Points of Entry to the Chinese Market
Hong Kong,
Hong Kong offers the world’s most liberal economy; has the second highest
income per capita in the world, and has the third biggest reserves in
foreign currency. Its system is based on the free flow of persons, goods,
capital and knowledge. Hong Kong also has non-discriminatory regulations for
the foreign and local investors and a predictable and simple tax system
based on reduced rates. The imported goods are exempted form customs duties
and other similar levies.
Hong Kong is presumably the most appropriate point of entry to the Chinese
market. As a center for business operations, it offers highly qualified
labor force, equipped with the required experience and knowledge on the
Chinese culture, business skills, a high level of education and knowledge of
English language at the level of native speakers. Other merits of Hong Kong
include, its unique characteristic as the biggest investor in China, its
geographical proximity to the Chinese market, and the fact that it offers
the highest level of logistic infrastructure in the region.
Hong Kong is among the most important business partners of China. It
possesses a substantial accumulation of knowledge regarding the Chinese
market. Hong Kong is treated as a base for the multinational corporations
from which they can launch their business operations to China and to the
other Far East countries. Moreover, effective as of January 1st 2004; China
and Hong Kong has signed Closer Economic Partnership Agreement) (CEPA). This
cooperation agreement (CEPA) grants significant privileges to the firms
established in Hong Kong in their business operations concerning mainland
China. According to CEPA
Hong Kong firms are treated in a manner that is almost identical to the
treatment received by the local firms and are granted customs duties
exemptions in exporting a great variety of products. The fact that no
restrictions are imposed with respect to the nationalities of the founders
of firms, make Hong Kong an attractive place for founding of firms. China
grants permission to firms of whose capital is entirely owned by investors
from Hong Kong, to open stores and sales outlets in China.
The location of Hong Kong in the heart of Asia, carries a strategic
importance for the firms who are interested in selling products to the
Chinese and Asian markets. A significant part of Hong Kong’s exports
consist of the re-exportation of goods originated in the People’s Republic
of China. While re-exports correspond to 85% of the total trade of Hong
Kong; 55% of this total consist of goods manufactured in China. In 2004,
Hong Kong’s exports to China has reached 115 billion dollars. Currently,
over 70,000 Hong Kong firms are operating in the Guangdong state in China;
while more than 2,000 Chinese firms are operating in Hong Kong.
The fairs regularly organized in Hong Kong, in the areas of Jewelry and
Watches, Electronics, Toys, Asia-Pacific Leather Fair, Gift Items and
Household Appliances, are among the biggest fairs of the world, and offer a
unique opportunity for the Turkish exporters in promoting their products in
Far East.
Shanghai,
Enterprises that are founded entirely with foreign capital or in partnership
with the local firms, are obliged to have a minimum equity capital of
200,000 US dollars. Firms who wish to import machinery for their own use,
are entitled to realize imports free of tax, provided that they receive an
approval from the competent authorities.
Foreign investors are offered a great variety of tax incentives; they are
entitled to tax refunds and if they realize investments in China with their
business profits, they become entitled to tax refunds at a rate of 40% or
higher. Foreign investors are not granted the right for land ownership;
however, they are permitted to acquire real property through leasehold for a
period of up to 50 years.
Pearl River Delta,With a population of 60 million, Pearl River Data is the most economically developed region of China, and has the highest rate of urbanization. China’s access to the outside world and the first foreign investments were initiated in this region. Pearl River Delta is densely populated with consumers from middle income level with gradually increasing purchasing power. The national income of this region is higher than the aggregate income of Singapore, Malaysia and Philippines