Hong Kong Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

In 2021, approximately 2,300 companies from EU countries were registered in HK, a decline occurred during the last two years due to the pandemic and the end of the riots. Statistics can distort the real activity of companies to a large extent, as many of them keep a branch registered in HK, even though the actual activity may be subdued.

  • Allcountrylist: Overview of major industries in China, including mining, construction, transportation, tourism, and foreign trade.

The EU has a long-term active trade balance with HK – however, for the most part, products imported to HK are further re-exported to the PRC. However, for a number of European companies, which perceive the HKSAR as a gateway to mainland China, the closure of the border and the impossibility of establishing contacts in the wider region are very problematic in the long term.

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 28,581.00 27,885.60 26,733.00 22,958.40 23,470.30
Imports into the EU (million EUR) 5,948.80 7,499.30 7,079.40 6,754.10 6,986.50
Balance with the EU (million EUR) -22,632.2 -20,386.4 -19,653.6 -16,204.4 -16,483.8

Source: European Commission

Trade relations with the Czech Republic

Hong Kong is one of the most successful export markets in Asia for the Czech Republic, or outside Europe at all. It is one of the few Asian territories where the Czech Republic has an active trade balance. Czech exports to Hong Kong had an increasing tendency in the period 2016-2019 with annual increases in the range of 9% to 18%. For 2020, a slight decrease in the volume of goods exported from the Czech Republic to Hong Kong can be noted. However, the fact is that the total volume of mutual exchange is relatively negligible. The mutual exchange of goods consists mainly of subcontracts by multinational companies in both directions, which is evidenced by the commodity structure of exports and imports. A significant part of Czech exports is further re-exported in the region, especially to mainland China.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 3 9.1 9.9 9.5 ON
Imports to the Czech Republic (billion CZK) 8 2.7 2.5 2.4 ON
Balance with the Czech Republic (billion CZK) 5.1 -6.4 -7.4 -7.1 ON

Source: CZSO

Trade relations with countries outside the EU

The EU is an important trading partner for Hong Kong. However, the fact is that the PRC is an incomparably more important market. The connection to countries in the wider region – Japan, Korea – is also significant.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 394 453.5 423,627.3 406 440.7 408,001.9 519,791.1
Imports to countries outside the EU (million EUR) 469,693.8 504,975.3 472 139.7 461 406.1 573,790.5
Balance with non-EU countries (million EUR) -75,240.3 -81,347.9 -65,699.0 -53,404.3 -53,999.4

Source: EIU, Eurostat

Foreign direct investment

According to UNCTAD’s 2021 report, total FDI in Hong Kong reached US$119 billion in 2020, up nearly 62% from 2019 (US$74 billion), mainly due to an increase in intra-corporate loans and reinvested profits. A rebound in cross-border mergers and acquisitions to US$11 billion (from -US$1 billion in 2019) contributed to this increase, representing a small share of FDI, thanks to many cases of Chinese MNCs consolidating Hong Kong operations. Given the significant flows within the economy and its close ties with China, which contributes 28% of its FDI, Hong Kong’s increase in FDI reflects corporate restructuring, particularly by Chinese multinationals, rather than new investment. In 2020, HK ranked third in the world in terms of FDI inflow after the US and China.

Hong Kong is the center of regional headquarters of foreign multinationals, therefore inflows of capital were mostly invested in service sector operations. The main investing countries are China, British Virgin Islands, Great Britain, Bermuda and Japan. The vast majority (around three quarters) of investments are intended for financial activities: holding, real estate, finance, insurance, banking, etc.

FTAs and treaties

Agreements with the Czech Republic Hong Kong has its own aviation, consular, economic and judicial agreements that do not apply in the rest of the PRC and vice versa.

The Czech Republic has an Aviation Agreement with Hong Kong dated 23/02/2002, the updated version of which was signed on 14/08/2014. On 06/06/2011, the Treaty on Avoiding Double Taxation and Preventing Tax Evasion in the Field of Income Tax was signed between the government of the Czech Republic and the government of Hong Kong – a special administrative region of the PRC. This agreement will significantly contribute to the support of bilateral economic relations between the Czech Republic and Hong Kong. The ratification process was completed on both sides and the contract was put into effect on 24 January 2012. On 4 March 2013, three agreements in the field of international judicial cooperation in criminal matters between Hong Kong and the Czech Republic were signed. These are the Agreement on Mutual Legal Assistance in Criminal Matters, the Agreement on the Surrender of Persons Wanted for Criminal Proceedings and the Agreement on the Surrender of Convicted Persons. The first two contracts entered into force on February 13. 2015 and the latter already on 28.11.2014. In 2019, the Protocol on the import of pork was signed, which makes the Hong Kong market available to Czech exporters.

Developmental cooperation

Hong Kong provides development aid to a limited extent, mostly in the form of humanitarian aid financed through non-governmental organizations from private sources. Hong Kong SAR is a developed economy and thus is not itself a recipient of development aid.

Prospective fields of study (MOP)

Healthcare and pharmaceutical industry

HK already has top-notch healthcare infrastructure. However, due to the aging population, this is a long-term priority of the government, with an updated budget ceiling of HKD 500 billion (roughly CZK 1,370 billion) for the program of building new hospitals and renovating existing hospital facilities until the end of 2036. In addition, budget expenditures for healthcare are increased every year. Priorities in the healthcare sector include biotechnology, smart/digital technology, telemedicine, diagnostics, rehabilitation and palliative care. Newly discussed are the possibilities of using medical equipment used in HK within the framework of GBA without the need for registration through the Chinese NMPA.

Agricultural and food industry

Due to the size of the territory, Hong Kong is not food self-sufficient and over 95% of agricultural products are imported from abroad. The high concentration of high-end restaurants makes Hong Kong an important gastronomic center of Asia, where luxury foods can be found. The current trend is meat substitutes, organic food and healthy food. Beer is a valued drink and the popularity of small breweries and home brewing is increasing. Although the wine market is relatively large by Asian standards, there are already many importers from Australia, New Zealand, Chile, France, Italy and Spain. Opportunities can therefore be seen in more expensive segments, or by focusing on organic production and natural wines.

Water management and waste industry

For many years, the emphasis on environmental protection has brought with it an increased interest in green technologies, circular economy, saving resources and the issue of energy efficiency. Although discussions have been going on for several years, the relatively benevolent legislative framework has in no way pushed for higher standards in waste recycling or the use of green technologies to increase efficiency (energy and other). Setting HK’s goal of carbon neutrality by 2050 will undoubtedly bring with it increased pressure to improve waste and water management infrastructure. Complex solutions will be in demand, while the verticality of the city must be taken into account, as well as partial solutions and measuring devices.

Entertainment and leisure

Culture and creative industries are one of Hong Kong’s most dynamically developing sectors, collectively accounting for around 5% of GDP and around 6% of jobs. Hong Kong is traditionally regarded as the place where the West meets the East, and the locals are therefore often very familiar with European art, music, and even book hits. The local art market is one of the most developed in Asia, and in the case of the sale of modern art, it is one of the most important markets in the world in terms of transaction volume. However, audiovisual production, jewelry, design, computer and mobile games are also in demand.

Services

The financial services sector remains one of Hong Kong’s most important economic pillars, after all accounting for just over 20% of the city’s GDP. Even thanks to more than 160 licensed banks and 8 virtual banks, Hong Kong is one of the most important financial centers in the world. Within the financial services sector, opportunities lie mainly in the fintech segment.

Hong Kong Trade