Number of new overseas firms in Hong Kong increases 1.9pc in first half

The companies plan to employ 1,576 people in their first year, down 17.8 per cent on last year

PUBLISHED : Friday, 05 July, 2013, 12:00am
UPDATED : Friday, 05 July, 2013, 4:30am

More overseas companies set up offices in Hong Kong in the first half of this year but they were smaller and employed fewer people than previous arrivals.

InvestHK, set up to promote foreign direct investment in the city, said there were 213 new firms in the first six months, up 1.9 per cent on the year.

The companies planned to employ 1,576 people during their first year of operations, a year-on-year decline of 17.8 per cent.

Simon Galpin, the director-general of InvestHK, said that since the global financial crisis in 2008 an increasing number of foreign businesses starting up in Hong Kong were small and medium-sized enterprises (SME) but the benefits they brought to the city went beyond the number of staff they hired.

"These small companies bring a lot of indirect opportunities as they do not do everything in-house and tend to outsource some of the jobs and create opportunities for locals," Galpin said.

The European Chamber of Commerce said in March many SMEs in Europe were seeking to come to Hong Kong as the economies there were sluggish. The latest arrivals included a Greek fast-food shop called Greco.

Meanwhile, a delegation led by the Trade Development Council and the Chief Executive, Leung Chun-ying, to promote trade and investment visited the United States last month, focusing on the largely untapped small and medium-sized business sectors. Twenty-four US companies set up in Hong Kong in the past six months, compared with 37 in the same period last year.

Galpin said the momentum would pick up in the next few months, noting that the trade trip helped boost the number of continuing projects to 700 from an average of 600.

As most of the growth came from the US, he expected the nation to be the second-largest source of investment in the city by the end of the year.

The mainland remained the biggest source of investment, with 51 companies setting up offices in the city during the first half, against 38 a year ago. Enterprises from second-tier cities such as Wuhan and Changsha are now eyeing Hong Kong as their springboard to the world.

Galpin said the State Council's move to set up a free-trade zone in Shanghai would not erode Hong Kong's competitiveness because most businesses that came here already had plans to expand on the mainland.

He said the recent liquidity crunch on the mainland might add to the city's attractiveness.