Investment promotion in Hong Kong achieved positive results in 2006. During the year, Invest Hong Kong assisted 246 overseas, Mainland and Taiwan companies to set up or expand operations in Hong Kong. This represents a healthy six per cent growth compared to 2005, itself a record year.

Among the 246 companies, 30% related to Europe, 25% North America, 24% Asia-Pacific and 17% Mainland China. Consumer, retail and sourcing companies accounted for 16% of the total.

These 246 projects is expected to lead to the creation of over 7,835 jobs, including 3,092 jobs initially, followed by an additional 4,743 in the next two years as these companies expand. These companies invested more than US$1.31 billion (HK$10.24 billion) in 2006, up 15% compared to the previous year’s record total.

Director-General of Investment Promotion at Invest Hong Kong Mike Rowse said 2006 was another year of steady growth for investment promotion in Hong Kong. “The results suggest that Hong Kong remains a highly attractive location for overseas, Mainland and Taiwan companies to do business in the region,” he said.

“We are encouraged by the positive results. However, we must not be complacent as the competition in the region is keen,” added Mr. Rowse. “The Government is committed to understanding and addressing the needs of the international business community in Hong Kong. We recognize the importance of continuing to improve our investment environment so that investors will continue to find Hong Kong an attractive place from which to do business in Asia. And we at Invest Hong Kong will strengthen our effort to assist foreign, Mainland and Taiwan companies with the establishment and expansion of their businesses in our city.”

Hong Kong’s unique positioning as the gateway to China and the business hub of Asia has attracted companies from different industries to set up operations to access clients in the region. For example, the Chicago Mercantile Exchange opened its Asia Pacific regional headquarters in Hong Kong to increase the level of services to its Asian-based customers; Bayer MaterialScience opened its Asia Pacific headquarters in Hong Kong to oversee the regional management functions of its business and service units; and Methanex, the world’s largest producer and marketer of methanol, relocated its Asia Pacific marketing and logistics operation to Hong Kong.

In 2006, Invest Hong Kong completed 41 projects related to Mainland investments in Hong Kong, representing 17% of the total number of projects. This indicates that Hong Kong’s key role as a preferred base for Mainland companies to expand regionally and internationally for Mainland companies. For example, one of the largest Mainland-based law firms, Jun He Law Offices, established a Hong Kong office to expand its regional presence; famous traditional Chinese medicine company Tong Ren Tang opened a new R&D manufacturing plant in Tai Po; and Foshan Shipping set up its first overseas office in Hong Kong to offer a full range of services.

Since the implementation of Closer Economic Partnership Arrangement (CEPA) in 2004, Invest Hong Kong has been actively organizing or participating in seminars in North America, Europe and Asia Pacific to promote the benefits of setting up operations in Hong Kong under CEPA to potential investors. The department also measured CEPA’s impact on the companies’ investment decisions.

Out of the 246 investment projects completed in 2006, 61 companies indicated that CEPA was one of the factors considered in making the investment. Some 22 companies invested because of CEPA, while some of the 61 companies have accelerated their investment plans, and/or invested more capital or employed more staff as a result of CEPA. Similar levels of CEPA’s effect on investment have been recorded since it took effect at the beginning of 2004.

The number of regional operations in Hong Kong also reached new highs in 2006, demonstrating that Hong Kong remains the preferred base in Asia for foreign companies to oversee their regional operations.

In 2006, Invest Hong Kong had successfully attracted investments from different sectors including consumer products, retail, sourcing, financial services, tourism, catering, IT, technology, telecommunications, media and multimedia, professional services, transportation and manufacturing. Mr. Rowse said that, to help retain existing investors and to encourage their expansion in Hong Kong, Invest Hong Kong will reinforce its after-care services to these companies. These services may include, for example, providing relevant information, assistance with regulatory issues or finding places in international schools.

Mr. Rowse is optimistic about investment promotion outlook for Hong Kong in the coming year. “It is important that we retain and attract even more companies of strategic importance to Hong Kong,” he said. “These companies do not only bring along employment opportunities for our people, but also new skills and technologies, which are important for the long-term growth of our economy.

“Our target for this year is to achieve about 250 completed projects. To achieve this, our sector-focused teams will continue to identify, attract and assist investors in our priority sectors from various regions around the world. At the same time, we will also work closely with the local and international business community in Hong Kong and around the world,” concluded Mr. Rowse.