David Parker

Welcome to Hong Kong

Hong Kong: The Gateway to ChinaHong Kong’s Role in Growing Your Business in Asia

Riga, Latvia, Thursday March 29th 2012

About InvestHK

• Support for Latvian businesses to set up and expand in Hong Kong

• Our aim is for Latvian companies to make an informed choice and put the right part of your business in Hong Kong for the right reasons in order to be more competitive and make more profit

• Provide free advice and customized services to help Latvian businesses succeed

The Department for Foreign Direct Investment

Relevant

up-to-date

information

Facilitation of

set-up /

expansion

Matchmaking

and

networking

support

Public relations

support for

launch /

expansion

1. Three (3) Markets• Hong Kong > A dynamic consumer market• Hong Kong + Mainland China• Hong Kong + Asia

2. Business or Operational Functions - E.g.• Sales and Marketing• Research & Development• Sourcing and Procurement• Regional Office/Regional HQ Management• Treasury Functions

3. Low Tax… or No Tax

3 Markets, 3 Opportunities for Latvian Businesses

One Country, Two Systems

Hong Kong – Dynamic consumer market

• Free port – no import or export tariffs on most goods

• No sales tax – maximise consumer business opportunities

• Hong Kong loves to shop – total retail sales in 2010 at HK$324.9 billion, an 18.3% increase over 2009

• Maximise brand and product exposure to more than 40 million (and growing!) visitors to Hong Kong

• With over 28 million Mainland Chinese visitors, Hong Kong is the shop window for Mainland consumers

• World-class logistics, infrastructure and financial services to support and help develop consumer activities in Hong Kong and Asia

• Large pool of tri-lingual and capable talent with international experience to help your consumer business

• Hong Kong a testing ground before entering Mainland China – minimising risk

China’s Global Financial Centre

• Global leader in IPOs since 2009

• Asia’s asset management hub with funds

under management in excess of US$1 trillion

• First and largest offshore RMB platform –

handles 86% of China’s global RMB trade

• World’s largest securitised derivatives market

in 2011

• Home to 70 of the world’s 100 largest banks

• Pool of financial expertise (more CFAs than

anywhere else in Asia Pacific)

Ranking City

1 London

2 New York

3 Hong Kong

4 Singapore

5 Shanghai, Tokyo

7 Chicago

8 Zurich

9 Geneva

10 Sydney, Toronto

The Global Financial Centres Index (GFCI) 9, The

Z/Yen Group, March 2011

World Class ICT - Connecting People

• Ranked 4th in the world and 2nd in Asia in the Global Innovation Index Report INSEAD, 2009-2010

• Mobile phone penetration rate 193.2%OFTA Feb 2011

• 7th most e-ready economy in the world EIU 2010

• 3rd highest average broadband connection speedUS-based network provider Akamai Technologies

2009

Quality Education

• Home to Asia’s leading universities and business schools

– HKU 2nd and in the world’s Top 50

Times Higher Education World University Rankings 2011-12

– World’s Top eMBA in 2010: Kellogg - HKUST EMBA Programme

– MBA run by HKUST ranked 1st in Asia and 6th

in the world in 2011

Rankings by the Financial Times

• 48 international schools serving students of more than 30 nationalities

• World's busiest cargo airport

• Third busiest international passenger airport

• Connections to about 160 destinations worldwide

• 900 daily flights by over 95 airlines

• 23 minutes to Central Business District from Airport

• One hour from GPRD, the “factory of the world”

Heart of Asia and Gateway to China

Greater Pearl River Delta

• Exports would rank 7th globally

• GDP would rank 18th globally

• Population 55.26Mn > Spain, Canada• Exports US$387Bn > Italy, UK, Canada (more than 27% of China’s exports)• GDP US$665Bn > Indonesia, Sweden, Saudi Arabia• Land area 56,000 sq. km < Ireland, Panama (less than 1% of China’s land area)

“No other city in the world can help

overseas investors manage the risks inherent in entering Chinese Mainland markets as well as

Hong Kong”

Source: E.E. Scott, First Choice Hong Kong – Your Asia Pacific Platform

Hong Kong + China

Gateway to the Mainland

• Supporting China’s development

– Raising capital, upgrading corporate skills, international exposure, testing/tailoring products

• Leisure & business visitors

– 40+ million visitors in 2011, fuelling retail, leisure, hospitality sectors – 22.7 million from mainland China

• Closer Economic Partnership Arrangement (CEPA)

• Double Taxation Agreement

• RMB trade settlement, RMB Banking and RMB bond issue

China opportunities

Hong Kong + Asia Opportunities

Hong Kong: How to use the Hong Kong Advantage

Most common business activities by overseas businesses

• Sales and Marketinge.g. local and region sales and marketing operation to promote your

own products and services to international buyers

• Research & Developmente.g. HK Science Park, Cyberport, testing new retail product

• Sourcing and Procuremente.g. access of most dynamic exhibitions, fairs, and events to obtain newest products

• Regional Office/Regional HQ Managemente.g. location to manage Far East agents, suppliers and manufacturing

• Treasury Functionse.g. Regional or Global Financial and Foreign Exchange Management

• Level playing field for all

• No foreign ownership rules

• Rule of law, low corruption

• Freely transferable currency

• Freedom of information

• Advanced infrastructure

• Low tax … or no tax!

Hong Kong offers “Business Freedom”

Forbes Tax Misery Index 2009

Source: Forbes magazine

Hong Kong Singapore Mainland China

Corporate tax 16.5% maximum rate 17% maximum rate Standard rate = 25%High/New Tech Enterprises (HNTE) = 15%HNTE some regions 0%

Income tax 15% maximum rate(salaries)

20% maximum rate 5 - 45%

VAT/GST Nil 7%Certain exemptions apply

17%Certain exemptions apply

Income not

subject to tax

Offshore income; dividends; capital gains; tax exemption for interest income from deposits placed with authorised financial institutions

Certain remitted income; certain shipping income; certain Singapore dividends; prescribed income of foreign investors arising from certain funds; capital gains

All income subject to tax (certain preferential tax treatments for foreign-invested enterprises)

Withholding tax Nil for dividends, management fees, interest, rent5.25% for royalties

Nil for dividends10% for royalties15% for interest 20% for directors

10% for dividends 10% for royalties10% for interest 10% for capital gains

Hong Kong Low Tax Regime

Corporate Tax Cut to 16.5%; Income Tax Cut to 15%

InvestHK Sector Specialist Teams

• Business & Professional Service

• Consumer Products

• Financial Services

• ICT

• Innovation &Technology

• Creative Industries

• Tourism & Hospitality

• Transportation & Industrial

Enjoy our free services

• Latest information on business environment and opportunities

• Personalised service from our European Office in London

• Contacts for all aspects of business establishment

• Arranging tailored visit programmes hosted by InvestHK

• Support and assistance with visa applications, trade regulations etc.

• Public relations services during your launch/expansion

• Advice on settling in Hong Kong – housing, schooling, healthcare

Invest Hong Kong: how we can help

InvestHK London

David Parker+44 (0)207 290 8207

Gus Franklyn-Bute+44 (0)207 290 8209

www.investhk.gov.hk

Thank you!