International Trade in Hong Kong SAR

News Related to International Trade in Hong Kong SAR

Business outline for Hong Kong SAR

Main Industry Sectors

Since the agricultural sector is almost non-existent, Hong Kong has to import 80% of its food supplies. Hong Kong does not have any natural resources and depends entirely on imports of raw materials and power. Agriculture contributes practically nothing to the economy.

The manufacturing Industry's contribution to the GDP is also very low. The country's main industrial sectors are textiles, electronic components and household appliances, computer technology and communications.

The tertiary sector, particularly financial services, is the heart of economic activity. It contributes around 90% of the GDP and employs about 80% of the active population. Hong Kong is a services center for Asian companies, especially those that trade with China. Additionally, the tourism industry is booming. mainly due to an exponential increase in the number of visitors from mainland China.

Economic Overview

After four years of maintained growth, the global financial crisis led the Hong Kong economy into recession during the third quarter of 2008. The recovery was nevertheless prompt and vigorous and in 2010 the economy resumed a trajectory of strong growth, especially thanks to the dynamism of exports, stimulated by the growth of China. In 2010, the growth is estimated at 6 %.

The government's priority is now to deal with the vertiginous rise in the real estate prices, which creates problems of social cohesion and access to housing. The announced measures seek to reduce the lever effect on bank lending, reduce speculation, increase the transparency of the market and expand the land available to developers.

The economic crisis has lead to the deterioration of the labor market, particularly in the financial services. However, the unemployment rate decreased to 4.4% in 2010 and should further decrease in 2011.

FDI in Figures

According to the €śWorld Investment Report 2010," published by the United Nations Conference on Trade and Development, Hong Kong has risen to the fourth position in the world for foreign direct investments (FDI) in 2009 and maintained the second place in Asia after China. 

The FDI fluxes, which have slowed down as an effect of the global recession, have again began to grow in 2010. This tendency will continue, due to the key role which the Asian reagion will play in global growth.

Hong Kong's attraction is due to a number of its strengths: its strategic position which makes the island the access gate to the Chinese market, its status as a free port, its simple and very incentive tax regime, its efficient infrastructure and legal security.

FDI Government Measures

Hong Kong is a free territory for investments, which are in fact encouraged by the government with a favorable taxation policy and light legislation. Foreign companies can be set up freely, register their brands and the Director of the company doesn't have to be a citizen nor resident of Hong Kong.

Country Strong Points

Hong Kong is an international leader in terms of export and as a services center. The country is also the bridgehead to one of the largest production bases in the world, China. Hong Kong has a sound economy and an efficient financial and banking system.
Favorable tax measures, the transparency of local institutions, political stability, freedom of information, availability of qualified human resources as well as its advantageous geographical location in Asia, all constitute to make Hong-Kong a preferred place for company establishment, as witnessed by the millions of companies registered on the territory. In 2003, the Capital Investment Entrant Scheme (CIES) was launched by the Hong Kong Special Administrative Region (SAR) Government. This scheme aims to facilitate the entry for residence for Foreign investors through capital investment into permissible assets without the need to establish or join in a business.

Country Weak Points

Hong Kong has few, yet  consequential, negative points against setting up:
- High cost of real estate and work space (offices, shops,etc.);
- High cost of salaries, compared to other Asian countries such as Mainland China and India;
- The question of Hong Kong's future, especially when the town will be completely integrated with the People's Republic of China;
- The excessive importance of the financial sector.
Furthermore, on the whole of the 2008-2009 year, the Hong Kong stock market was highly disturbed. The stock market's main indicator fell by 45%, the lowest in 34 years.

Foreign Trade Overview

Hong Kong's economy is considered a model of capitalism because of its dedication to free trade.Trade represents more than 400% of the GDP. Hong Kong belonge among the fifteen top exporters of trade services and the first fifteen trade-based economies in the world.

Foreign trade was pursued intensively during these past years. Structurally in a deficit, the trade balance of Hong Kong has worsened due to the quicker rise in imports.

The island's main trade partners are China, Southeast Asia and Japan.