For many years the renowned financial success of Hong Kong has been linked to its close economic ties with mainland China, its geographic location and shared culture. But as China’s economic strength and international presence on the world stage continues apace, will Hong Kong continue to benefit from those ties? Will its status as a pre-eminent international financial centre for channelling foreign investment into China and the wider region continue? Hong Kong has repeatedly shown its ability to bounce back from periods of uncertainty, going back as far as the run up to the handover in 1997, the Asian financial crisis of the late 1990s and the more recent social unrest and, of course, its broadly successful handling of the Covid pandemic. Added to the current mix is the deteriorating relationship with the US, exemplified by the US-China trade war and the more combative rhetoric of President Joe Biden.
There is a case for saying, perhaps ironically, that Hong Kong could be an unexpected beneficiary of the current frosty Sino-US relations. The attractions for Chinese businesses seeking a US stock market listing have diminished following recent interventions by Chinese regulators into the operations of US-listed Chinese tech companies, as well as the US sanctions against Chinese companies listed in the US. There is a clear trend developing, which could strengthen in the coming months, for Chinese companies to look to their closest neighbour in order to raise capital instead of using overseas and particularly US exchanges. This may well have the beneficial knock-on effect of encouraging non-Chinese international firms also to seek Hong Kong listings in preference to the New York Exchange.
Recent research by one of the “big four” accounting firms noted that although the number of Hong Kong stock market listings declined in 2020 when compared to 2019, the actual amount of capital raised through IPOs increased year-on-year by 26% at almost HK$400 billion (approx US$51.3 billion). If the US administration continues its current uncompromising approach to China, this trend could very well continue.
As described above, Hong Kong has an opportunity to consolidate its place in the international financial world through its close links to China. When the world wants to tap into this vast and still growing market, rather than set up directly on the mainland, the jurisdiction of choice remains Hong Kong.
Hong Kong stands to play a key role in China’s Belt and Road Initiative as it is one of the principal cities in the Greater Bay Area (which includes Macau, Shenzhen, and Guangzhou) comprising a population of more than 70 million. This initiative will see enormous investment from throughout the world, coordinated by China, with the aim of integrating both the physical and digital development of the GBA, unleashing tremendous potential for Hong Kong.
Additionally, in the latter part of this year the Regional Comprehensive Economic Partnership (“RCEP"), the world’s largest free trade agreement, will come into effect. The mostly ASEAN nations which have signed up to RCEP will enjoy lower tariffs, simplified rules and procedures, and better market access for products produced by them in RCEP member countries. Again, Hong Kong is well placed to maintain and expand its historic role as a significant trade and financial player in the Asia Pacific region.
Despite its business-friendly environment, those unfamiliar with the Hong Kong’s trading procedures and requirements would be well advised to engage the services of a trade or treasury services partner like A-PASS. This is particularly relevant in these still unpredictable post-Covid times and the ever present need to control overheads.
'In the area of more general corporate services, A-PASS can handle a wide range of tasks for clients including local regulatory requirements, financial and tax reporting, work visas, compliance, payroll management and HR administration. Setting up operations in a new location can be daunting but working with a local expert provider like A-PASS with its long experience will help streamline the whole process. We have a practical approach to helping our clients allowing them to choose which of our services we provide to them without a “one size fits all” approach. This is highly appreciated by our clients,’ says Robin Harris, A-PASS Hong Kong.
The range of services provided by A-PASS allows its clients to operate their businesses in an efficient and cost-effective way, which we believe is infinitely preferable to setting up their own office.
'Our clients want to focus almost exclusively on developing their business and taking full advantage of their new location. Our clients can concentrate on macro issues such as business strategy, keeping a check on cash flows and maintaining good trading relations with suppliers, while we handle the routine back-office tasks such as compliance, payroll, accounts preparation, financial and tax reporting and the multitude of distractions which come with running a business,' explains Fiona.
With opening bank accounts being such a problematic process these days, A-PASS’s relationships with a network of banks and financial institutions can help our clients source and establish trade credit and insurance for their business transactions.
A-PASS provides all the necessary services to establish and manage a trade finance operation, including the establishment of the trading entities themselves and general advice on trading practice and processes. We can also provide order processing, logistics management, trade documentation, and transaction monitoring services.
'Hong Kong remains a jurisdiction that is ideally situated as a stepping stone in and out of China. RCEP will have a far-reaching impact on the Asia-Pacific Region. We expect to see more interest in Hong Kong based entities eager to take advantage of these opportunities which we believe will arise with the advent of RCEP and the continuing growth of the Chinese economy,' adds Robin in conclusion.