Todas las entradas de: Ana Menchero

ONE BELT, ONE ROAD

The Silk Road of the 21st century is the One Belt One Road program. This initiative of the Chinese Government aims to develop the land route (along Central Asia, Iran, Turkey and Russia) and the maritime route (connecting Europe, Africa and South America with China). The goal is to develop joint projects with Chinese companies, promote innovation and extend the use of the yuan abroad, especially seeking to benefit the city of Hong Kong. Spanish companies are looking to be an important part of this ambitious program.

So what does this mean for Hong Kong? Being the interface between China and the rest of the world, Hong Kong stands to benefit from the numerous business opportunities which will arise out of the One Belt One Road initiative. Hong Kong’s position is unique. A part of China, the One Country Two Systems framework allows it to retain control of its own political and legal system and over its econony and financial affairs. The initiative thus offers a greater degree of proximity for other countries seeking to invest in the world’s second largest economy while strengthening historic, cultural and linguistic ties.

Hong Kong is perhaps Asia-Pacific the best site for the international growth of a company. Most importantly, Hong Kong has become China’s most cosmopolitan city and one of the world’s leading international financial centres. Its independent legal system based on English common law has made it a very attractive place for Chinese companies to raise funds, and for companies from around the world to set out to invest in China.

 

 

 

Why Hong Kong?

Ana Menchero, Dictum Consultant HK

With almost one third of the planet’s population, South East Asia has virtually one third of the world’s GDP. Hong Kong is the main economic and financial centre in the region, making it an attractive place for foreign companies looking to expand their business.

Why? Starting a business in Hong Kong so simple, so much  that it could be summed up in a simple maxim: total permissiveness, minimal obstacles.

For example, it is not required to live in Hong Kong to set up your company, initial share capital can as low as 1HKD (less than 0.15 USD) and only a director and a shareholder (that might be the same person) are required at registry.

Taxing is also remarkably straight forward: a single tax based on territoriality. Only the profits generated in the autonomous territory during the accounting period are taxable at a single rate of 16.5% net profit. There are extensive and generous tax deductions for amortization, debts, repairs undertaken in factories, expenses of registry of rights and marks, training, interest of real estate loans, etc. No taxes are applied on capital gains, dividends, or interest, no tax on consumption or VAT…

To that flexible tax scheme, local authorities have been keeping promoting stimulus measures. For example Hong Kong taxation allows a 75% discount on profits that is applied once, with a cap of 20,000 HKD.

Regarding currency, Hong Kong authorities do not impose controls on incoming or outgoing currency. There are no restrictions on the repatriation of capital and profits. The local currency  HKD conversion can be done in virtually any global market. It enjoys great stability in relation to the US dollar and, therefore, also to the rest of currencies in the world.

On legal disputes matter, arbitration plays a significant role:  Hong Kong is home to the International Court of Arbitration (HKIAC), one of the most important arbitration courts in the world. Created in 1985, it was adapted to the new needs of international trade in 2010, giving primacy to the will of the parties to negotiate, to the detriment of more rigid institutional standards. This has yielded greater effectiveness in the resolution of disputes.

The presence of this international institution increases the legal security necessary and essential for anyone who has established any type of business here.

The HKIAC has prestigious referees and mediators from the different economic areas of the world. A group of professionals in the field offer advice on the importance of including arbitration clauses, suitably adapted to the singularity of each contract, in order to prevent conflicts or foresee their resolution

With such an scenario… why not Hong Kong?