for CEPA benefits:
• criteria to meet + applications to be approved
• Trade in goods
• Most popular: textiles/clothing; pharma; plastics and paper
• Example benefit:
• Pre-CEPA: tariff on exporting textiles = 5 - 21.3%
• Post-CEPA: tariff on exporting textiles = nil
• Trade in services
• Most popular: transport/logistics; advertising; construction and
management consultancy
• Example benefit:
• Pre-CEPA: vague rules; some logistics joint ventures achieved
• Post-CEPA: can set up wholly owned logistics company
Opportunities for Overseas Companies
• Agent/Distributor – work with TDC
Own operation:
• Sourcing
• Trading
• Logistics/Distribution
• Local and regional management operations
• Research & Development
UK Presence In Hong Kong
• 3rd largest number of regional operations:
– Regional headquarters 115
– Regional offices
215
– Local offices
154
• HK$48.1 billion total stock of direct investment from UK as at
end 2003
• Total exports to UK grew by 15% to US$8.4 billion in 2004
• Imports from the UK rose by 19% to US$3.7 billion in 2004
• Over 1,000 UK companies in Hong Kong, employing about
10% of the workforce
• Very effective British Chamber of Commerce in Hong Kong is
largest British Chamber in Asia
• Approximately 20,000 UK citizens residing in Hong Kong
Some UK Companies in Hong Kong
Financial Sector
• Barclays
• HSBC
• Prudential
Professional Services
• Clifford Chance
• Ove Arup & Partners
• PA Consulting Group Ltd
Information Technology
• Logica
• Footfall
• Copitrak
Trade Related Services
• Burberry
• Ashworth
• Aquascutum
• Kent & Curwen
Transportation/Logistics
• British Airways
• P & O Nedlloyd
• Exel
Technology
• GlaxoSmithKline
• AstraZeneca
UK Companies in China
In Hong Kong
In Mainland
Regional management,
including all Mainland
operations. 120,000sqft
retail store to open in
2007
50 retail outlets, sourcing
products
Asian sourcing office and
retail outlets
Manufacturing
Engineering and
manufacturing control
Manufacturing
About Invest Hong Kong
• Award-winning* Government Department
• Our Mission - To attract to and retain in Hong Kong
economically and strategically important direct investment
• Our Offer - Free and confidential facilitation services to ensure
that investors smoothly establish or expand their operations in
Hong Kong
Relevant
up-to-date
information
Facilitation of
set-up /
expansion
Matchmaking
and networking
support
*Voted best managed investment promotion agency in
Asia, Strategic Direct Investor awards 2004
Public relations
support for
launch /
expansion
Final word…
“No other city in the world can help overseas
investors manage the risks inherent in entering
Mainland markets as well as Hong Kong. This is
an important part of the reason why overseas
firms prefer Hong Kong for the highest-value
activities that they perform in the
Asia-Pacific region.”
Michael Enright, Sun Hung Kai Properties
Professor, School of Business,
University of Hong Kong
Thank you for listening
www.InvestHK.gov.hk
For further information contact:
Julia Herries/Lynette Quah
[email protected]
[email protected]
020-7499-9821
In Hong Kong:
John Rutherford
[email protected]
+ 852 3107 1002