2007 SCoRPP. 1

2007 Annual Survey of Companies in Hong Kong

Representing Parent Companies

Located outside Hong Kong

2007 SCoRPP. 2

(i) Survey conducted annually since early 1990s: Covers RHQs and ROs(ii) Since 2001: Also covers LOs(iii) Since 2004: Also collects views of LOs(iv) Since 2006:

Survey name revised Definitions of RHQ, RO and LO revised

Background

2007 SCoRPP. 3

(i) To enumerate number of RHQs, ROs and LOs in HK representing parent companies located outside HK(ii) To obtain basic information of these companies(iii) To seek their views on HK as a location for setting up RHQs/ROs and LOs

Survey Objectives

2007 SCoRPP. 4

Covers companies in HK taking charge of business/operations in HK or in the region on behalf of parent companies located outside HK

Reference date: 1 June 2007

Survey Coverage

2007 SCoRPP. 5

How is a company classified as an RHQ, RO or LO?

Taking charge of

business/operations on behalf of

its parent company

located outside HK?

Non-RHQ/RO/LO

No

Yes Geographical responsibility?

LO

HK only

RHQ

Yes

In the region

Any managerial control over offices in the

region?

RO

(i.e. only coordinates offices and/or operations in the region)

No

2007 SCoRPP. 6

100

200

300

400

500

600

USA Japan UK MainlandChina

RHQ

RO

LO

0

937%

12410%

23219%

29824%

1526%

2238%

51620%

59322%

48019%

1636%

43117%394

15%

Country/Territory of Location of Parent Companies

No.

of c

ompa

nies

2007 SCoRPP. 7

500

1 000

1 500

2 000

2 500

MainlandChina

Taiwan Singapore Korea Thailand

RHQ

RO

0

38431%

39231%

47438%

52242%

1 08987%

65425%

69226%

80030%

99538%

2 17682%

Geographical Responsibility of RHQs and ROs in the Region (other than HK)

No.

of c

ompa

nies

2007 SCoRPP. 8

250

500

750

1 000

1 250

1 500

RHQ

RO

LO

0Wholesale,

retailand I/E trades

Businessservices

(excl. IT)

Financeand banking

ManufacturingTransportand related

services

917%

19816%

64952%

12210%

1139%

2118%

135751%

47418%

29811%

883%

673%

51820%424

17%

96438%

26410%

No.

of c

ompa

nies

Major Line of Business of RHQs, ROs and LOs

2007 SCoRPP. 9

250

500

750

1 000

1 250

1 500

RHQ

RO

LO

0Manufacturing Wholesale,

retailand I/E trades

Financeand banking

Businessservices

(excl. IT)

Transportand related

services

14211%

12310%

50741% 419

34%

12210%

2359%

33213%

94036%

100938%

2058%

28111%

66126%

71928% 579

23%

2219%

Major Line of Business of Parent Companies

No.

of c

ompa

nies

250

500

750

1 000

1 250

1 500

RHQ

RO

LO

0Wholesale,

retailand I/Etrades

Businessservices(excl. IT)

Financeand banking

ManufacturingTransportand related

services

917%

19816%

64952%

12210%

1139%

2118%

135751%

47418%

29811%

883%

673%

51820%424

17%

96438%

26410%

No.

of c

ompa

nies

2007 SCoRPP. 10

Views on Importance of Factors for Choosing Location for Setting up RHQs/ROs and LOs

*In descending order of importance

RHQs/ROs*

1. Low and simple tax system2. Free flow of information3. Corruption free government4. Absence of exchange controls5. Rule of law and independent judiciary

6. Political stability and security

LOs*

1. Low and simple tax system2. Free flow of information3. Corruption free government4. Political stability and security5. Absence of exchange controls

6. Rule of law and independent judiciary

2007 SCoRPP. 11

FactorFavourable Unfavourable

Views on Favourable Factors for HK as a Location for Setting up RHQs/ROs

• Low and simple tax system

• Free flow of information

• Absence of exchange controls

• Corruption free government

• Communication, transport and other infrastructure

68%

67%

64%

64%

63%

1%

<0.5%

1%

<0.5%

1%

2007 SCoRPP. 12

FactorFavourable Unfavourable

Views on Unfavourable Factors for HKas a Location for Setting up RHQs/ROs

• Availability and cost of residential accommodation

• Availability and cost of business accommodation

16%

20%

28%

28%

2007 SCoRPP. 13

FactorFavourable Unfavourable

Views on Favourable Factors for HK as a Location for Setting up LOs

• Low and simple tax system

• Free flow of information

• Absence of exchange controls

• Corruption free government

• Free port status

64%

61%

59%

59%

58%

<0.5%

1%

1%

1%

<0.5%

2007 SCoRPP. 14

FactorFavourable Unfavourable

Views on Unfavourable Factors for HKas a Location for Setting up LOs

• Availability and cost of residential accommodation

• Availability and cost of business accommodation

16%

20%

24%

24%

2007 SCoRPP. 15

Views on Overall Business Environment in HKas a Location for Setting up RHQs/ROs and LOsDeteriorated

6%

No comment 17%

Improved 29%

Same 49%

Deteriorated 5%

No comment 19%

Improved 29%

Same 47%

RHQs/ROs LOs

Comparing June 2007 with June 2006

2007 SCoRPP. 16

Views on Effect of CEPA Implemented since January 2004 on RHQs/ROs and LOsVery much beneficial

3%

Negatively affected

1%

To some extent

beneficial27%

Not affected

52%No

comment17%

RHQs/ROs LOsVery much beneficial

3%

Negatively affected

1%

To some extent

beneficial23%

Not affected

54%No

comment19%

2007 SCoRPP. 17

EffectNo comment

17%

No73%

Yes10%

Setting up new

business expansion

plans

Advancing business

expansion plans

Views on Effect of CEPA on Investment Activities of RHQs/ROs and LOs Whether investment activities affected ?

No comment

20%Yes8%

No73%

RHQs/ROs LOs

2007 SCoRPP. 18

2007 Annual Survey of Companies in Hong Kong

Representing Parent Companies

Located outside Hong Kong