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As at June 1, 2002, there were 948 regional headquarters and 2 171 regional offices in Hong Kong of companies incorporated outside Hong Kong, according to results of the 2002 Annual Survey of Regional Offices Representing Overseas Companies in Hong Kong released by the Census and Statistics Department today (October 31). The corresponding numbers as at June 1, 2001 were 944 for regional headquarters and 2 293 for regional offices.

The United States topped the list of countries with companies having regional headquarters in Hong Kong. A total of 233 American companies had regional headquarters in 2002. This was followed by Japan with 159 companies and the mainland of China with 96 companies.

The major lines of business of the regional headquarters in Hong Kong were wholesale, retail and import/export trades; and business services. Other major lines of business included finance and banking; transport and related services; and manufacturing.

Japan topped the list of countries with companies having regional offices in Hong Kong. A total of 471 Japanese companies had regional offices in 2002. The United States was next, with 437 companies, followed by the mainland of China, with 170 companies.

The major lines of business for the regional offices in Hong Kong were wholesale, retail and import/export trades; and business services.

A Regional Headquarters is an office that has control over the operations of offices in the region (i.e. Hong Kong plus one or more other places), and manages the business without frequent referrals to its parent company outside Hong Kong.

A Regional Office is an office that coordinates offices/operations in the region (i.e. Hong Kong plus one or more other places), and manages the business but with frequent referrals to its parent company outside Hong Kong or its regional headquarters.

The 2002 Survey is the third one of its kind conducted by the Census and Statistics Department. The previous surveys were conducted by the ex-Industry Department on an annual basis beginning in 1990.

As from 2001, the coverage of the survey has been extended to include local offices in Hong Kong of companies incorporated outside Hong Kong.

The survey found a total of 1 748 local offices in Hong Kong as at June 1, 2002. The corresponding number as at June 1, 2001 was 1 230.

A Local Office is an office that solely takes charge of the business in Hong Kong on behalf of its parent company outside Hong Kong.

Japan topped the list of countries with companies having local offices in Hong Kong. A total of 296 Japanese companies had local offices in 2002. The mainland of China was next, with 290 companies, followed by the United States, with 272 companies.

The major lines of business for the local offices in Hong Kong were wholesale, retail and import/export trades; and business services.

Among the various factors relevant to the choice of location for setting up regional headquarters and regional offices, companies considered low and simple tax system as the most important factor. Other important factors included political stability and security; free flow of information; rule of law and independent judiciary; and corruption-free government. All these five factors were rated as favourable for Hong Kong as a location for setting up regional headquarters and regional offices.

Among the various factors for which Hong Kong were considered as favourable, low and simple tax system was regarded as a favourable factor for Hong Kong by the largest proportion of companies (74%). This was followed by absence of exchange controls (70%); free flow of information (67%); communication, transport and other infrastructure (66%); and free port status (66%).

Factors viewed as less favourable for Hong Kong by relatively larger proportion of companies included cost and availability of residential accommodation (43%); cost and availability of business accommodation (34%); and cost and availability of staff (31%).

About 54% of the companies considered that the overall business environment in Hong Kong as a location for setting up regional headquarters and regional offices was about the same or had improved compared with the previous year.

The Director-General of Investment Promotion at Invest Hong Kong, Mr Mike Rowse, said today: "I am delighted that the number of regional headquarters in Hong Kong has continued to increase, reaching another all-time high - despite the difficult economic situation regionally and internationally. Although the number of regional offices has dropped slightly, this is not surprising given the impact of such factors as the 9-11 incident, the economic downturn and corporate restructuring. Taken together, the increase in regional headquarters, the small decline in regional offices and the substantial rise in local offices are encouraging."

"The results of the survey once again indicate that Hong Kong's business environment and its fundamentals remain attractive to international investors. The favourable ratings given to the five most important factors - low and simple tax system; political stability and security; free flow of information; rule of law and independent judiciary; and corruption-free government - point to why Hong Kong remains the preferred location for regional operations in this region. Invest Hong Kong will strengthen its efforts to be responsive and proactive in communicating with prospective investors about the advantages and opportunities in Asia's World City," Mr Rowse added.

The survey was conducted to study regional headquarters, regional offices and local offices in Hong Kong of companies incorporated outside Hong Kong. While the survey reference date was June 1, 2002, fieldwork of the survey was mainly conducted within the two to three months thereafter.

The survey was first conducted in 1990 to identify regional headquarters and regional offices in Hong Kong. With such a long history, the survey frame should serve well in identifying regional headquarters and regional offices which are more likely to be prominent undertakings in Hong Kong with higher profile. On the other hand, local offices in Hong Kong, which are usually less prominent undertakings with lower profile, have only been covered as from the 2001 survey. Hence, the frame in respect of local offices is still undergoing continuous enhancement to a larger extent.

The Survey only covers companies in Hong Kong that manage the business in Hong Kong or in the region on behalf of their parent companies incorporated outside Hong Kong. It does not cover, for example, companies in Hong Kong which are funded by investment from outside Hong Kong, but manage the business in Hong Kong or in the region independently and not on behalf of the investors. Hence, the total number of regional headquarters, regional offices and local offices in Hong Kong does not represent all companies in Hong Kong with investment from outside Hong Kong.

More detailed results of the survey are set out in the "Report on 2002 Annual Survey of Regional Offices Representing Overseas Companies in Hong Kong". The report is now available for sale at HK$26 per copy.

The above publication and other publications of the Census and Statistics Department can be purchased in person from:

(i) Government Publications Centre, Ground Floor, Low Block, Queensway Government Offices, 66 Queensway, Hong Kong (Tel: 2537 1910); or

(ii) Publications Unit of the Census and Statistics Department, 19th floor, Wanchai Tower, 12 Harbour Road, Wan Chai, Hong Kong (Tel: 2582 3025).

Internet users may purchase the publications online at the "Statistical Bookstore, Hong Kong" (Address: http://www.statisticalbookstore.gov.hk) with payment made instantly. Softcopies of the publications purchased are available for immediate downloading while hardcopies purchased will be delivered by mail. Subscription to regular publications and advance ordering of upcoming releases are also available. The Statistical Bookstore is hosted on the ESD portal (Address: http://www.esd.gov.hk) together with other public services.

A mail order form for ordering or arranging subscription to hardcopies of publications is available in most publications of the Census and Statistics Department. It may be completed and sent back together with a cheque or bank draft covering all necessary cost and postage. The order form is also available for downloading from the website of the Department (Address: http://www.info.gov.hk/censtatd/eng/service_desk/forms_index.html).

Enquiries about the survey results may be directed to the Business Expectation Statistics Section of the Census and Statistics Department (Tel: 2805 6112).

End/Thursday, October 31, 2002

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