Hong Kong remains a magnet for overseas and Mainland businesses while its start-up ecosystem and fintech sector are rapidly developing, according to three recent surveys carried out by InvestHK.
The 2018 Annual Survey of Companies in Hong Kong with Parent Companies Located Outside Hong Kong – jointly conducted by InvestHK and the Census and Statistics Department – found that the number of such business operations climbed 6.4% to 8,754 in 2018. Of these, 1,530 were operating as regional headquarters, 2,425 as regional offices and 4,799 as local offices.
The number of regional headquarters in particular showed robust growth of 8.3%, highlighting the key role Hong Kong plays for many businesses across Asia.
In terms of jobs, the number of people engaged by these companies reached an all-time high of 485,000, compared to 443,000 in 2017. Mainland China ranked first as a source location, with 1,591 companies, followed by Japan (1,393), the United States (1,351), the United Kingdom (712) and Singapore (427).
The survey also collected views on the attractiveness of Hong Kong as a location. Favourable factors noted by respondents included our simple tax system and low tax rate, free flow of information, free port status and geographical location.
“Hong Kong continues to attract and retain leading overseas and Mainland companies, as well as entrepreneurs from around the globe setting up leading-edge and innovative businesses,” said Stephen Phillips, Director-General of Investment Promotion at InvestHK.
“Factors that attract world-class investment include Hong Kong’s strategic position in the region as well as its international status as a sophisticated business and financial city with a business-friendly environment. Companies are increasingly seizing new opportunities arising from the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area development.”
Start-ups are also finding a home in Hong Kong. InvestHK’s 2018 Annual Start-up Survey found rapid growth, with 2,625 start-ups operating in major public and private co-working spaces and incubators, up 18% compared to 2017. Altogether, these start-ups employed 9,548 people, a 51% rise on 2017.
More than one-third of the founders of these companies came from outside Hong Kong, including the U.K., U.S., Mainland China and Australia.
Major sectors in the start-up area included fintech (16%), followed by e-commerce/supply chain management/logistics technology (11%), professional or consultancy services (11%), and information, computer and technology (10%).
“Hong Kong’s start-up ecosystem has skyrocketed in the last few years,” Phillips said. “The start-up community is also highly international, with 35% of founders coming from outside Hong Kong.”
InvestHK’s 2018 Fintech Study revealed the latest developments in the local fintech sector. There are now more than 550 fintech companies in Hong Kong, which form part of a growing ecosystem that also includes three innovation sandboxes and six fintech accelerators.
With its large financial sector, and as home to the regional headquarters of many global corporations, Hong Kong acts as a landing pad for fintech companies eyeing regional expansion in Asia, and as a launch pad for Mainland fintech businesses seeking to grow internationally.
Fintech initiatives introduced recently in Hong Kong include the Faster Payment System and common QR code. New rules for dual-class listings will also make it easier for technology companies to list in Hong Kong.
Meanwhile, developments such as blockchain for trade finance, the Fast Track Scheme for Insurers, and the Open API Framework in the banking sector reflect the expansion of fintech across a range of industries.
“We are very heartened to see the results of these surveys, which confirm the Chamber’s belief that Hong Kong is the best place in the world to do business,” said Chamber Chairman Aron Harilela. “The growth in the number of outside companies setting up here shows that Hong Kong continues to lead the way as the commercial heart of Asia.”
Chamber CEO Shirley Yuen said that the development of Hong Kong’s start-up and fintech sectors was particularly welcome.
“A leap of more than 50% in the number of jobs being created by start-ups is certainly something to shout about,” Yuen said. “But we are always mindful of Hong Kong’s manpower challenges. We also need tech talent – both homegrown and overseas – to fill these roles. This means targeted training and education, and ensuring that the systems are in place to import skilled workers where required.”