THERE is no doubt that the Chinese market presents lucrative opportunities for Brisbane’s exporters, but with uncertainty surrounding the legal system and culture, Hong Kong provides a safety net to fall back on.
InvestHK Australia investment promotion head Cameron Boardman says the city not only operates with the familiar British legal system, but its low tax rates are among the best in the world.
“Rule of law is a major issue for those that can fall back on the Hong Kong legal system if events happen in China where they have legal issues - the other major thing is that there is a very low tax structure in Hong Kong so it’s a really attractive base for an international company and it’s probably a role model for the world,” says Boardman.
“You’ve got low company tax rates at 16.5 per cent and personal income tax at a maximum of 15 per cent, so this system creates a good foundation for companies to operate their international business from Hong Kong or base their headquarters there.”
And as an entry point to the Chinese economy Hong Kong is ideal, allowing companies to bypass the compliance rigmarole of dealing on the mainland.
“China remains a very difficult market for Australian companies to access. It has a complicated regulatory system that requires excessive compliance management which is prohibitive to most smaller and mid-sized companies, because of the time and resources required to meet Chinese Government regulatory standards,” says Boardman.
But Boardman says with Hong Kong all dealings are in English and there are no restrictions on foreign ownership of companies or capital.
“Chinese companies also use Hong Kong for this exact purpose as it is immensely easier and less risky to set up in Hong Kong and manage mainland operations through Hong Kong.”
He says all the factors such as the legal system, taxes, quality of staff, the language and infrastructure all add up, with its position making Hong Kong an ‘unrivalled location’.
“It’s an international gateway as well - Singapore would be its main competitor but Hong Kong is in an unrivalled location. There are people there that focus on Japan, Korea and it’s quite easy to travel through South East Asia.”
Boardman explains that it’s quite rare for businesses to base in Hong Kong just for the local market, but there is a large scope for financial and business service companies – in addition there are about seven million people which is a substantial market.
While there have been many misconceptions about China’s influence in Hong Kong and the challenges it may present, Boardman believes the Chinese government has been very helpful towards the city’s economy.
“There’s been a lot of support from the Chinese government in Hong Kong and contrary to belief they have kept it as an autonomous economy – what they’ve done is excelled Hong Kong’s position and it’s abilities.”
“Hong Kong has got a clean government – they’ve worked hard to stop corruption and they are ranked as one of the highest corruption-free economies in the world,” says Boardman.
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