Getting to Know the Asian Tigers – Hong Kong

By Michael Jones (michael.jones@tsiglobalconsulting.com)

The second of the 4 Asian Tigers that we will be discussing in this blog series is Hong Kong.  This tiny East Asian nation can often seem like an enigma to those who are unfamiliar with its systems: despite today being administrated by the more controlling regime of Mainland China, Hong Kong still strongly adheres to its heritage as a capitalist, free-market city put in place by the British more than a century ago.  However, regardless of any confused westerners in its way, Hong Kong has continued to skyrocket in recent years in its economy.  Hopefully, by familiarizing oneself with the economy and political systems in place, one can take advantage of this growth and turn a business opportunity with Hong Kong into a profitable enterprise.

First of all, let’s talk about perhaps the most important question surrounding Hong Kong’s viability as an international partner: its relationship with China, and how much control that government exerts.  In 1997, Hong Kong was turned over to the Chinese government by the British, ending its rule over the are since the Opium Wars in the 1840s.  At the time, it was decided that Hong Kong would be adopted into China under the system of “One Country, Two Systems”.  This system mandated that Hong Kong keep its unique capitalist system while the mainland continued to operate under socialism for a period of 50 years (until 2047).

Since this policy was implemented and Hong Kong returned to the administration of China, the Communist Party has largely respected the autonomy of Hong Kong’s economy and politics, notably, by not implementing the same internet censorship present on the mainland.  However, it is very important to note that, while official censorship does not occur in Hong Kong, the Communist Party has been known to exert strong indirect pressure against its critics in order to prevent certain opinions from being expressed.  While most working in Hong Kong will never experience this kind of problem, it would be advantageous to anyone to screen their business partners: doing so could prevent you from taking heat from the government if your partner is strongly anti-China.

Aside from this indirect pressure, the only other thing that one might have to fear about interference from China in terms of doing business in Hong Kong would be the expiration date for the “One Country, Two Systems” experiment.  Those working in very, very long term industries may see a move towards more censorship and restrictions as that date ticks ever closer, and only time will tell as to what kind of plitical climate will emerge when it arrives.  However, the possibility of a drastic shift away from Hong Kong’s laissez-faire capitalism seems very unlikely, as the Chinese government is making so much money off of their experiment that it is being implemented in other parts of China as well.  For anyone who is interested in working in Hong Kong, government intervention would not likely be a problem.

So what other things does one need to know before building a partnership with Hong Kong?  Well, fortunately, it’s mostly just positives from here on in.  Hong Kong has a  very developed infrastructure, and its ports serve as some of the most important trading hubs in the world, making it easy for one to bring goods made in Hong Kong (or in any other Asian market, for that matter) to consumers in the west.  Another plus for Hong Kong is its Economic Freedom Ranking, which is currently pegged as the most free economy in the world.  You read that right, Hong Kong rates in at a staggering 89 out of 100 in an average of all categories (including Trade, Property Rights, and Investment Freedoms), meaning that the main Hong Kong government itself (not necessarily the Chinese government, as discussed above) will seemingly bend over backwards to ensure that your business goes smoothly.

Lastly, what are some of the key areas that one can benefit in while working in Hong Kong?  According to the Government of Hong Kong, the 4 main areas that are being developed are Trading/Logistics, Tourism, Finances, and other Service Industries.  Indeed, the service industry market in Hong Kong is particularly notable for its growth in recent years, clocking in at around 3%.  While exports and physical goods are growing slower, they are still worth mentioning due to the previously mentioned infrastructure benefits of work in Hong Kong.

For TSI Global Consulting, Hong Kong is one of the most unique challenges that we’ve seen in the international market.  While it does have great promise, one should always have someone more familiar with the regulations by their side before starting work in this Asian Tiger.  Give TSI Global Consulting a call at 210-757-0618 for a consultation about how you can start today.

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