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What are MNCs and Why are they Important in Hong Kong?

Known as one of the world’s freest economies and an important economic powerhouse in Asia, Hong Kong is a great place to open your business or your regional headquarters. As per the last data by the Census and Statistics Department of Hong Kong, there are around 1,530 regional headquarters for MNC companies in Hong Kong, and the number keeps growing. If you are searching for the best international growth opportunity or to get a hold of the Asian market, then Hong Kong is the best choice. Other than its amazing economic environment, Hong Kong offers tremendous advantages including a talented workforce, enviable market access, and free trade. This article will list the reasons why you should open a brand for your MNC company in Hong Kong. 

MNC companies in Hong Kong

Multinational Companies (MNCs) in Hong Kong 

The sustained growth and the importance of Hong Kong as the gateway to all the countries in Asia, has been attracting a lot of foreign direct investment and loads of opportunities from other parts of the world. Global innovation hubs and regional headquarters of large multinational corporations in Hong Kong are huge evidence of this. 

What are MNCs? 

MNC stands for multinational company, which is a company that has branches in one or more countries other than the main head office in its home country. To explain it better, an MNC company in Hong Kong will mean that the company’s central office is located in its home country, while one of its branches is located in Hong Kong. Do not mistake a company that exports its products to multiple countries as an MNC. A company needs to maintain all the actual business operations in the other countries and make foreign direct investments in that country, for it to be considered an MNC.

How are MNCs important in Hong Kong’s economy and society?

MNCs are a crucial part of any country’s economy. But more of the MNCs that come into Asia, set up their hubs in Hong Kong. In fact, Hong Kong’s economy is dominated by huge names and many multinational companies. When an MNC is opened in Hong Kong, that company invests in the jurisdiction, helping it grow economically. 

Here are some of the main reasons why an MNC company in Hong Kong is important for its economy and society:

  • Increase in employment: When an MNC is opened in the jurisdiction, jobs open up as well. There is a lot of talent in Hong Kong. With more talent on the force, innovation takes birth. Although Hong Kong was a bit behind, as compared to the US, in terms of innovation, intrapreneurship, and entrepreneurship, things are coming to a pace now. 
  • Cultural collaboration & growth: It is obvious that some foreign talents are also invited to join the MNC force when its branch opens up in Hong Kong. And this is a good thing. It brings a lot of business and cultural growth. Moreover, it is considered crucial for small businesses that depend on partnerships with larger companies for amplifying their impact in the business world. Networks are built and the business world becomes stronger. 
  • Proximity and access: A lot of small companies in Hong Kong rely on larger companies for business. So, when an MNC company is incorporated in Hong Kong, it offers the jurisdiction a lot of success. On the other hand, with Hong Kong located at the center of Asia, it makes the regional expansion of an MNC easier.
  • Private funding: With an increase in the number of MNCs in a jurisdiction, the number of inventors also increases. Lots of private investors and even government funding schemes come up in hopes of helping small businesses grow and someday be acquired or partnering with a large MNC.

In short, when an entrepreneur opens an MNC company in Hong Kong, they are helping Hong Kong as much as they will be helping themselves. These companies help in growing the social network and the economy of Hong Kong.

How can individuals benefit from the presence of MNCs in Hong Kong?

The answer to this is completely related to the last section. MNCs, bring in a lot of scope, growth, and potential to the jurisdiction. It offers other small entrepreneurs an opportunity to start thinking big. Some of the benefits that come from the presence of MNCs in Hong Kong include:

  • Increase in the number of jobs – Opening an MNC in Hong Kong will mean more jobs will be available to the Hong Kong market. 
  • Growth in the economy – When an economy keeps growing, the government offers many tax reliefs that also help others grow. 
  • Business opportunities –  Other than jobs, people who have always wanted to start their own businesses will get a boost of confidence. In addition to this, they can become partners or work under contract with some of these MNCs.
  • Cultural diversity – The number of foreign employees tends to increase when an MNC company is opened in Hong Kong. 
  • Network expansion – With more foreign talents entering the industry and jurisdiction, it opens the doors for growth and networking. 

Top MNCs in Hong Kong

Due to its vibrant business environment, Hong Kong thrives as a most sought-after investment spot in the Asian sub-continent. It is also one of the main reasons why there are more than 9000 foreign-owned companies in the jurisdiction. In addition to this, there are about 290 American MNCs in the city. 

Here is a list of the top MNCs in Hong Kong:

  • Prudential: This is one of the top global insurers. It is a Fortune 500 company and has its regional branch in Hong Kong. 
  • Goldman Sachs: This is a leading international investment and securities management, and investment banking firm. Its headquarters are in New York City and its regional branch is in Hong Kong. 
  • J.P. Morgan: This is a renowned American investment bank that is based in NYC.
  • ICBC: This is a Chinese banking company. It is not only the largest bank in China but also the largest bank in the world, in terms of its total assets.  
  • IBM: This is a name you might already know. It is a multinational information technology company that is linked to the very first computer systems that were created. It is located in New York and has a global presence in about 170 countries.
  • FedEx: Another company you might already know about. This is an American multinational courier delivery services company. 
  • Estée Lauder: A very reputed fashion brand, Estée Lauder is a multinational manufacturer and marketer of hair care, skincare, fragrance, and makeup products. Its based location is in New York City.
  • Credit Suisse: This is one of the top Swiss investment bank and financial services companies in the world. 
  • BNP Paribas: This is a French international banking group. It is one of the top banks in the world and has been ranked as the world’s eighth largest bank, in terms of its total assets.
  • AXA Asia: AXA is one of the top global insurers. And it has opened its regional office in Hong Kong under the name AXA Asia. 

What challenges do MNCs face in Hong Kong, and how can they overcome them?

Even though Hong Kong is a great place to open a company and grow it, expanding your business by opening an MNC company in Hong Kong involves a few challenges that need to be considered. These include:

  • Hong Kong labor regulations: One of the main challenges that anyone will face is learning the labor laws in the jurisdiction. Just like every other country, Hong Kong has a few rules that need to be followed when you hire employees for your company. For instance, if you are about to hire international employees, you need to ensure that they have the proper documentation, experience, and education before they can get their employment visas. 
  • Labor costs: The cost of living in Hong Kong is quite high. Due to this, the labor wages need to match the high cost of living in this city. In fact, the current average salary that an employee earns in Hong Kong is US$2,400 (HK$18,000). You need to be able to pay at least this much to one employee.
  • Tax laws: Although Hong Kong has a business-friendly tax climate, there are still a lot of laws that need to be followed strictly. Learning and following these laws can be very complicated, especially if you do not have any professional help. One of the laws requires you to submit annual audited financial statements to the government after you have paid both the payroll and corporate taxes. If you miss out on this, the penalties applied are usually very high. The only way to avoid these issues is by taking the help of a professional service like Startupr
  • Complex bank account opening process: Opening a bank account as a foreigner has become quite complex due to the recent changes that were implemented in the efforts to combat terrorist financing and money laundering. The process is especially very complicated and lengthy when it comes to the traditional banks in Hong Kong, and not all the account applications are approved. The only way around this is if you have all the proper documentation and professional help. Moreover, you will have to visit the bank at least once for a face-to-face interview process. 

All of these challenges won’t seem much if you have the help of a professional service like Startupr, which is based in Hong Kong. These services help you focus on other things while they take care of all the other hurdles that might come your way, including these challenges. 

What is the future of MNCs in Hong Kong, and what should businesses do to prepare for it?

Despite the unfortunate economic and social challenges that Hong Kong faces in the last three years, businesses are still thriving in the jurisdiction. A lot of new businesses have also opened and many entrepreneurs still remain invested in Hong Kong. As per the latest survey by the government, the number of MNC companies in Hong Kong rose to 9049 in 2021. On the other hand, the number of startups in the jurisdiction has increased by 68.55 since 2017, which has also increased the employment numbers as well. 

Some of the industries that have seen a rise in startups include logistics technology, supply chain management, e-commerce, financial technology, and consultancy business. This is mostly due to the advancement in the technology and innovation sector of Hong Kong. In fact, this sector ranks as the second-most performing sector in the world. The number of new companies in this sector is increasing every day. 

Some of the main areas of Hong Kong’s innovation and technology industry include financial technology, smart city, artificial intelligence, and biotechnology. These areas keep growing as the government keeps spending on research and development for the same. Looking at how things are going and how Hong Kong is growing, there is a lot of scope for startups and MNCs in the future, too. But before you jump into anything, do your proper research. To be successful in Hong Kong and keep growing your business, it is important to network and partner with some of the top companies in Hong Kong. This will help you learn a lot and expand. ​​

Want to register your Hong Kong company? 

Hong Kong will always be on the top of the list for all global investors due to its amazing business climate. In addition to this, it is also the best gateway to enter an international market. If you are hoping to open an MNC company in Hong Kong or even just your very first company, then you are making the right choice. The tax-friendly business environment will allow your business to grow and expand easily. 

Once you are ready with your business plan, you will need a company secretary and a local business to help you in the registration process. That is where Startupr comes in. We offer company registration and incorporation services. Contact us to know more!