Firms' favourite: Census & Statistics Department Senior Statistician Frank Fong, Director-General of Investment Promotion Mike Rowse and Associate Director-General Charmaine Wong present the report on the annual survey of Mainland and overseas businesses in Hong Kong.

Hong Kong continues to be one of the most preferred locations for overseas and Mainland firms managing their operations in Asia Pacific, Director-General of Investment Promotion Mike Rowse says. An all-time high of 60.4% of the 6,440 firms representing overseas parent companies are regional offices or headquarters, he added.

The inflow of foreign direct investment into Hong Kong also soared more than 30% on a year earlier, to US$27.1 billion for the first half of this year.

Releasing results of an annual survey today, Mr Rowse said: "For us at Invest Hong Kong, there is no better advertisement for our city than companies which do their due diligence and select Hong Kong as their primary office in the region.

"Since the handover in 1997, the number of regional headquarters and regional offices has increased 55%. It's certainly silenced a lot of the critics who predicted the demise of Hong Kong a decade ago," Mr Rowse said.

Survey findings

According to the survey results, headquarters, regional and local offices together employ almost 346,000 people in Hong Kong, accounting for around one in 10 of the working population.

At the start of June, there were 1,246 regional headquarters, 2,644 regional offices and 2,550 local offices in Hong Kong representing their overseas parent companies, up 1.5%, 1% and 1.6% on a year earlier.

The US topped the list of countries/territories with regional headquarters (298), followed by Japan (232) and the UK (124). The major lines of business of regional headquarters were wholesale, retail and import/export trades; business services excluding information technology, and transport and related services. They employed 131,347 people in Hong Kong.

The US also topped the list of countries/territories with regional offices (593), followed by Japan (516) and the UK (223). The major lines of business of regional offices were wholesale, retail and import/export trades; business services excluding information technology; and finance and banking. They had hired 94,803 people in Hong Kong.

The Mainland topped the list of countries/territories with local offices (480), followed by Japan (431) and the US (394). The major line of business of local offices were wholesale, retail and import/export trades; finance and banking; and business services excluding information technology. They employed 119,476 people in Hong Kong.

Favourable factors

Key favourable factors affecting the choice of Hong Kong as a location for regional headquarters/regional offices/local offices for foreign or Mainland companies were a low and simple tax system; free flow of information; absence of exchange controls; corruption-free government; communication, transport and other infrastructure; free port status; geographical location; availability of business services and professional support services; rule of law and independent judiciary; and political stability and security. Unfavourable factors for Hong Kong included the availability and cost of residential and business accommodation.

Overall 78% of regional headquarters and regional offices considered that, comparing this June with last June, the overall business environment in Hong Kong remained the same or had improved. The corresponding figure for local offices was 76%.

To read the detailed survey results, click here.

Key challenges

Mr Rowse recognises that Hong Kong could not rest on its laurels.

"We are at the heart of a competitive, high-growth region and investors have more and more choices. What I am hearing from the international chambers in Hong Kong and during my trips overseas is that Hong Kong has three key challenges ahead. We need to focus on the high cost of office premises, on improving our air quality and on increasing the number of international school places. The Government is aware of these problems and is working to address them."

Noting the survey results provide invaluable information to better understand the factors that influence investment choices, Mr Rowse stressed Invest Hong Kong is committed to addressing these issues, both the positive and the negative, within the Government. It will also work closely with the international business community to help their business operations here.