2019.4.17
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Trends by Country

"Asia's leading international hub": What are the successful Japanese companies operating in Hong Kong?

(Cooler8/Shutterstock.com)
(Cooler8/Shutterstock.com)
Is there any secret to the success of Japanese companies in Hong Kong, which is considered "Asia's leading international hub"? Perhaps internationality, the tax system, the level of economic freedom, or an environment where highly professional human resources gather?

Reasons why Hong Kong is called "Asia's leading international hub"

Hong Kong is characterised by a free-market economy and the value of trade in products and services is about four times its GDP. The Heritage Foundation, a US think tank, has ranked Hong Kong first in the world for 24 consecutive years in the Economic Freedom Index, a survey conducted to evaluate market openness, the efficiency of laws and regulations, and freedom of finance and trade in 43 countries.

The generous tax system is also one of the major factors which attracts foreign companies. A two-stage corporate tax system was introduced after April 2018, lowering the uniform tax rate from 16.5% to 8.25% for profits under HKD$2 million. For non-corporate business owners, the tax rate is 15%, and 7.5% applies to profits under HKD$2 million.

It is an ideal gateway for companies looking to expand into other parts of Asia, including mainland China, both geographically and in the business environment.

Japanese companies betting on Hong Kong's potential

Japanese companies have successfully expanded into Hong Kong through a wide range of industries from food and beverages to fashion, media, staffing, pharmaceuticals, and real estate.

ASICS, a sports equipment maker, established ASICS Hong Kong in 1996. As of December 2018, they are expanding their business sites while developing eight stores, including the " Onitsuka Tiger", which is their lifestyle brand. Japan Dining World, which opened its first sushi restaurant in Hong Kong, celebrated its 10 year anniversary in 2014. In the meantime, they have grown their sales by more than 1.5 times compared to their parent company in Japan and have doubled their number of employees.

Other Japanese companies operating in Hong Kong are Hang Lung-Hakuyosha (HK) Ltd., Hitachi Capital, Taisho Pharmaceutical, Co., Ltd., Hyakunosha International Limited,, WATAMI International., Japan Recreation and Miscellaneous Goods Safety Laboratory (MGSL), and Nihon Keizai Shimbun, Inc.

Secure excellent employees through highly transparent evaluation systems

In order to succeed in overseas expansion, it is essential to secure excellent employees in the field. In Hong Kong, the lifetime employment system is not in place, and due to the high number of people changing jobs, the ideal human resource development environment is also not yet in place.

Hongkongers, who have a strong sense of independence and a strong tendency to value human relationships, place more importance on personal relationships than organisational relationships in business situations. It is common throughout the world that people who have changed their jobs seek better treatment and a better work environment, but in Hong Kong, people value internal relationships rather than salaries.

In organisations where management policies, HR Evaluation Systems, and bosses change frequently, employees will not stay put for long as well. With a fair HR Evaluation System, it will also be important to strengthen employees’ motivation and commitment to the company. In securing human resources in Hong Kong, it is important to create an environment that facilitates the development of excellent employees while always being aware of the need to create a stable and highly transparent internal environment.

Reinforcing human resources and adhering to rules are key to business success

Whilst the emphasis is placed on securing and developing human resources, both internal and external factors such as partner selection, gathering information, developing a network, and clear manifestation of intention hold the key to business success.

It is also important to conduct thorough research and gather information to deepen understanding of local businesses and regulations, to create partnerships and networks that support business expansion and globalisation, and to thoroughly express intentions which may appear ambiguous in Japan. If you find it difficult to understand each other's intentions, you need to be proactive enough to ask for explanations as many times as you need until both parties understand.

Hongkongers value human relationships in business, but they do not let their personal feelings get in the way, and they do business with a sense of professionalism. Japanese companies must adhere to Hong Kong’s strict adherence to rules. With unlimited potential, Hong Kong will be the ideal local branch office for companies looking to expand their business internationally.
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