China invests in the world via Hong Kong

Hong Kong is often hailed the “gateway to China” for foreign investors – but doors open both ways, says our HK expert.

Recently rated the freest economy in the world by the Index of Economic Freedom for the 17th consecutive year, Hong Kong is certainly one of East Asia’s jewels. Among the world’s leading international finance centres, it offers investors low taxation, free trade and minimum government interventions.

And it’s not just foreign multinationals making the most of Hong Kong: there are almost 800 listed mainland enterprises on the Hong Kong Stock Exchange with a total market capital of US$1.76tn, and renminbi deposits in Hong Kong of 1,053bn. China, too, sees the gateway and is making the most of it.

Hong Kong is the prime jurisdiction for Chinese mainland businesses looking to expand into the international business community: around 60% of Chinese outbound investment was directed to or channelled through Hong Kong, says the Hong Kong Trade Development Council, adding that Hong Kong’s world class services providers play a crucial role in enabling cross-border deals and partnerships for Chinese enterprises. (http://www.hktdc.com/mis/coi/en/s/overview.html)

The volume of Chinese outbound investment has been growing substantially for almost a decade; in its 12th five-year plan, issued in 2011, the Chinese government target is a 17% average annual growth in outbound investment, reaching US$150bn by 2015.

Sectors of interest have traditionally been in the energy and metals markets, with finance a distant third. Today, as state-owned enterprises are no longer the only players going outbound, more and more Chinese mainland private enterprises are investing in industrial and manufacturing technologies, clean technology and new materials, distribution network, consumer brands and modern business solutions – they want to see what the world is up to, and ensure China remains competitive in the world market.

A launch pad to markets across Asia, as well as beyond, Hong Kong is one of the world’s largest trading economies and was ranked No 2 for both ease of doing business and trading across borders in the World Bank’s 2014 rankings.  Its regional openness and high level of internationalisation have contributed to its economic stability, creating an environment where Chinese and Western influences fuse – and thus providing the perfect gateway for traditional Chinese companies to meet the world.

On Wednesday 25 June we’re holding a webinar on doing business in Hong Kong with fellow experts from Digital River and Invest Hong Kong.

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