According to the annual report from the Hong Kong Census and Statistics Department, the number of regional operations established in the jurisdiction by foreign-owned companies has reached an all time high.
Hong Kong has suffered of recent months as a result of the global economic slowdown, and the results of several recent studies and surveys have suggested that the region may be losing its competitive edge. However, these latest findings show that, for the moment at least, Hong Kong is still considered as the pre-eminent Asian location for business by many foreign organisations.
The government study found that the number of foreign owned regional headquarters (which have control over the operation of other offices in the region) had risen by 10.4% to 944 in June 2001, regional offices (which co-ordinate but do not control other offices) had increased by 6.8% to 2,293, and that local offices (which take charge of business only in Hong Kong) had risen to 1,230.
An astonishing 76% of multinationals established in the region pointed to the low and simple taxation system as a major draw, with free flow of information and capital, well-developed infrastructure, and skilled population cited as other major factors in the decision of international businesses to locate in the area. However, cost and availability of accommodation and staff was pointed to by many organisations as a disincentive.
Although this is undoubtedly good news for Hong Kong, and could go a long way towards restoring confidence in the region, there are warning signs that mainland financial centres may soon overtake the offshore jurisdiction as regional favourites. Mark Hooper, Asia-Pacific corporate communications managing director of Boeing, which established its Asian headquarters in the SAR in August, explains how difficult the decision to locate in Hong Kong actually was.
'We were thinking about Singapore, Shanghai and Hong Kong in the final stages of decision-making in 1999,' he revealed, explaining that 'Singapore and Hong Kong possess similar strengths, and Shanghai's economy is improving gradually'. However, the international aircraft manufacturer eventually settled on the SAR, according to Mr Hooper, because: 'Hong Kong still has the edge in conducting business activities.'
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