Hong Kong continues to be the top choice of location for overseas and Mainland China companies to manage their regional businesses, according to annual survey jointly released by Invest Hong Kong and the Census and Statistics Department (C&SD) in October 2008.

According to the results of the “2008 Annual Survey of Companies in Hong Kong Representing Parent Companies Located outside Hong Kong” conducted by the C&SD, Hong Kong was host to 6,612 overseas and Mainland China companies representing parent companies located outside Hong Kong, as at June 2, 2008. This represents an increase of 2.7% from 2007. 3,882 of these companies served as regional headquarters or offices.

Mr. Mike Rowse, Director-General of Investment Promotion welcomed the results. He said, “The figure of 6,612 companies is an all-time high. This is a strong vote of confidence in Hong Kong's role as Asia's leading business hub.

“In recent years, two emerging trends have further strengthened Hong Kong’s status as a regional and even international hub: more multinationals have upgraded their Hong Kong operation by adding regional and even global responsibilities, while more and more Mainland companies have established local offices here to capture the business opportunities Hong Kong has to offer.”

“We at Invest Hong Kong cannot and will not be complacent. The competition is getting stronger in the region, so investors have more choices. Given the recent global financial difficulties and uncertain economic outlook, companies may delay overseas investments or even reduce the size of their operations. We therefore have to work even harder to attract and retain investors from all over the world,” Mr. Rowse added.

According to the survey, as at June 2, 2008, there were 1,298 regional headquarters (RHQs), 2,584 regional offices (ROs) and 2,730 local offices (LOs) in Hong Kong representing their parent companies located outside Hong Kong.

The United States topped the list of countries/territories with RHQs in Hong Kong (311), followed by Japan (238), and the United Kingdom (119). The major lines of business of RHQs were wholesale, retail and import/export trades; business services (excluding information technology); and transport and related services. They employed some 142,000 persons in Hong Kong.

The United States also topped the list of countries/territories with ROs in Hong Kong (612), followed by Japan (494) and the United Kingdom (234). The major lines of business of ROs were wholesale, retail and import/export trades; business services (excluding information technology); and finance and banking. They employed some 97,000 persons in Hong Kong.

The mainland of China topped the list of countries/territories with LOs in Hong Kong (499), followed by the United States (452) and Japan (440). The major lines of business of LOs were wholesale, retail and import/export trades; finance and banking; and business services (excluding information technology). They employed some 131,000 persons in Hong Kong.

Key favorable factors affecting the choice of Hong Kong as a location for RHQ/RO/LO (in descending order of favorableness rating) are:
(1) Simple tax system and low tax rate;
(2) Free flow of information;
(3) Absence of exchange controls;
(4) Corruption–free government;
(5) Communication, transport and other infrastructure;
(6) Free port status;
(7) Political stability and security;
(8) Geographical location;
(9) Rule of law and independent judiciary;
(10) Availability of business services and professional support services.

For purpose of the survey, a regional headquarters is defined as an office that has managerial control over offices in the region (i.e. Hong Kong plus one or more other places) on behalf of its parent company located outside Hong Kong. A regional office is an office that coordinates offices and/or operations in the region (i.e. Hong Kong plus one or more other places) on behalf of its parent company located outside Hong Kong while a local office (LO) is an office that only takes charge of the business in Hong Kong (but nowhere else) on behalf of its parent company located outside Hong Kong.