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Themis Qi

Hong Kong can serve as a key treasury centre for mainland Chinese companies going global, helping them hedge foreign exchange risks and lower financing costs by leveraging the city’s unique advantages, according to Deloitte China.
The assessment comes as the administration of Chief Executive John Lee Ka-chiu rolls out measures to tap into the growing trend of Chinese companies expanding their businesses and supply chains overseas amid intensifying competition and economic headwinds at home.
Around 80 per cent of mainland enterprises used Hong Kong as their global launch pad, Deloitte said.
“Many policies in Hong Kong can help mainland firms effectively tap into international markets,” said Patrick Tsang Shun-fuk, senior partner and former CEO of Deloitte China.
With no capital controls, Hong Kong allowed Chinese firms to set up holding companies in the city and to use profits or investment income from overseas subsidiaries directly for new investments, the firm noted.
Establishing a treasury centre in Hong Kong could also reduce tax costs for mainland enterprises because the city had signed tax treaties with more than 50 jurisdictions, Deloitte said.
This supported the diversification of China’s outward investment over recent years, with Southeast Asia, Latin America and economies linked to the Belt and Road Initiative emerging as key destinations.
For example, subsidiaries in Japan, Indonesia or India could pay up to 10 percentage points less in withholding tax on interest payments to a Hong Kong-based holding company, according to Deloitte.
Edward Au Chung-hing, Deloitte China’s southern region managing partner, said Hong Kong’s comprehensive financial infrastructure allowed mainland enterprises to better manage their assets.
As more technology-focused and digital-native firms went abroad, Hong Kong could also help them reduce “hidden costs” related to intellectual property protection and data transparency, Deloitte added.
While concerns about US-China relations persisted, “geopolitical tensions offer Hong Kong opportunities instead, as the mainland firms will be more cautious when going overseas,” said Robert Lui Chi-wang, leader of Hong Kong growth and markets and capital market services group at Deloitte China.
Lui said many international asset managers had returned to Hong Kong to invest in Chinese companies, reflecting renewed confidence among foreign investors. That trend underscored the city’s growing role as a connector between mainland companies and global capital.
In early October, the Hong Kong government officially launched a GoGlobal Task Force to attract mainland firms to use the city as a base for overseas expansion.
Deloitte expected the administration to take a more proactive approach, drawing more Chinese companies to use Hong Kong as a springboard into international markets.
Tsang said the government should sharpen its focus by targeting high-potential sectors such as technology and advanced manufacturing as well as small and medium-sized enterprises, now that most of China’s corporate giants had already embarked on their offshore push.
“A simple tax regime is easy to copy,” Tsang noted.


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As Chinese companies diversify into Southeast Asia, Latin America and belt and road markets, many are using Hong Kong as a springboard


As Chinese companies diversify into Southeast Asia, Latin America and belt and road markets, many are using Hong Kong as a springboard.


Hong Kong

China

Deloitte China

Belt and Road Initiative

Deloitte says Hong Kong primed as treasury hub for China’s go-global push

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}As Chinese companies diversify into Southeast Asia, Latin America and belt and road markets, many are using Hong Kong as a springboard

As Chinese companies diversify into Southeast Asia, Latin America and belt and road markets, many are using Hong Kong as a springboard