Chinese Investors Flock To Hong Kong

by Mary Swire, Tax-News.com, Hong Kong

21 February 2006

According to Hong Kong's Ministry of Commerce, there has been a 58% increase in the number of enterprises from Mainland China granted approval to invest in Hong Kong in 2005 compared to the previous year.

Figures released by the department this week show that 253 Mainland enterprises were granted approval to invest in Hong Kong last year, up 58% on the 160 approvals in 2004.

Mike Rowse, Director-General of Investment Promotion at InvestHK, the government's investment promotion agency, believes that the growing investment from the Mainland shows Hong Kong's increasingly important role as the springboard for companies to expand out of China, .

Speaking at the annual spring reception for business leaders of Hong Kong-based Chinese enterprises last week, Mr Rowse stated that the Mainland was the one of the largest contributors to Hong Kong's direct investment inflow in 2004, amounting to $62 billion - a 63% rise in inflow from the Mainland on 2003.

Meanwhile, Mr Qin Xiao, chairman of the Hong Kong Chinese Enterprises Association, noted that the Closer Economic Partnership Arrangement (CEPA), which has removed tariff and regulatory barriers for Hong kong firms investing in China and visa versa, has also had a beneficial impact on trade between Hong Kong and the mainland.

"The steady growth in Hong Kong's economy has brought many opportunities for Mainland enterprises. And the implementation of CEPA in recent years has strengthened Hong Kong's attractiveness to Mainland enterprises," Qin noted.

"We believe that with the rapid development of the Chinese economy and the excellent business environment in Hong Kong, more Mainland enterprises will invest here to set up or expand their operations," he added.

According to statistics released by the Hong Kong Exchange, some 211 Mainland enterprises have listed on the Hong Kong stock market. Their total market value of $3.36 trillion represents about 38% of the total overall market value in Hong Kong.

Invest Hong Kong says that it plans to provide more comprehensive coverage in the Mainland and will devote more resources to that market by setting up investment promotion units at the Beijing Office, the Hong Kong Economic & Trade Office in Guangdong, and the two new economic and trade offices to be opened in Chengdu and Shanghai later this year.

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