According to statistics recently released by Hong Kong’s Census and Statistics Department, during 2009 there were a total of 6,397 companies in Hong Kong that represented foreign parent companies; of these, 1,252 were regional headquarters (RHQs), 2,328 regional offices (ROs) and 2,817 local offices (LOs). Further analysis of these statistics by http://www.GuideMeHongKong.com reveals that the majority of the companies incorporated in Hong Kong had foreign parent companies from just five nations – USA, Japan, UK, mainland China or Taiwan.

The United States topped the list of countries with Regional Head Quarters (RHQs) in Hong Kong, followed by Japan and the United Kingdom. The order remained the same for Regional Offices (ROs). Mainland China topped the list of countries with LOs in Hong Kong, followed by the United States and Japan.

According to Jacqueline Low, a senior member of the team that operates the GuideMeHongKong.com site – the principal driving force behind this trend is Hong Kong’s liberal foreign investment policy. Ms Low said, “Hong Kong strongly encourages foreign investment and there are no limits on foreign ownership. Hong Kong allows 100% foreign ownership of private limited companies. Quite simply, there is no difference between a local and a foreign person who wishes to form a Hong Kong company. This ease of starting and operating a business plays a very big role in attracting foreign companies to set up a regional or local base here. ”

Accordingly to the data released, the favorable factors affecting the choice of Hong Kong as a location were:

(1) Simple tax system and low tax rate;

(2) Free flow of information;

(3) Absence of exchange controls;

(4) Corruption-free government;

(5) Communication, transport and other infrastructure;

(6) Rule of law and independent judiciary;

(7) Political stability and security;

(8) Free port status;

(9) Geographical location;

(10) Availability of financial services.

The negatives for Hong Kong included the availability and cost of residential and business accommodation.

The financial downturn has not diminished Hong Kong’s attraction. According to Ms. Low, “Despite a challenging economic environment during 2008 and 2009, overseas companies showed confidence in Hong Kong’s role as a regional hub. Hong Kong attracted investments of over US$63 billion in 2008 alone.” Ms. Low added, “Enterprises from the mainland and Taiwan find Hong Kong uniquely positioned to help them expand internationally. At the same time, Hong Kong’s strategic location makes it an attractive base for foreign companies wanting to tap the mainland China and regional markets. As a result, there is a large number of companies from the West as well as from mainland China and other Asian countries that are setting up business operations in Hong Kong. The recent Hong Kong-Guangdong Co-operation Agreement only serves to further strengthen Hong Kong’s regional dominance.”

Ms Low anticipates that this trend will continue. “With Asia emerging as the world’s economic growth engine, Hong Kong is uniquely positioned for companies who want to gain access to the Asian region. This year we expect more overseas companies to establish an Asian presence by setting up a company in Hong Kong,” said Ms. Low.