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Studio Alpha Concept & Partners Costituire Società Offshore
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China has large holdings in Hong Kong companies. Hong Kong Telecom and Cathay Pacific Airways. Asia Business Services: Virtual Office in Hong Kong, Registered address
China holdings in Hong Kong companies
In 1975 Indonesia had suddenly and bloodily seized East Timor, a former Portuguese colony which was geographically part of Indonesia but had never been under Dutch rule; because guerrilla warfare has continued in East Timor, the world has said a bit more about it. Hong Kong would in the normal course of events have been taken like Goa and East Timor. But to Chinese leaders such a strategy seemed politically and economically counterproductive.
During tense periods of Sino-British negotiations over Hong Kong's future from 1981 to 1984, China subsidized financial stability in Hong Kong. Since that time, China has made huge investments there. The Bank of China Building, Asia's tallest structure, holding many of the bank's fourteen thousand Hong Kong employees, symbolizes China's investments in Hong Kong real estate, buildings and companies. China has large holdings in Hong Kong companies, including 20% of HK Telecom and 22.5% of Cathay Pacific Airways. Chinese companies like CITIC are rushing to list subsidiaries on the Hong Kong Stock Exchange. In fact, during the period since the British-Chinese negotiations, China has become by far the largest single investor in Hong Kong.
Can China be trusted?
For two generations China has protected Hong Kong and profited from it while all other colonies around the world were simply "liberated". The prospects for honoring the agreements over Hong Kong rest on three foundations. First, China has an excellent record in honoring past international agreements. Second, China's effort to promote the "one country, two systems" formula as a basis for eventual unity with Taiwan has proved both consistent and successful. Despite Tian An Men Square, Taiwan investments in China and trade with the mainland, formerly negligible, are now measured in billions of dollars, and millions of Taiwanese tourists have visited China. Even Taiwan officials visit the mainland, and Taiwan is vigorously inventing legal channels for all this trade, investment and tourism to follow. China's vital economic self-interest is at stake. Two-thirds (65.7%) of foreign direct investment in China comes from Hong Kong.
Hong Kong economic vulnerability
Any system could be mismanaged. Chinese residents in Hong Kong fear that there might be circumstances under which China could invoke national-security concerns to deprive them of rights to which they are accustomed. Companies fear that there might be circumstances under which, for instance, disputes with Chinese companies might rise to level of the National People's Congress and be settled under Chinese law. They fear that administration of Hong Kong banks fear that the bank of China will assert itself in damaging ways. Everyone fears China endemic corruption and rising crime, as well as its potential instability and the possible rise of malevolent leaders. Such fears have not, so far, damaged the economy, but they have induced widespread efforts to escape Chinese legal domicile to more trustworthy jurisdictions-for instance, the Hong Kong and Shanghai Bank to London. And a major proportion of the educated population has said it is interested in the possibility of emigration. The shift of legal domiciles by Hong Kong companies has no economic or political consequences; they do not shift their business along with their nameplates. But there are some real business shifts. Many companies have diversified their business geographically beyond what would seem to be justified by purely business calculations. For instance, the Hong Kong and Shanghai Bank paid huge sums for Midland Bank in Britain and Marine Midland in the USA (both of which were poor users of its funds if judged only by profit potential) in order to establish a global, primarily British identity and legal standing. Many Hong Kong companies tend to borrow heavily for Hong Kong investments and then put considerable investments overseas. Throughout the 1980s, the Western press reported a vast flight of capital from Hong Kong. In fact, much of it consists of valuable acquisitions: Hong Kong's New World bought Ramada Inns, and its Regal Hotels bought over two hundred US hotels. The Hong Kong manufacturer Semi-Tech bought Singer, America's most famous maker of sewing machines and other household electronics.
Hong Kong's watch companies, far more profitable than their Swiss counterparts, bought Swiss watch companies in order to control famous brand names. This was victory, not capital flight. And even with such purchases, Hong Kong during this period achieved substantial net inflows of capital.
The most vital issue is not capital but people. People, especially the most skilled workers, are leaving Hong Kong in large numbers: about forty-five thousand left annually between 1987 and 1989, roughly double the rate in 1984. The rate rose to around sixty thousand in 1990-92, reflecting the Tiananmen Square crisis. Singapore has less than half the population of Hong Kong and its brain drain has risen much faster. It involves the same kinds of people emigrating to the same countries (largely Canada, Australia and the USA) for similar reasons - in Singapore's case, disdain for the current rather than the prospective political constraints on their lives. And it is proportionately much more serious, because Singapore previously had a policy of severely restricting higher, especially postgraduate education, and consequently has a proportionately much more limited pool of high-level skills. Its loss of talent has been of proportionate magnitude.
Hong Kong's roles
Hong Kong's firs role is as an airlock for China - an entry point for technology, capital, management skills, and ideas. No other country can compete with Hong Kong in this respect. In theory, the special economic zones could become competitors. In practice, they have become colonies of Hong Kong because its investment dominates there zones; effectively, Hong Kong own the zones. As China has soared, the role of airlock between China and the outside world has become far more important than in the past. While the opening of China reduces some of the need, China's overall relations with the outside world are expanding at such a rate that any attrition is more than offset. Note that most of China's exporters seek to export from Hong Kong, even when other ports are closer, and that Hong Kong managers are assuming potentially dominant roles in China's other main ports. In the future, Shanghai or even Taiwan could become competitors, but that possibility is decade away.
Hong Kong - Entrepot
Hong Kong and Singapore are the world's greatest ports primarily because of their roles as entrepots. During the 1980s the Entrepots were seen as important primarily because they allowed free trade at a time when other countries severely restricted or taxed trade. It followed that, with the fast liberalization under way, Hong Kong and Singapore would no longer be special. Such an analysis misses most of the rationale for an entrepot, which is a concentration of special skills for bringing together sellers and buyers. Hong Kong's role may be to connect a hitachi tape recorder manufactured in China to Peruvian buyer. The permutations of sellers, products, buyers, mode of transport and financial terms have become virtually infinite, and an enormous concentration of highly specialized skills is required to make the whole process work. The role of entrepot has become more important and only Hong Kong and Singapore have the concentration of skills to play that role.
Hong Kong - Financial Centre
Hong Kong is the world's third largest financial centre if measured by the number of banks present, or the fourth largest if measured by the number of offshore loans originated. Most potential competitors are disqualified from the start: Bangkok because its telephones and infrastructure are inadequate; Manila and Jakarta for that and many other reasons; Kuala Lumpur because it is politicized; and Taipei because its security environment is restrictive. Tokyo is the region's capital for the distribution of loans, but it cannot take over Hong Kong's origination role because it is too expensive a place to do business, because the language is not yet widely understood by foreigner, because Japan's culture is both esoteric and xenophobic, and because its financial markets are so large and complex that they have become all-absorbing preoccupations for Tokyo financial executives.
That leave Singapore. A serious competitor with none of these deficiencies, Singapore has managed to surpass Hong Kong in the volume of foreign exchange transactions. But Singapore's tight controls on most markets and on the press will limit its role until these controls are loosened - and there is non prospect of early change. Most modern financial enterprises need the Asian Wall Street Journal, Asia Week, the Far Eastern Economic Review, CNN television and other sources of information that are banned much of the time in Singapore, and they cannot thrive in an atmosphere of heavy-handed business regulation. While a number of financial firms moved to Singapore in the period after Tiananmen Square, many subsequently moved back because of what they considered repressive regulation. Hong Kong people seek Singapore residence permits as an insurance policy, but most do not want to live there. There are unofficial reports that after Tiananmen Square five or six hundred people accepted Singapore's offer of permanente residence permits; but even if this is true, Singapore emigration to Hong Kong in four years (873 people) was greater than Hong Kong emigration to Singapore in five years. Proportionately, Singapore migration to Hong Kong was more than double.
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< SOCIETÀ OFFSHORE MADE IN CINA >
Virtual offices, tailor made services for companies without operation address in Hong Kong. Business and communication support. Registered address; receiving/redirecting Mails service. Individual phone and fax number. Phone answering services by a professional secretary in the name of the client's company. Conference rooms in Hong Kong Offices for rent. Professional and comprehensive services for self-employed persons and newly setup companies; creation of bank account; forming Companies, Hong Kong Companies, Offshore Companies, China Company/Representative Office; Parking Services, Company Secretary, Accounting, Auditing & Tax, Taxation, Tax filing
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