Study reveals HK's real engines of wealth creation Foreign companies contributed 28 per cent of Hong Kong's gross domestic product and hired 16 per cent of its workforce, according to the government's first detailed study on their presence in the city. The study, conducted by the Department of Census and Statistics, found some 10,000 foreign firms employed 543,000 people and generated HK$356.4 billion in 2004. Their dominance is most apparent in finance, insurance, real estate and business services, where they hired 217,000 staff and generated HK$160 billion in added value - 45 per cent of staff and 60 per cent of value across the combined sectors. Fung Hang-wang, Commissioner of Census and Statistics, said foreign companies in construction have the greatest advantage over local firms. He said while they accounted for only 9 per cent of employment, they generated 27 per cent of added value, meaning they have superior technology and skills to secure a better rate of return. 'The results show the market openness of Hong Kong's economy and the significance of commercial presence of foreign companies. Apparently they are doing pretty good business here, since they hired 16 per cent of employees but contributed 28 per cent of GDP,' he said. Dr Fung said the study, entitled Inward Foreign Affiliates Trade in Services Statistics in Hong Kong, provided a more comprehensive picture of the level of foreign investment than the usual foreign direct investment figures. Foreign firms are defined as those registered outside Hong Kong and majority-owned by overseas investors. 'These new statistics tell you in which areas foreign firms invest in Hong Kong, where they come from, and how successful they are. We will keep updating these statistics annually,' he said. In a geographical breakdown, companies from the British Virgin Islands topped the chart with 23.5 per cent of total investments, followed by those from the US (17.6 per cent), the Netherlands (13 per cent) and Japan (8.1 per cent). Companies from the mainland only account for 3.4 per cent. 'The Netherlands ranked third since HSBC is registered there, while many companies come from British Virgin Islands since it is an offshore haven,' Dr Fung said. He said the department was also considering a study on the level of investments of local firms overseas. 'This can tell us how Hong Kong companies influence the world economy,' he said. Dr Fung said it had also nearly completed a study on asset management markets. Statistics showed the amount of assets managed in Hong Kong grew from HK$2,230 billion in 2003, to HK$2,740 billion in 2004 and HK$3,240 billion last year. 'Our study focuses on knowing the number of people employed in asset management activities, and the business receipts and added value generated. The statistics will likely be released for the first time before mid-2007,' he said. The report can be downloaded free at www.censtatd.gov.hk .