Mainland and Hong Kong forge partnership in architecture business

Integration between Hong Kong and mainland China after 1997 was inevitable. Despite being a global economic powerhouse, China continues to undergo development to catch up with the more established nations in terms of infrastructure and professional standards.

The field of architecture is no exception in terms of developing sectors with plenty of promise. There is fierce competition between developers in tier-one cities and the rapid growth of tier-two cities, as well as an increased demand for mainland architects to provide services overseas.

Despite Hong Kong architects having decades of experience working on the mainland, there's been a lack of consolidated information on the business restrictions, barriers to entry, and differences between mainland provinces.

To address this, the Hong Kong Institute of Architects, subsidised by the government's Professional Services Development Assistance Scheme, engaged Hogan Lovells International and KPMG Advisory (China) to conduct research into taxation, foreign exchange and legislation challenges that Hong Kong architects face when establishing businesses on the mainland.

The research provided insight into the advantages and disadvantages of various business models. Offshore models largely acknowledge significant savings on capital and personnel investment while being accompanied by an array of tax incentives. Onshore models note the advantage of operational flexibility at the expense of steep investment costs. The benefits and limitations of onshore models were noted to be subject mostly to varying legal dynamics.

Figures have varied over time and by province, but the required capital investment for Hong Kong architects in setting up a business on the mainland is generally far higher in comparison to Hong Kong.

For personnel, there is also the more standard requirement of three "PRC Class 1 Architects", three Structure Engineers, and three E&M Engineers; all registered on the mainland. This is a steep investment for many Hong Kong architects, especially when taking into consideration the fact that the natural scale of operations in Hong Kong is smaller.