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Hong Kong’s business environment - Coggle Diagram
Hong Kong’s business environment
Importance
Firms hire people to operate businesses → employment opportunities
Ppl are employed → earn income to support their daily life
Firms create demand for goods and services →stimulate the economic growth
Earn foreign exchange by international trading (imports and exports)
Raise government revenue: profits tax(firms) salaries tax (employees)
Characteristics
Lack of primary production (❌arable lands) concentrate on tertiary production; HK is a service-oriented region
Rely heavily on external trade
Import foodstuffs and fuel from the Mainland
Import foreign goods and re-export them to the Mainland
Free trade (自由貿易)
Free market economy with little gov. intervention
Duties of the government
Maintain law and order (the rule of law reduces the uncertainty of operating a business in HK)
Provide training and education to local ppl( ensure their qualifications can meet the market’s requirement)
Provide infrastructure (good logistics and transportation system to facilitate trade and communication of the companies with their business partners in other places)
No trade barriers (quota and tariffs) impose tariffs on cigarettes/tobacco products and alcohol
No foreign exchange control (free for capital inflow and outflow) favourable for the businessmen to invest in HK
Simple taxation system
3 direct taxes only (profits tax, salaries tax and property tax)
Low tax rate
Recent development of the Hong Kong economy
Closer and more frequent cooperation with the Mainland China
CEPA (Closer Economic Partnership Agreement)
Usual and mutual trading partners
Major sources of capital (foreign direct investment & funding centre)
Globalisation
Keen competition
Free and effective flow of capital and information
Global sourcing and outsourcing
Technology transfer
International cooperation
Asia-Pacific Economic Cooperation
World Trade Organisation