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If you’re a Latin American company pondering international expansion, consider Hong Kong. For a long time, Hong Kong has been the number one spot for international business. An established reputation, few trade barriers, low tax and compliance costs and English as an official language have helped this small peninsula to attract foreign investment and business development from all over the world and to act as a gateway to other Asian countries.
Already compared to the historical port cities of New York City, Tokyo and San Francisco, the Guangdong–Hong Kong–Macao Greater Bay Area, also known as the Greater Bay Area (GBA), remains a premier location for international business, despite recent competition. Consider BusinessHub’s recommendations below when reviewing your options to enter the Asian market.
Why is Hong Kong so attractive to foreign entrepreneurs?
Important technology hub: In 2021, Hong Kong ranked 14th on the global list of most innovative economies, according to the Global Innovation Index (GII). Its innovation capabilities have increased continuously: there are over 57,000 high-tech enterprises in the area and about 780,000 patents registered. China is also supporting Hong Kong in building a batch of innovation platforms, including 16 State Key Laboratories, six branches of the Chinese National Engineering Research Centers, three national high-tech industrialization partner bases and two national-level incubators for science and technology companies.
Global connectivity: Hong Kong’s strategic location in the heart of Asia gives the territory unmatched access to some of the largest high-growth markets in the region via air, land, and sea travel.
Easy access: Hong Kong has visa-free entry for international visitors to access Guangdong province for periods ranging from 7 to 180 days.
Ease of Doing Business: Hong Kong has risen to the 3rd place in the World Bank Group’s latest Ease of Doing Business Ranking 2020, a jump from last year’s 4th place, with ease of dealing with construction permits ranked 1st, paying taxes ranked 2nd, and ease of starting a business ranked 5th, which contains two steps and can be finished in 1.5 days.
Robust legal system: As a Special Administrative Region of China, Hong Kong has a separate established legal system based on English common law. This coupled with advanced anti-money laundering legislation and a clear regulatory framework makes doing business simpler than it would be through a direct investment in China.
Strong corporate structures: A Hong Kong holding company can be used as parent to a Chinese Foreign Investment Enterprise (FIE), as well as to structure other investments into the region. Using a holding company offers much higher security and flexibility to foreign investors.
Low taxes: The first 500.000 USD (2 million HKD) of assessable profits earned in Hong Kong are subject to Profits Tax at a reduced rate of 8.25%, while any part of assessable profits above this threshold are subject to the standard rate of 16.5%. This is considerably lower than the 25% Corporate Income Tax (CIT) rate in China and neither capital gains or income earned overseas are subject to tax in Hong Kong.
A world banking and payments hub: As a center of international finance and investment, Hong Kong has no shortage of payment services and solutions to manage your earnings. It's easy to set up and access multi-currency business accounts, saving significant amounts on currency conversion. Hong Kong has over 160 banks with a population of 8 million people, which brings a lot of competition and alternatives for foreign investors.
World-class infrastructure: Hong Kong provides some of the most advanced business infrastructure in the world. The city is easily accessible with one of the world’s most efficient and affordable public transport systems.
All these benefits make Hong Kong a platform to access other countries in Asia, especially in the South East Asia region. Hong Kong attracts business from all over the world, particularly now as global investments are moving to the region, a leader in global development and growth.
Facilitating Business Between Hong Kong and Latin America
At BusinessHub, we work closely with Invest Hong Kong, the Hong Kong Special Administrative Region (HKSAR) Government Department responsible for Foreign Direct Investment, helping them to partner with potential associates in Latin America.
This year, we have brought Invest Hong Kong to the Chile Fintech Forum (Chile), Web Summit Rio (Brazil) and Digital Bank Lima (Peru), where we had the chance to connect with Latin American companies interested in the digital and fintech markets of Asia. We also collaborated with Colombia Fintech to bridge opportunities in Hong Kong to businesses in the Latin American region. Hong Kong is equally interested in seeing how the technology markets are working and growing in Latin America, and identifying prospects for investment and partnership.
Trade Agreements
In Latin America, only Chile holds a Free Trade Agreement with Hong Kong. This FTA was implemented on November 29, 2014, with the addition of a chapter on Trade in Services on April 6, 2023. The Asian region is currently in negotiations with Peru, with the first round of dialogues launched in January 2023. The dialogue centers around topics from trade and investment to e-commerce and the business environment for small and medium-sized enterprises.
Conclusions
Hong Kong is a vibrant and promising economy in its own right, and also a stepping stone for foreign investors to reach South East Asia. Global connectivity, easy access for travelers, a robust legal system, strong infrastructure and low taxes are some of the factors that draw investors to choose the administrative region of Hong Kong as their headquarters to the main markets in Asia.
If you’d like to know more about trade opportunities and services available in Hong Kong, reach out to Verónica Medina, vmedina@investhk.com.hk, for a free consultation. We can help you connect with the best partners for business development overseas, and discover one of the strongest and most reliant economies in Asia.