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Hong Kong - Gateway to China

Hong Kong is known to be the world class special administrative region of China which had remained a British Colony for more than one fifty years.  This place now has a really strong economy due to which it is known to be in a map of the best business and trade centers of the world.  It was in the year 1997 when Hong Kong became a part of China.  The government of China promised that  Hong Kong will be administrated with the “one country two systems” formula in which Hong Kong will have its own autonomy in all matters except that of the defense and foreign affairs until the year 2046.

In the year 2008, the economy of Hong Kong was greatly hit by the global economic crisis but a good thing was that it started to improve during the 2nd quarter of the year 2009. Retail sales were dropped by 3.4 percent in the year 2009 due to poor economic conditions.   The unemployment rate in the country has always shown an uptrend since the year 2008 but still there are signs of improvements in the business conditions.  Trading and logistics, tourism, professional services, financial services and other productive services are the four major pillars that have contributed in the development of the economic sector of Hong Kong.

Once the four pillars were strengthened, then Chief Executive planned some objectives in order to enhance the financial services sector. The major step taken regarding this was reinforcing the role of Hong Kong for producing Renminbi products and internationalizing the land currency.

In order to further strengthen the tourism industry, the government took steps in faclitating more mainland travelers and simplifying the market entry procedures as well as developing the emerging markets.  In order to open up new markets and expanding the existing ones, liberalization measures under the CEPA framework are opening.  Six more industries in Hong Kong could be developed if more than one thousand industrial buildings are redeveloped or converted.  The Chief Executive proposed many reforms include lowering the sale threshold for redevelopment,  providing additional premiums of more than 20 million Hong Kong dollar through installments with a fixed interest rate for 5 years and going to the Taylor-made leasing options.

Hong Kong sure has a market that is much attractive for the foreign direct investment.  After China, Hong Kong is considered to the 2nd largest FDI recipient and the world’s 7th largest in attracting investment of almost 63 billion USD in the year 2008.  Despite of the economic crisis going on all around the globe, still this rate was increased by 16 % each year.

One contributing factor in the increase of direct investment was the indirect channeling of capital from non-operating firms.

Hong Kong and the Chinese Mainland have great relations.  Hong Kong is known to be the most important enter port in China.  Almost 17 percent of the foreign trade of the mainland is handled through Hong Kong.  It is known to be the 3rd largest trading partner of the mainland after the United States of America and Japan. Furthermore, it is known to be the largest sources of foreign direct investment in the mainland.

By October 2009, 7 licensed banks and 6 representative offices incorporated by the mainland were established in Hong Kong. Other than this major lenders such as the Bank of China, Agirucltural Bank of China,  Industrial And Commercial Bank Of China and China Construction Bank have also opened their branches in Hong Kong.  Representative offices of the Shenzhen Development Bank, Shanghai Pudong Development Bank and the China Everbright Bank are also there in Hong Kong.

Many of the regional headquarters and representative offices of the multinational companies are there in Hong Kong.  It is also a significant banking and financial center of the Asian Pacific.  200 licensed banks and 71 rep offices were established in Hong Kong by the end of the year 2008.  The Bank for International Settlements says that Hong Kong is the 3rd largest foreign exchange market in Asia and the 6th largest in the world.

As Hong Kong has a history of foreign trade and plenty of investment opportunities, it has become a center of attraction for many people from different countries to do business and trade here.  As the investment policies here were quite simple and liberal, this encourages a lot of foreign investment into the country.  In order to promote international trade, traffic and other regulatory measures were kept lenient.  Lower tax rates and the availability of an effective infrastructure is also one reason of promotion of investments.

Plenty of workforces are found in the country because people here have a really strong entrepreneurial spirit. Many of the direct investments are made in Hong Kong just because of the fact that China is the parent economic power behind the country.

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