Hong Kong extends incentives to foreign SMEs that register in HK

Hong Kong, with its strategic position in Asia, is a beacon of opportunity for UK and European small and medium-sized enterprises (SMEs), which can enjoy the same rights and privileges as their local counterparts under the ‘One Country, Two Systems’ framework, especially when it comes to tendering for projects, writes a Sovereign Business Development Manager.

With its powerful economy and unwavering dedication to free trade and entrepreneurship, Hong Kong offers countless openings for enterprises keen on broadening their global reach. A particular opening currently attracting attention is the talent gap in Hong Kong, with a glaring shortage of around 5,000 engineers. This presents UK and European SMEs, especially those with technical engineering expertise, a golden opportunity to establish their presence in the city.

Last December, the Hong Kong SAR government revamped its tendering procedures to encourage consulting companies in Hong Kong to collaborate with smaller consultancies by enabling collaborations to generate extra tender points. This innovative initiative is an integral component of the government’s SME Support Programme, designed to bolster the growth and competitiveness of SMEs.

To qualify for these additional points, consulting companies must satisfy several criteria: they should be registered and operational in Hong Kong, must not have exceeded a turnover of HKD200 million in the most recent fiscal year, should employ no more than 200 individuals, and should collaborate with a smaller consultancy that constitutes up to 20% of the total contract value.

The specifics of the tender process might seem complex at first glance, but the overarching message is clear – it’s an avenue ripe for foreign SMEs to venture into the Hong Kong market. And for businesses seeking to navigate this intricate landscape, the Sovereign Group can serve as a trusted ally, equipped with both expertise and local insights.

Hong Kong is currently brimming with infrastructure projects and the construction industry stands on the threshold of a transformative era. The government is commited to more land creation, expanding the railway and road infrastructure networks, investing in housing and sports and recreational facilities, supporting worker and project-related personnel training and promoting the adoption of innovation and technology in the construction industry.

In the 2021 Policy Address, the government announced the Northern Metropolis Development Strategy, a development of 30,000 hectares of land in the northern part of the New Territories. This includes five new and extended railway lines including cross-boundary projects, connecting the Northern Metropolis with other areas in Hong Kong and mainland China.

The aim is to drive Hong Kong’s economic growth, as well as its innovation and technology development, housing supply and cooperation and integration with the Greater Bay Area (GBA). In the 2022-23 Budget, the government allocated HKD100 billion to expedite the implementation of infrastructure works relating to land, housing and transportation within the Northern Metropolis.

Another megaproject, the Lantau Tomorrow Vision (LTV), was announced in the 2018 Policy Address. At the core of the LTV is the phased formation of artificial islands around Kau Yi Chau and Hei Ling Chau in the waters east of Lantau Island.

This land reclamation will be accompanied by new strategic road and railway networks to link it with Hong Kong Island, Lantau, and the coastal areas of Tuen Mun. It is expected to cost USD80 billion and includes the development of 1,700 hectares of artificial islands with 260,000 to 400,000 housing units, of which 70% will be earmarked for public housing.

The government has also allocated HKD1 billion to support the training of manpower in the construction industry to add an estimated 27,000 semi-skilled and skilled workers into the construction industry in coming years. It has also allocated HKD30 million to the Centre of Excellence for Major Project Leaders for training project-related personnel of major public organisations as well as those working for consultants and contractors engaged in public works projects.

In respect of technology, the administration has planned an additional HKD1.2 billion for the Construction Innovation and Technology Fund to expand its funding scope and increase its funding ceiling. It has also allocated HKD30 million to promote applied R&D and adoption of new materials and innovative construction technologies in public works and the construction industry in the next three years.

Shifting the spotlight to the tech sector, the Hong Kong Science Park stands as a testament to the city’s commitment to innovation. Many people believe that this incubation programme is confined to local businesses but that is not the case. Any enterprise introducing new or enhanced technology is welcomed and foreign companies that establish a local presence in Hong Kong can take full advantage of the benefits. The Science Park is due to be expanded and is expected to receive an additional 60 hectares of land through reclamation over the next six years for innovation and technology developments.

The government has also allocated HKD400 million to its Green Tech Fund (GTF), which was established in 2020 to provide better and more focused funding support to research and development projects that can help Hong Kong decarbonise and enhance environmental protection.

Priority is given to projects in net-zero electricity generation, energy saving and green buildings, green transport and waste reduction. The emphasis is on practical applications and each project can last up to five years, with funding up to HKD30 million.

All these projects and initiatives combine to give UK and European SMEs even more reasons to explore Hong Kong. Sovereign has been assisting international clients in Hong Kong for over three decades and with this depth of experience can guide foreign businesses to set up here and unlock these lucrative opportunities. We can further assist by providing back office and ancillary services, hiring staff, obtaining visas, making government filings and payroll.

Hong Kong is a mosaic of opportunities, spanning from technology to infrastructure, waiting for UK and European SMEs to tap into. And businesses that make their mark in Hong Kong can extend their sights further. With the introduction of the new high-speed rail link connecting the Hong Kong SAR to the Greater Bay Area (GBA), passengers now have direct access to seven major Mainland cities – Shenzhen, Guangzhou, Zhaoqing, Foshan, Dongguan, Huizhou and Jiangmen.

With a population of over 100 million, the GBA brims with myriad projects and commercial openings, allowing Hong Kong businesses to expand and deepen their footprint in Asia. For further information, please contact Peter Fenyves, Sovereign Business Development Manager.

With a population of over 100 million, the GBA brims with myriad projects and commercial openings, allowing Hong Kong businesses to expand and deepen their footprint in Asia. For further information, please contact Peter Fenyves by phone at +44 (0)20 7389 0555 or by email below.