The worldwide family office sector is booming, and Asia is dominating the charge. According to this Bloomberg article, the number of family offices founded in the Asia-Pacific region increased by 44% in the two years leading up to 2019, faster than every other region worldwide.
The concept of a family office has always been based on the safeguarding of one's wealth and legacy. While this is still a key component of a company's success, wealth expansion is becoming an increasingly important priority as well.
While Asia becomes a central focus for the demand for private wealth management services, Hong Kong emerges as the natural centre for the family office industry.
Christopher Hui, Secretary for Financial Services and the Treasury mentions these two sources are the main drivers of growth in family offices in the world, especially in Asia.
“First, entrepreneurs from China have quickly risen to become the world’s second largest billionaire group. A family office is the most effective structure for any ultra-high net worth family that wants to preserve and transfer wealth for the family over the longer term. In addition to the phenomenal wealth generation, the rapid growth of Asia’s family office segment has been driven by succession planning needs. Family offices are ideal vehicles for those looking at how best to preserve their wealth for generations to come.”
For decades, Hong Kong has been at the top of the world's rankings for economic openness. Aside from its renown thriving financial market, Hong Kong has a straightforward low-tax regime, a network of double-taxation agreements, strong regulatory measures, and a long track record of monetary stability.
Hong Kong has grown to become Asia's greatest cross-border private wealth management centre (and the second-largest globally). The rising family-office sector now employs over 263,000 individuals, or about 7% of the total workforce. Not to mention the Fintech sector in Hong Kong is also thriving, with a quick rise of start-ups and quick implementation of innovative technology by established financial institutions. New Fintech applications can help family offices identify and manage potential risks throughout their investment portfolio.
The city also has a geographic location advantage, found within the booming Greater Bay Area, one of China's most successful districts and home to one in every five of the country's high-net-worth households. Setting up a business in Hong Kong, as a leading international financial centre and wealth management centre, is simple, quick, and economical.
While Hong Kong's reputation as one of the world's best financial capitals is well-established, new developments have strengthened the city's status as a hub for family offices even more so. The city's Securities and Futures Commission modified its family office licensing standards in early 2020 to give businesses additional clarity.
With the government's strong support, the Family Office Association of Hong Kong was created in November 2020 to facilitate the industry's development. This was bolstered by new regulations aimed at making the working environment for family offices more appealing. The Limited Partnership Fund Ordinance 2020, for example, creates a stronger and more flexible legal environment for private capital by providing a profits tax exemption on the sale of securities for privately provided funds in Hong Kong.
The steps for establishing a family office or associated services in Hong Kong are pleasantly simple: after choosing a business type and naming your company, all you need now is to incorporate and register your company.
Want to build your family office in Hong Kong? Reach out to us at A-PASS here.