Key points in this article
- The challenge of doing business in Hong Kong
- Major industries like real estate
- The emergence of eCommerce and tourism
Special Administrative Region of China
Despite a relatively small population Hong Kong is the world’s ninth largest trading economy.
Hong Kong’s economy is underpinned by its financial sector, competitive logistics industry, low trade tariffs and taxation – making it a pivotal location in Asian Pacific trade.
Hong Kong’s free market approach and close trading relationship with Mainland China make for a vibrant economy.
Hong Kong has a free market economy and is highly dependent on international trade and finance. The territory has no import tariffs and imposes excise duties on only four commodities:
- hard alcohol
- hydrocarbon oil
- methyl alcohol.
Mainland China has long been Hong Kong’s largest trading partner, and accounts for around half its total trade value.
Hong Kong’s natural resources are limited – and food and raw materials must be imported. In the past decade, much of Hong Kong’s manufacturing industry has relocated to Mainland China, being replaced by a vibrant and rapidly growing service industry.
See the Department of Foreign Affairs and Trade’s (DFAT) website for a wider overview of Hong Kong.
Challenges of doing business in Hong Kong
Market research and building good relationships are vital to penetrating a saturated market like Hong Kong.
Research and understand the cultural nuances for doing business, such as the importance of developing long-term relationships.
The proximity of China
Take a greater China view when doing business in Hong Kong to access the second largest economy in the world.
Saturated market with limited local market data
There’s strong competition across all sectors of the Hong Kong market. Extensive market research to evaluate potential partners and suppliers is important for success, however accessing this information can be challenging.
It’s recommended that you build relationships with key partners, such as your bank, to access this critical information.
Build a solid personal network based on reciprocity or ‘guanxi’ in Chinese
Ensure you build strong relationships with your partners, suppliers and clients – particularly over food and drink as these are seen as important elements of doing business.
Commit for the long term
Hong Kong business people take a long-term view to business relationships, particularly as many businesses are family owned. It’s essential to maintain your networks and connections through the good times and the bad.
For more advice on doing business in Hong Kong, see the Australian Trade Commission’s (Austrade) site.
Cultural challenges will be some of the biggest obstacles when exporting to Hong Kong
Since Hong Kong’s manufacturing sector began relocating to Mainland China a decade ago, a range of service industries have rapidly grown to fill the void.
In addition to finance, there are four key industries in Hong Kong.
Real estate development and services
The real estate industry has been a key driver of the Hong Kong economy for over 30 years.
Imports and exports
Hong Kong’s free trade policy means there are no barriers to trade. It doesn’t charge tariffs on the import or export of goods – and licensing is kept to a minimum.
Wholesale and retail
There are over 68,000 wholesale and retail establishments operating in Hong Kong. The Hong Kong government has created a wholesale and retail taskforce whose terms of reference include reviewing government regulations and procedures, with the aim of minimising red tape for business.
The logistics and transportation sector contributes around 4% of the city’s GDP and accounts for around 5% of local employment.
The real estate industry has been a major one in Hong Kong over the past few decades
Hong Kong has positioned itself as an attractive destination for tourists and technology businesses.
While tourism is not a new industry in Hong Kong, it’s one of the fastest growing with year-on-year growth. Hong Kong – the city where east meets west – boasts a wealth of shopping, dining and entertainment attractions.
The city routinely hosts tourists, cruise passengers and conference delegates, with over 100 airlines operating around 1,000 flights daily. It’s forecast to become the world’s fifth most visited destination by 2020.
eCommerce has seen tremendous growth in Hong Kong due to favourable market conditions, increasing consumer acceptance, and comfort with shopping online. There’s strong government support for R&D initiatives.
Tourism and eCommerce are growing industries in Hong Kong
Australia's relationship with Hong Kong
Major Australian exports to Hong Kong
Fruit and nuts, gold, telecommunications equipment and parts, and meat.
For more information on specific importing and exporting industries in Hong Kong, see Austrade’s market profile of Hong Kong.
Hong Kong’s primary exports and imports
Hong Kong’s major global exports include electronics and household electrical appliances, clothing and footwear, textiles, yarns and fabrics.
Hong Kong’s primary global imports are machinery and equipment, manufactured goods and articles, chemicals, and mineral fuels.
See DFAT’s Hong Kong country and economy fact sheet for more detail on the island.
Operating as a free market, Hong Kong is an easier place to do business than some other Asia Pacific economies.
Additional regulatory considerations when doing business in Hong Kong are as follows.
Certificate of incorporation
You will need to certify your business name and be incorporated in Hong Kong. Generally, this is a quick online process.
Employee Compensation Insurance and Mandatory Provident Fund (MPF) Schemes
This is a critical step for doing business in Hong Kong. Private banks, such as ANZ, can help with setting these up.
Establishing your corporate seal and company rubber stamp