Invest Hong Kong said it was pleased to note that Hong Kong remained the preferred city in Asia for overseas and Mainland companies, according to the results of an annual survey released today (October 2). At the same time, the Department cautioned that more needed to be done to ensure Hong Kong’s continued competitiveness in the years ahead.

     “Once again, Hong Kong is one of the most preferred locations for overseas and Mainland companies managing their operations in Asia Pacific. According to the survey results, of the 6,440 companies in Hong Kong representing parent companies located outside Hong Kong, 3,890 are regional offices or headquarters. This is an all-time high,” said the Director-General of Investment Promotion, Mr Mike Rowse.

     “For us at Invest Hong Kong, there is no better advertisement for our city than companies which do their due diligence and select Hong Kong as their primary office in the region,” Mr Rowse added.

     Mr Rowse recognised that Hong Kong could not rest on its laurels. “We’re at the heart of a competitive, high-growth region and investors have more and more choices. What I’m hearing from the international chambers in Hong Kong and during my trips overseas is that Hong Kong has three key challenges ahead. We need to focus on the high cost of office premises, on improving our air quality and on increasing the number of international school places. The Government is aware of these problems and is working to address them.”

     The results are based on the "Annual Survey of Companies in Hong Kong Representing Parent Companies Located outside Hong Kong" conducted by the Census and Statistics Department of the Hong Kong SAR Government.

     Mr Rowse emphasised the important role played by overseas and Mainland companies in Hong Kong. “Headquarters, regional offices and local offices together employ almost 346,000 people in Hong Kong, accounting for around one in 10 of our working population.”

     The Invest Hong Kong Director-General said he was also delighted to see the healthy growth trend over the past 10 years. “Since the handover in 1997, the number of regional headquarters and regional offices has increased by 55 percent. It’s certainly silenced a lot the critics who predicted the demise of Hong Kong a decade ago.”

     Mr Rowse added that the survey results provided invaluable information to better understand the factors that influenced investment choices. “We are committed to addressing these issues, both the positive and the negative, within the Government, and will continue to work closely with the international business community to facilitate their business operations in Hong Kong.”

Survey Highlights
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     The full survey report is available at: www.censtatd.gov.hk/products_and_services/products/publications/index.jsp
     As at June 1, 2007, there were 1,246 regional headquarters, 2,644 regional offices and 2,550 local offices in Hong Kong representing their parent companies located outside Hong Kong.

     The United States topped the list of countries/territories with regional headquarters (298), followed by Japan (232), and the United Kingdom (124). The major lines of business of regional headquarters were wholesale, retail and import/export trades; business services (excluding information technology); and transport and related services. They employed 131,347 people in Hong Kong.

     The United States also topped the list of countries/territories with regional offices (593), followed by Japan (516) and the United Kingdom (223). The major lines of business of regional offices were wholesale, retail and import/export trades; business services (excluding information technology); and finance and banking. They employed 94,803 people in Hong Kong.

     Mainland China topped the list of countries/territories with local offices (480), followed by Japan (431) and the United States (394). The major line of business of local offices were wholesale, retail and import/export trades; finance and banking; and business services (excluding information technology).  They employed 119,476 people in Hong Kong.

     Key favourable factors affecting the choice of Hong Kong as a location for regional headquarters/regional offices/local offices for foreign or Mainland companies were: (1) A low and simple tax system; (2) Free flow of information; (3) Absence of exchange controls; (4) Corruption–free government; (5) Communication, transport and other infrastructure; (6) Free port status; (7) Geographical location; (8) Availability of business services and professional support services; (9) Rule of law and independent judiciary; and (10) Political stability and security.
 
     Unfavourable factors for Hong Kong included the availability and cost of residential and business accommodation.

     Overall 78 percent of regional headquarters and regional offices considered that, comparing June 2007 with June 2006, the overall business environment in Hong Kong remained the same or had improved.  The corresponding figure for local offices was 76 percent.

Survey Definitions
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     A regional headquarters (RHQ) is defined as 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.

     A regional office (RO) is an office that coordinates 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.

     A local office (LO) is 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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     Owing to the lack of a complete survey frame, the number of RHQs, ROs and LOs represents only the best snapshot available at the time. Coupled with the voluntary nature of the survey, the continuous improvement in the survey framework and response rate, the survey results should be interpreted with care. However, it should be noted that since 2003, the survey has had a response rate of 98 percent or above.

     The survey only covers companies that manage business in Hong Kong on behalf of their parent companies located outside Hong Kong. It does not cover companies which are funded by investment from outside Hong Kong and manage the business in Hong Kong independently but not on behalf of the investors. Hence, the total number of RHQs, ROs and LOs in Hong Kong does not represent all companies with investment from outside Hong Kong.

     The survey results are published in greater detail by the Census and Statistics Department in the ‘Report on 2007 Annual Survey of Companies in Hong Kong Representing Parent Companies Located outside Hong Kong’. The publication is now available for download free of charge at: www.censtatd.gov.hk/products_and_services/products/publications/index.jsp).  Enquiries about the survey results may be directed to the Business Expectation Statistics Section of the Census and Statistics Department (Tel: 2805 6112).

Ends/Tuesday, October 2, 2007
Issued at HKT 14:00

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