By: Charné van Biljon, Associate Director in the Sales department of Sovereign Trust (Hong Kong)

Hong Kong has long been recognised as a major international financial centre, offering a business-friendly environment and the freest economy in the world. Now it’s emerging as a key gateway to the Chinese and Asian markets at a time when China has become South Africa’s biggest trading partner.

Strategically located at the centre of Asia, all the region’s key markets are within a four-hour flight. That’s why more than 8,000 businesses and companies have made Hong Kong their home in recent years, with many relocating strategic functions to the enclave, says Sovereign Trust’s Charné van Biljon, Associate Director in the Sales department of Sovereign Trust (Hong Kong).

“Hong Kong is an effective hub and logistics base, with excellent access to the Chinese market. It offers significant commercial opportunities to South African businesses, especially those looking to access the increasingly lucrative mainland China market,” Charné says .

Here are Sovereign Trust’s five top reasons to set up a business in Hong Kong to trade with China and Asia.

Quick business set-up with 100% foreign ownership

Opening a company is quick and easy. Private limited companies can be registered in one to two working days and can start taking advantage of all the tax benefits and concessions available to any fully incorporated business in Hong Kong almost immediately.

“There are no restrictions on inbound or outbound investment, and no nationality restrictions on company ownership. This means foreigners can invest in almost any business and own up to 100% of the equity. There is no statutory requirement for a minimum amount of paid-up capital, and no requirement for a local resident director. Directors and shareholders meetings can be held anywhere in the world,” says Charné .

Simple, competitive tax system

Businesses and individuals in Hong Kong enjoy one of the most tax-friendly systems in the world. Under the two-tiered tax regime, corporations pay only 8.25% on the first HKD2 million of assessable profits, rising to 16.5% for amounts above that. For unincorporated businesses (partnerships and sole proprietorships), the tax rates are 7.5% and 15% respectively.

Individual tax rates are also low. The salaries tax has a standard rate of 15% and property tax is 15%. There is no sales tax or VAT, no withholding tax on dividends and interest, no capital gains tax, no tax on dividends and no inheritance tax.

Robust legal system

Hong Kong is the only common law jurisdiction within China and has built a well-established commercial case law that is highly regarded by the international business community and foreign investors. According to the World Economic Forum’s 2019 judicial independence rankings, Hong Kong ranks first in Asia and eighth overall globally.

Competitive international financial platform

With its strengths in banking, capital markets and asset management, Hong Kong provides a high-quality financial platform for investors, financiers, asset managers, funds and financial institutions from all over the world. Hong Kong is also a preferred location for corporate treasury centres.

“Hong Kong is Asia’s largest banking hub for Chinese and international banks, with 200 authorised banking institutions, including 70 of the world’s top 100. Being an international financial centre with a full range of services, it is an ideal hub for corporate treasury activities. To encourage more corporates setting up their CTCs in Hong Kong, the government has also introduced tax incentives,” says [name].

Business-friendly immigration

Hong Kong is renowned for its business-friendly immigration policies, offering visa-free entry for visitors from over 170 countries to stay for between seven to 180 days, as well as dedicated visa schemes for entry for investment as entrepreneurs and for employment in R&D roles.

Short-term visitors can make the most of Hong Kong’s light-touch visa policies, and are permitted to conduct business negotiations and sign contracts while on a visitor’s visa or entry permit. Foreign nationals working in Hong Kong for longer periods of time require a visa before they can live or work in Hong Kong, but there are plenty of options including the Entrepreneur Visa, the Technology Talent Admission Scheme (TechTAS) and the Employment Visa.