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US Companies Upbeat on the Greater Bay Area

The HKTDC TATHK Survey 2019

Think Asia, Think Hong Kong (TATHK), an international promotional event organised by the Hong Kong Trade Development Council (HKTDC), was held in Los Angeles on 20 September 2019, to showcase Hong Kong’s attractive business environment and professional services in Asia for US corporates and start-ups. A survey was carried out to better gauge the views of US companies on the Greater Bay Area (GBA) development and Hong Kong’s role in their GBA business plans, and a total of 86 valid responses were collected during the event, in which over 90% respondents were US-domiciled companies.

The poll found that US companies expect the GBA development to have a positive business impact in the coming three years. In order to take advantage of GBA opportunities, a majority of the companies have put in place specific business plans with concrete actions such as opening new offices in the region. As these US companies are planning to make bigger and deeper inroads into the GBA, they see Hong Kong as a partner ready to provide a range of services in a timely and professional manner.

The GBA Opportunity

Most US businesses regarded the GBA as an opportunity, with over 60% of the respondents expecting the GBA to bring either positive or very positive impacts on their businesses over the coming three years, while 28% of respondents were undecided.

Chart: The Likely Impact of the GBA Development on Your Business over the Next Three Years
Chart: The Likely Impact of the GBA Development on Your Business over the Next Three Years

The GBA has a total population of more than 70 million, earning a per-capita GDP of more than US$23,000, in an economy boasting a combined GDP of US$1.6 trillion. The US companies expressed optimism particularly with regard to catering to the sizeable consumer community (47%) as well as providing professional services (30%) and industrial products, service and technology (19%) to the business community.

Chart: Major Opportunities for Your Business Over the Next Three Years
Chart: Major Opportunities for Your Business Over the Next Three Years

Many US businesses were eager to share a slice of the market by investing in the region over the coming three years, for example by setting up new operations (29%),  expanding existing operations (16%) or adding new business functions to their existing operations (5%) in the GBA, while others were still in the process of strategy formulation.

Chart: Business Adjustments to Tap GBA Opportunities over the Next Three Years
Chart: Business Adjustments to Tap GBA Opportunities over the Next Three Years

Hong Kong has traditionally been the prime destination of US businesses, and over 700 such companies have set up regional headquarters or offices in the city. They not only cater to the domestic market but also the broader Asian market, thanks to the free flow of information and excellent connectivity, together with the free flow of capital within, into and out of Hong Kong, and the deep talent pool available in the city. This was reflected in the survey, which found that more than one out of every four respondents had set up operations in Hong Kong, the most in the GBA cities, followed by Shenzhen (12%) and Guangzhou (10%).

Chart: GBA Presence
Chart: GBA Presence

In addition to above-mentioned competitive advantages, the introduction of wide-ranging policy measures, including but not confined to service market liberalisation for Hong Kong-based legal and film and entertainment service providers in mainland China, is set to strengthen Hong Kong’s position as a gateway to the GBA market. Detailed policies for different business sectors are available here.

Hong Kong Platform

In the business community, there is growing confidence among US businesses regarding the GBA market, yet they also foresee potential problems when doing business in the GBA, such as cross-border capital movement (24%), the lingering Sino-US trade dispute (22%), legal and regulatory challenges (20%), lack of policy transparency (17%), lack of funding or investment incentives (16%), and information flow and security (14%). To assess and handle the potential risks arising from these challenges in the GBA, the prospective US companies will naturally need the support of professional service providers in the GBA.

Chart: Key Challenges
Chart: Key Challenges

Hong Kong is well-positioned to serve as a service hub in the GBA for these US companies, thanks to the city’s close business ties with the US in service trade. In 2017, for instance, the US was Hong Kong’s second-largest service export destination, with transport, financial and business services as the key export categories. This goes without saying that the huge business potential in the GBA will open a new window of opportunity for providers of legal services, customs management, logistics and cyber security services, among many others.

The role of Hong Kong was very well-received by US companies. In the survey, some 70% of the respondents indicated they would consider using Hong Kong as a business platform for business expansion. For GBA opportunities, almost 80% of the respondents indicated that Hong Kong is either relevant or very relevant to their GBA plan, implying new demand for Hong Kong professional services, including design, marketing and branding services (29%), banking and finance (23%), creative and content services (20%), intellectual property (17%) and business management & consultancy services (15%), among others.

Chart: View on Hong Kong as a Platform for Business Expansion
Chart: View on Hong Kong as a Platform for Business Expansion

 

Chart: Hong Kong Relevance in Your GBA Expansion
Chart: Hong Kong Relevance in Your GBA Expansion

 

Chart: Most Benificial Hong Kong Professional Service
Chart: Most Benificial Hong Kong Professional Service

Profile of Respondents

86 valid responses were collected during HKTDC’s Think Asia, Think Hong Kong in Los Angeles on 20 September 2019.

Of the respondents, 94% of them were US-domiciled companies, coming primarily from the state of California (88%), which has a long history of close connection and relationship with Hong Kong, making it the largest US state exporter to Hong Kong and the home for more than half of the Hong Kong immigrants to the US.

Chart: Corporate Place of Residence
Chart: Corporate Place of Residence

In terms of business, most of the respondents were service providers (77%). Many of them were in the film and entertainment business, design and marketing, and accounting, banking and finance.

Chart: Business Nature
Chart: Business Nature
Content provided by Picture: Charlotte Man
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