Hong Kong Company Formation

Hong Kong company formation gives businesses exposure to a dynamic, expanding economy with a robust consumer market and excellent international trade characteristics. According to the United Nations Conference on Trade and Development (UNCTAD), Hong Kong is Asia's second-largest recipient of inward foreign direct investment (FDI) after China.

In the World Bank's Doing Business 2011 Survey, Hong Kong is the world's 2nd easiest place to do business. The survey measures factors includes procedures, time, cost and minimum capital required for company formation in Hong Kong.

According to the 2010 Report on Annual Survey of Companies in Hong Kong Representing Parent Companies Located outside Hong Kong" conducted by the C&SD, there were 6,561 overseas (including mainland China) companies with parent companies outside Hong Kong. The survey showed 3,638 of these companies served as regional headquarters or offices.

One of the most positive attributes for Hong Kong company formation is the openness of its economy. This is noted in the 2011 Index of Economic Freedom by The Heritage Foundation, which ranks Hong Kong's as having the world's freest economy. Entrepreneurs choosing Hong Kong company formation benefit from relaxed trade regulations, including low import and export tariffs to encourage international trade. Hong Kong is a member of the World Trade Organization (WTO), and also signed the Closer Economic Partnership Agreement with China.

Hong Kong is considered a low-corruption jurisdiction. For example, Hong Kong is positively ranked as the 12th least corrupt country in the 2011 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians.

Despite the points above, Hong Kong's inward FDI is expected to decline in the medium to long-term due to i) the rise of Shanghai as a more efficient alternative ii) the increasing Chinese influence in Hong Kong iii) the chronic air pollution triggering an expatriate exodus and iv) the declining standards of spoken and written English language. The American Chamber of Commerce of Hong Kong reported that 57% of its members would consider investing elsewhere because of the health problems related to Hong Kong's pollution. As evidence of this, the number of American expatriates living in Hong Kong has fallen by 21% to 28,320, since 1997. These negative factors could have a negative impact on the future appeal of Hong Kong company formation.