Gus Franklyn-Bute

Welcome to Hong Kong

Hong Kong: The Gateway to ChinaHong Kong’s Role in Growing Your Business in Asia

About InvestHK

• Support overseas, Mainland and Taiwanese businesses to set up and expand in Hong Kong

• Our aim is for companies to make an informed choice and put the right part of your business in Hong Kong for the right reasons in order to be more competitive and make more profit

• Provide free advice and customized services to help your business succeed

The Department for Foreign Direct Investment

Relevant up-to-date

information

Facilitation of set-up /

expansion

Matchmaking and

networking support

Public relations

support for launch /

expansion

1. Three (3) Markets• Hong Kong > A dynamic consumer market• Hong Kong + Mainland China• Hong Kong + Asia

2. Business or Operational Functions - E.g.• Sales and Marketing• Research & Development• Sourcing and Procurement• Regional Office/Regional HQ Management• Treasury Functions

3. Low Tax… or No Tax

3 Markets, 3 Opportunities for Estonian Businesses

Hong Kong – Dynamic consumer market

• Free port – no import or export tariffs on most goods

• No sales tax – maximise consumer business opportunities

• Hong Kong loves to shop – total retail sales in 2010 at HK$324.9 billion, an 18.3% increase over 2009

• Maximise brand and product exposure to more than 36 million (and growing!) visitors to Hong Kong

• With over 22 million Mainland Chinese visitors, Hong Kong is the shop window for Mainland consumers

• World-class logistics, infrastructure and financial services to support and help develop consumer activities in Hong Kong and Asia

• Large pool of tri-lingual and capable talent with international experience to help your consumer business

• Hong Kong a testing ground before entering Mainland China – minimising risk

“No other city in the world can help

overseas investors manage the risks

inherent in entering Chinese Mainland markets as well as

Hong Kong”

Source: E.E. Scott, First Choice Hong Kong – Your Asia Pacific Platform

Hong Kong + ChinaGateway to the Mainland

• Supporting China’s development– Raising capital, upgrading corporate skills,

international exposure, testing/tailoring products• Leisure & business visitors

– 36 million visitors in 2010, fuelling retail, leisure, hospitality sectors – 22.7 million from mainland China

• Closer Economic Partnership Arrangement (CEPA)• Double Taxation Agreement• RMB trade settlement, RMB Banking and RMB bond

issue

China opportunities

Major Fund Raising Centre for Mainland Companies

Source: HKEx

439

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%38 50 53 64

90 101 111 127152

198242

304335

19931994

19951996

19971998

19992000

20012002

20032004

20050

50

100

150

200

250

300

350

400

# of companies%

# of companies

Mainland companies listed in Hong Kong

% of Market Capitalisation% of Equity Turnover

367

2006

60%

55% 450

2007

50065%

75%

70%550

600

2008

465

2009

542

Hong Kong + Asia Opportunities

RHQs / ROs / LOs in Hong Kong 2001 – 2010

4,4674,867

5,414

5,9436,272 6,354 6,440 6,612

6,397 6,561

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Year

No.

RHQs ROs LOs Total Source: C&SD

Hong Kong: How to use the Hong Kong Advantage

Most common business activities by overseas businesses

• Sales and Marketinge.g. local and region sales and marketing operation to promote your own products and services to international buyers

• Research & Developmente.g. HK Science Park, Cyberport, testing new retail product

• Sourcing and Procuremente.g. access of most dynamic exhibitions, fairs, and events to obtain newest products

• Regional Office/Regional HQ Managemente.g. location to manage Far East agents, suppliers and manufacturing

• Treasury Functionse.g. Regional or Global Financial and Foreign Exchange Management

• Level playing field for all

• No foreign ownership rules

• Rule of law, low corruption

• Freely transferable currency

• Freedom of information

• Advanced infrastructure

• Low tax … or no tax!

Hong Kong offers “Business Freedom”

Forbes’ Tax Misery Index 2009

Hong Kong Singapore Mainland China

Corporate tax 16.5% maximum rate 17% maximum rate Standard rate = 25%High/New Tech Enterprises (HNTE) = 15%HNTE some regions 0%

Income tax 15% maximum rate(salaries)

20% maximum rate 5 - 45%

VAT/GST Nil 7%Certain exemptions apply

17%Certain exemptions apply

Income not subject to tax

Offshore income; dividends; capital gains; tax exemption for interest income from deposits placed with authorised financial institutions

Certain remitted income; certain shipping income; certain Singapore dividends; prescribed income of foreign investors arising from certain funds; capital gains

All income subject to tax (certain preferential tax treatments for foreign-invested enterprises)

Withholding tax Nil for dividends, management fees, interest, rent5.25% for royalties

Nil for dividends10% for royalties15% for interest 20% for directors

10% for dividends 10% for royalties10% for interest 10% for capital gains

Hong Kong Low Tax RegimeCorporate Tax Cut to 16.5%; Income Tax Cut to 15%

InvestHK Sector Specialist Teams

• Business & Professional Service

• Consumer Products

• Financial Services

• ICT

• Innovation &Technology

• Creative Industries

• Tourism & Hospitality

• Transportation & Industrial

Enjoy our free services

• Latest information on business environment and opportunities

• Contacts for all aspects of business establishment

• Arranging tailored visit programmes

• Support and assistance with visa applications, trade regulations etc.

• Public relations services during your launch/expansion

• Advice on settling in Hong Kong – housing, schooling, healthcare

Invest Hong Kong: how we can help

InvestHK LondonGus Franklyn-Bute

+44 (0)207 499 9821www.investhk.gov.hk

Thank you!