Global corporations are starting to view Hong Kong as a prime location for their international headquarters, according to Simon Galpin, the director-general of investment promotion at InvestHK. At the other end of the scale, Hong Kong has also developed as a significant base for small and medium-sized enterprises (SMEs), and FDI into Hong Kong is increasingly being led by its SMEs, said Mr Galpin.
Hong Kong traditionally competed with places such as Singapore when marketing itself as a base for Asia-Pacific-related multinational operations, said Mr Galpin. However, international companies are starting to see Hong Kong as a main base for global operations.
“Hong Kong is not just used by the big multinationals as their base in Asia – it is increasingly used as a global headquarters for global activities,” said Mr Galpin. “So big companies such as General Electric, Schneider and Nissan have all put their global operations here in the past couple of years.”
Economic stagnation in European economies such as France, Germany and Spain have led Europe-based entrepreneurs to establish business operations in Hong Kong at an early stage of growth. “For many SME entrepreneurs, the fact that the eurozone economies are fairly flat means there are few tremendous opportunities for rapid growth within Europe,” said Mr Galpin. “That means that they need to look further afield. So a typical company that might have expanded from France to Germany, or from Spain to the UK, will now come straight to Asia at a much earlier stage than they would have done four or five years ago.”
To date, Hong Kong has maintained its reputation as one of north-east Asia’s foremost business hubs and, according to data from InvestHK, the total number of overseas and mainland China companies with operations in the city numbered 7250 in 2012. This was a 4.3% increase from the year before and, of these, 3883 companies established their regional headquarters in the city.
The influx of mainland Chinese companies in the city has also enabled Hong Kong to significantly increase its FDI stock. “We have been successful in attracting mainland Chinese companies that wish to go global,” said Mr Galpin. “They are a very strong source of projects for us. And 80% of these incoming projects are greenfield investments, while 20% are significant aftercare expansions.”
Traditional financial service providers, such as wealth and asset management firms, will enable this sector to remain as Hong Kong’s best performing industry, as will innovation in business. Although financial technology is a relatively niche industry still in its nascence, Mr Galpin maintained that this industry was expanding rapidly. This is partly down to InvestHK’s efforts in launching its StartmeupHK programme, designed to create an ecosystem that will support innovative companies.
“We were very encouraged by the beginning of StartmeupHK, which we launched a few months ago through a business plan competition called StartmeupHK Venture Programme,” said Mr Galpin. “We were expecting to get between 70 and 100 applicants, as we issued the competition on late notice. However we have received more than 380 applications from all over the world. So, financial technology will be an industry to watch. The ecosystem is developing for these innovative start-ups.”