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Chinese Firms Continue Flocking To Low-Tax Hong Kong

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

26 March 2007


In 2006, 282 Mainland companies invested in Hong Kong, injecting more than US$2 billion into the Hong Kong economy, China’s Ministry of Commerce (MOFCOM) reported recently.

According to InvestHK, the Hong Kong Special Administrative Region Government department charged with encouraging and facilitating inward investment into the city, Mainland companies are attracted by Hong Kong’s international business environment, attractive tax rates and fund-raising capabilities.

Currently, 368 Mainland–related companies are listed on the Hong Kong Stock Exchange Main Board and GEM markets. Last year alone, the mainland-related companies raised HK$384.9 billion, a 94% increase on 2005.

The Director-General of Investment Promotion at Invest Hong Kong, Mike Rowse, thanked the business leaders of the Chinese companies for their continued support and long-term commitment to Hong Kong.

“The strong confidence showed by the Mainland entrepreneurial leaders in Hong Kong has been the most encouraging reward to Invest Hong Kong," he stated.

Rowse added that the high level of cooperation with the Ministry of Commerce and the Liaison Office had been an essential driver in allowing them to better serve the needs of Mainland companies interested in Hong Kong.

Speaking at a reception on Thursday, Chairman of the HKCEA, Mr Qin Xiao noted: “Hong Kong has been an excellent partner for Mainland companies seeking outward investment opportunities. Hong Kong’s advantageous position as an international business market fully integrated into the world’s economy has made this city the number one incubator in the Asia Pacific region for Mainland companies looking to expand their business around the world.”

Rowse added: “We have a solid track record of helping ambitious, internationally-minded, Mainland companies to move outside their domestic market. Over the past three years we have helped more than 110 Mainland companies and the trend is for this to increase substantially over the next five years.”

Invest Hong Kong has opened more service centres in the Mainland recently to cater for increased demand. In mid-March a new facility was opened in Shanghai, while another will be opened in Chengdu next week. In late 2006, Invest Hong Kong’s Guangzhou office was almost doubled in size.

“The establishment of the Invest Hong Kong Service Centre is part of our long-term China strategy. As interest from Shanghai and its neighbouring provinces continues to rise, Hong Kong will provide a natural business environment and springboard to international markets for the companies from this region,” Mr Rowse explained.

Staffed by four inward investment professionals, the Shanghai Investment Promotion Unit provides a range of free services including market research, advice on office rental, staff hiring, visa issues and networking opportunities.

“With this strong growth trend we are fortunate that the Central Government, not least the Ministry of Commerce, is so supportive of our efforts to promote the advantages, opportunities and services Hong Kong has to offer," Rowse concluded.

Invest Hong Kong’s Chengdu service centre will open on 28 March to better serve the mainland enterprises in the south-west region. Rowse said the Chengdu team planned to build networks with the local business community to pave way for a greater level of cooperation between Hong Kong and the region.

A comprehensive report in our Intelligence Report series looking at Tax-Effective Global Manufacturing and Financing Structures is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report8.asp

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