First we will analyze the relationships between the EU and Hong Kong.
The EU and Hong Kong Special Administrative Region (SAR) enjoy a positive and stable trade relationship, with a trade volume of €29.1 billion (2009) and a EU positive trade balance in goods of +€10.1 billion. The EU isHong Kong's second major trade partner after China. In 2009 Hong Kong ranked as the EU's 6th largest trading partner in Asia and its 17th global trading partner.
In commercial services EU-HK trade is equally showing a stable development over the last couple of years, with a value of €7.5 billion in exports and €6.5 billion in imports from Hong Kong in 2009.
The EU and Hong Kong SAR enjoy apositive and stable trade relationship
* Trade in goods
EU good exports to Hong Kong 2009: €19.6 billion
EU goods imports from Hong Kong 2009: €9.5 billion
The EU imports mainly machinery and transport equipment and telecommunication equipment and in terms of size of EU exports, machinery and transport equipment, telecommunication equipment, chemicals and other semi-finished products are by farthe most traded commodities.
* Trade in services
Total of EU exports and imports 2009: €14.0 billion, with a small export surplus of €1.0 billion
Main areas are air transport and transportation, business and financial services.
* Foreign Direct Investment
As data indicate, over the past years the EU has been a major source of foreign direct investment (FDI) in Hong Kong but FDI wentdown by €2.8 billion to €3.4 billion in 2009 compared to 2008, but the decrease in Hong Kong investments in the EU was even more pronounced (from a surplus of €2.0 billion to minus €0.2 billion in 2009).
Now, we are going to point some of the strengths and weaknesses of foreign companies, specially European and Finnish organizations, established in Hong Kong now, as they started their operationsthere.
It is relevant to note that Hong Kong is a free port with no barriers to trade, the procedures for the establishment of companies are simple, and the entry of foreign capital and repatriation of profits is free, also has its currency tied to the U.S. dollar and no controls or requirements are imposed for current transfers. Therefore, all European companies will have a veryeasy to settle in the country and freely repatriate their profits.
The cultural differences with other Asian countries are reduced by Hong Kong, because it is a former British colony that retains all the characteristics of a metropolis. This will be an advantage in maintaining business relationships.
European companies can take advantage of a number of unique advantages for investment in the PearlRiver Delta such as linguistic proximity (Cantonese language), family ties and deep friendship between the two communities and financing for foreign companies in China to meet their expenses.
Hong Kong offers a number of unique advantages for investment in this region since January 1, 2006 is in effect the third phase of CEPA Agreement, through which all goods entering China from Hong Kong areexempt from tariffs if meet certain requirements of origin. The CEPA Agreement provides for all trade in services with China, Hong Kong as soon as goods are produced. With this agreement, any foreign enterprise established in Hong Kong for a certain period of time can be established in China without a joint venture with Chinese partners (excluding financial services). That is, any European companythat began operations in Hong Kong, you can export their products to China without having to endure any type of tariff.
The Hong Kong tax system is one of the main attractions of this area to attract foreign investment. The Hong Kong tax system has a very simple and is based on the criterion of territoriality. There are almost no indirect taxes, with the exception of rings, gambling, snuff,...