Hong Kong, renowned for its free market economy, is a prime location for launching a business in Asia. The jurisdiction boasts numerous industries that present opportunities for international investors. Additionally, the government’s increased support and development initiatives in these industries can offer significant benefits to international investors. In this article, we discuss the benefits of launching a business in Hong Kong for Chinese investors and the leading industries they might be interested in venturing into. 

Doing business in Hong Kong: The advantages for Chinese investors

Gateway to major Mainland markets 

Hong Kong offers a strategic location for investors from the mainland. Some cities in China are about an hour away from Hong Kong, such as Guangzhou, Shenzhen, Zhuhai, Foshan, Dongguan, Zhongshan, Jiangmen and parts of Huizhou and Zhaoqing.  

Its proximity provides businesses easy access to opportunities in the Greater Bay Area, strengthening economic ties with the mainland. The Greater Bay Area connects Hong Kong and Macao with nine Pearl River Delta cities, facilitating the flow of goods, people and capital.  

Attractive Tax System

Hong Kong does not impose sales taxes, VAT, withholding taxes, capital gains taxes, dividend taxes or estate taxes, making the state’s tax system attractive for investors. Below are the three main types of direct taxes that foreign investors should know about.  

• Profit tax for incorporated bodies at 8.25% for the first HKD 2 million and 16.5 per cent for profits above that amount
• Salaries tax at 15%
• Property tax at 15%

Favourable economic policies

The jurisdiction has favourable economic policies for mainland investors, such as the Closer Economic Partnership Arrangement (CEPA). This arrangement allows for a free trade agreement between China and Hong Kong, focusing on goods, services, investment protection and economic cooperation. This agreement benefits manufacturers, service suppliers, professionals and investors. 

Global connectivity 

Hong Kong provides access to a global market, with over 100 airlines offering flights to 180 locations. Asia’s key markets are less than four hours away, and half the world’s population is within five hours’ flight time. Its industries also adhere to international standards, ranking fifth in global competitiveness in 2024.  

Leading Industries in Hong Kong 

According to the Hong Kong Census and Statistics Department, the main industries contributing to the growth of the Hong Kong economy are the financial services industry, trading and logistics and tourism. Below, we will explore these key industries and how Chinese investors can tap these opportunities to enter the Hong Kong market. 

Financial Services 

Hong Kong has consistently been ranked as one of Asia’s top international financial centres by the Global Financial Centres Index. In 2022, the Census and Statistics Department reported that 22.4% of its GDP is attributed to the financial services sector.  

Hong Kong provides the largest offshore RMB clearing centre, hosting 73% of global offshore RMB settlements in the first half of 2023. The ‘basic law’ also allows for improved economic integration and a robust legal system, making Hong Kong a bridge between mainland China and the rest of the world. 

Trade and Logistics 

Hong Kong’s trading and logistics industry accounted for 23.7% of the city’s GDP in 2021. Renowned as one of the freest economies in the world, Hong Kong functions on a free trade policy with no customs tariffs, minimal import and export licensing requirements and most products not needing licenses. In addition, economic policies such as CEPA allow accessibility to mainland markets, simplify customs procedures and boost diverse industries. 

Hong Kong is a key regional hub in Asia, boasting a robust transportation infrastructure. Its maritime and port industry offers free port status, efficient customs clearance and international connectivity. The aviation industry has 120 airlines connecting it to 165 destinations. There are also ten land boundary control points connecting Hong Kong to major cities in mainland China. 

Tourism 

The Hong Kong Tourism Board recently estimated that about 21 million visitors arrived in Hong Kong in the first half of 2024, with 16.1 million coming from the Mainland. This is a 64% increase from last year and accounts for a daily average of 116,000 visitors.  

In particular, Hong Kong attracted 700,000 travellers for Meetings, Incentives, Conferences and Exhibitions (MICE) events. Leisure areas such as theme parks, resorts, museums, temples and other cultural districts are among the top tourist attractions in Hong Kong. Each traveller spent an average of HK $8,000 and stayed in town for 3.7 nights. 

Due to the increasing number of tourists, including international travellers and visitors from the mainland, market players can anticipate favourable outcomes from the Hong Kong tourism industry. The tourism industry is projected to contribute 3.3% to Hong Kong’s economic growth by the end of the year. 

Company Formation in Hong Kong 

The leading industries in Hong Kong offer opportunities for mainland investors to tap into significant markets in China and around the world. Institutional efforts to develop the region’s leading industries through legal and economic policies and advanced infrastructure allow for an open and efficient business environment.

Bolder Group provides bespoke solutions to help Chinese investors navigate the complexities of starting a business in Hong Kong. For more information, contact our team in Hong Kong.

Disclaimer: Bolder Group does not provide financial, tax or legal advice and the information contained herein is meant for general information purposes only. We strongly recommend that before acting on any of the information contained herein, readers should consult with their professional advisers. The Bolder Group accepts no liability for any errors or omissions in the information, or the consequences resulting from any action taken by a reader based on the information provided herein.

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