Business 20 Years after Hong Kong’s Handover
20 years ago people saw Hong Kong’s return to China with mixed feelings. Would the city boom as a gateway to China? Or would its West-meets-East appeal fade?
When reviewing the past 20 years, opinions continue to be as diverse as the social, political, and economic changes that the city has undergone. But from a business perspective, Hong Kong has held on to its uniqueness. Its operational advantages as a regional hub with low administrative burden and a simple tax system, drawing from a diverse talent pool, continue to attract investors and keep many of our clients rooted in the SAR.
Hong Kong has clearly benefited from China’s success. The city neighbours the rich supplier ecosystem of the Pearl River Delta, which gives it access to its broad range of industrial clusters – from lighting, to electronics and automotive. It also serves as the best free trade platform for sales and distribution activities in China and the rest of Asia. Investment and spending from the mainland into Hong Kong have directly bolstered specific sectors of its domestic economy, such as tourism and retail. On the other hand, China’s booming cities have indeed outgrown Hong Kong in some aspects. Larger container ports have developed, and while Hong Kong’s GDP doubled between 1997 and 2016, China’s GDP grew 12-fold.
What lies ahead for Hong Kong’s business landscape?
Looking forward, there are indeed structural tensions and hurdles that Hong Kong has to tackle to preserve its economic vitality, grassroots entrepreneurship, and innovative capacity. Our clients’ mid-term and long-term plans show us that the business community trusts Hong Kong’s ability to navigate these issues.
Like them, we believe the city’s stable institutions, easy access to the Asia Pacific region, and highly skilled workforce will continue to give it a competitive advantage in the region. Hong Kong is likely to remain a location of choice for specific sectors – such as finance and logistics – and business functions – such as procurement and sales. Its role in China’s Belt and Road and other initiatives, as well as the new “Stock and Bond Market Connects” with China, add to the city’s growth prospects.
Even before the handover, Fiducia opened offices in Beijing, Shanghai, and Shenzhen to serve the growing needs of clients there. Far from losing business from Hong Kong to our mainland operations, we have experienced synergy and growth on both sides of the border. Accordingly, our view of the city’s future is not zero-sum. We continue to believe in Hong Kong as it will find ways of benefiting from its uniqueness.