Hong Kong continues to be the preferred base for international companies to oversee their regional operations. The number of regional operations and local offices in Hong Kong operated by overseas and Mainland companies reached its highest-ever level this year, according to the Census and Statistics Department’s 2006 Annual Survey of Companies in Hong Kong Representing Parent Companies Located outside Hong Kong.

There were 1,228 regional headquarters, 2,617 regional offices and 2,509 local offices in Hong Kong representing their parent companies located outside Hong Kong as at 1 June, 2006.

The United States topped the list of countries/territories with companies having regional headquarters in Hong Kong. In 2006, a total of 295 regional headquarters in Hong Kong represented their American parent companies. This was followed by Japan, with 212 companies, and the United Kingdom, with 114 companies.

The major lines of business of the regional headquarters in Hong Kong were wholesale, retail and import/export trades; business services; and transport and related services.

The United States also topped the list of countries/territories with companies having regional offices in Hong Kong. In 2006, a total of 594 regional offices in Hong Kong represented their American parent companies. This was followed by Japan, with 519 companies, and the United Kingdom, with 223 companies.

The major lines of businesses of regional offices in Hong Kong were wholesale, retail and import/export trades; business services; and finance and banking.

Mainland China topped the list of countries/territories with companies having local offices in Hong Kong, with 449 companies, followed by Japan with 437 and the United States with 391. The major lines of business of the local offices in Hong Kong were wholesale, retail and import/export trades; business services; and finance and banking.

In line with the trend observed in recent years, the report indicates that investors from traditional markets, including the United States, Japan and the United Kingdom, continue to see Hong Kong as the key strategic location to manage regional businesses. At the same time, Mainland companies continue to be the largest source of local offices in Hong Kong.

“The results demonstrate that Hong Kong’s traditional advantages – including a low and simple tax system, free flow of information, corruption free government and absence of exchange controls – are the most important reasons for investors choosing Hong Kong for the location of their regional operations,” said Mr. Mike Rowse, Director-General of Investment Promotion at Invest Hong Kong. “However, we cannot be complacent. We are well aware of the keen competition for investment in the region, and the need to continue to improve the business environment in Hong Kong to retain our leading position.”

Of the companies surveyed, many cited Hong Kong’s low and simple tax system, free flow of information, corruption-free government and absence of exchange controls as key considerations in establishing offices in the territory. Other factors include: communication, transport and other infrastructure, free port status, geographical location, availability of business services and professional support services, rule of law and independent judiciary, political stability and security, and availability of financial services.