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More overseas and Mainland companies using Hong Kong as their regional command and control centre

The number of business operations in Hong Kong with parent companies overseas and in Mainland China reached an all-time high of 7,250 in 2012, up by 4.3 per cent from a year ago, according to the results of an annual survey released by Invest Hong Kong (InvestHK) and the Census and Statistics Department (C&SD) today (October 18).

The Director-General of Investment Promotion, Mr Simon Galpin, welcomed the survey findings, which also showed a 5.7 per cent rise in the number of people employed by these companies, an increase of about 20,000 compared to a year ago.

More overseas and Mainland companies using Hong Kong as their regional command and control centre

Director-General of Investment Promotion at Invest Hong Kong, Mr Simon Galpin (right) and Senior Statistician of the Census and Statistics Department, Ms Iris Law (left), co-chaired a press conference today (October 18) to announce the results of “2012 Annual Survey of Companies in Hong Kong Representing Parent Companies Located outside Hong Kong”.

Director-General of Investment Promotion at Invest Hong Kong, Mr Simon Galpin, explained the total number of regional headquarters, regional offices and local offices in Hong Kong reached an all-time high of 7,250 in 2012, according to the survey.

Director-General of Investment Promotion at Invest Hong Kong, Mr Simon Galpin, explained the total number of regional headquarters, regional offices and local offices in Hong Kong reached an all-time high of 7,250 in 2012, according to the survey.

Mr Galpin said, “We are delighted to see growth in the number of foreign and Mainland companies running business operations in Hong Kong, which is proof of the city’s continued appeal as an ideal business hub in Asia.”

However, Mr Galpin was cautious regarding global economic trends and their likely impact on Hong Kong. He said, “We have to recognise that a difficult global environment and the slowdown in Mainland China’s economy may have a negative impact on the number of foreign companies setting up in Hong Kong in the short term. We are confident, though, that in the long run Hong Kong will continue to attract investors who plan to start or strengthen their operations in the region.”

Mr Galpin noted that Hong Kong’s enduring advantages such as its low and simple tax regime, free market principles and strong rule of law should continue to attract overseas and Mainland investors. Its strategic location at the heart of Asia makes it an ideal platform for start-ups to take their first steps into the Asian market, he said, and added that the city’s proximity to the Mainland offers a dual platform from which overseas companies can access Mainland markets and Mainland companies can “go global”.

The “2012 Annual Survey of Companies in Hong Kong Representing Parent Companies Located Outside Hong Kong” aims to collect information on the profile of these companies and their views on the business environment of Hong Kong. Of the 7,250 companies responding to the survey, 1,367 operated as regional headquarters (RHQs), 2,516 as regional offices (ROs) and 3,367 as local offices (LOs), compared to 1,340, 2,412 and 3,196, respectively, a year ago.

Analysed by country/territory where the parent company was located, the top three sources remained unchanged when compared to a year ago. The US topped the list (1,388 versus 1,328 last year), followed by Japan (1,218 versus 1,150 last year) and Mainland China (853 versus 805 last year).

The 7,250 companies together employed about 388,000 people, compared to 368,000 last year. In terms of size, the majority of the respondent companies were of small and medium size, with 4,843 companies (4,626 last year) employing fewer than 20 people and 1,193 companies (1,130 last year) employing 20 to 49 people.

The top three lines of business engaged by these companies remained the same: import/export trade, wholesale and retail (3,297 versus 3,080 last year); professional, business and education services (1,349 versus 1,311 last year); and financing and banking (1,152 versus 1,059 last year). Of particular note is the 8.8 per cent rise in the number of companies engaged in financing and banking, which reflects the increasing appeal of Hong Kong as an international financial centre and its role as the Mainland’s official offshore Renminbi centre.

When choosing a location to set up RHQs/ROs/LOs, the top five factors rated as most important by respondents included: (1) simple tax system and low tax rate, (2) free flow of information, (3) corruption-free government, (4) political stability and security, and (5) rule of law and independent judiciary.

Each of the important factors mentioned above was rated by 60 to 73 per cent of the RHQs/ROs/LOs to be favourable for Hong Kong.

Survey definitions

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Regional Headquarters: an office that has managerial control over offices in the region (i.e. Hong Kong plus one or more other places) on behalf of its parent company located outside Hong Kong.

Regional Office: an office that co-ordinates offices and/or operations in the region (i.e. Hong Kong plus one or more other places) on behalf of its parent company located outside Hong Kong.

Local Office: an office that only takes charge of the business in Hong Kong (but nowhere else) on behalf of its parent company located outside Hong Kong.

Survey methodology

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Data collected in the 2012 survey refer to the position as at June 1, 2012. Owing to the lack of a complete sampling frame of companies covered in the survey, the number of RHQs, ROs and LOs enumerated in each survey round represents only the best snapshot that could be taken at the time of the survey. Coupled with the voluntary nature of the survey, changes between years in the number of RHQs, ROs and LOs may be affected by the continuous improvement in the sampling frame of companies and response rate, and hence should be interpreted with care. However, it should be noted that since 2003, a high response rate of 98 per cent or above has been achieved in each round of the survey, so that the effect of the response rate is relatively insignificant. In additions, changes between years in the total number of persons engaged in these companies may also be affected by the response patterns of companies of different employment sizes. Hence, the relevant changes should be interpreted with care.

The survey results are published in greater detail in the “Report on 2012 Annual Survey of Companies in Hong Kong Representing Parent Companies Located Outside Hong Kong” by the C&SD. The publication is available for download free of charge from the C&SD website at www.censtatd.gov.hk/hkstat/sub/sp360.jsp?productCode=B1110004. 

Enquiries about the survey results may be directed to the Business Expectation Statistics Section of the C&SD (Tel: 2805 6112).

About Invest Hong Kong

InvestHK is the department of the Hong Kong Special Administrative Region Government established in July 2000 to take responsibility for Foreign Direct Investment and support overseas and Mainland businesses to set up or expand in Hong Kong. It provides free advice and customised services to help businesses succeed in Hong Kong’s vibrant economy. As at June 2012, InvestHK had completed over 2,600 investment projects, creating more than 30,000 new jobs in the first year of operation or expansion and HK$67 billion of investment. For more information, please visit www.investhk.gov.hk. 

For event photos, please visit www.flickr.com/photos/investhk/sets/72157631781048058/. 

Ends/Thursday, October 18, 2012

www.investhk.gov.hk Hong Kong