Hong Kong: a gateway for SA fintech to target Asian markets
South Africa’s fintech businesses can take advantage of a wealth of growth opportunities by expanding their presence to Hong Kong. This is according to Stephen Phillips, Director-General of Investment Promotion at InvestHK, the department of the Hong Kong Special Administrative Region (HKSAR) Government responsible for Foreign Direct Investment. Speaking during a recent visit to Johannesburg, Phillips said Hong Kong was stepping up its drive to attract South African and pan-African businesses to the SAR.
Hong Kong is actively welcoming more IT businesses, as it builds on its financial and fintech sector success. Phillips says: “Hong Kong has a 67% fintech adoption rate – one of the highest in the world. 66% of fintech companies focus on the B2B market, where over 1,800 asset and wealth management firms, over 160 licenced banks including 78 of the world’s top banks, over 100 payment companies and over 160 insurers operate.”
Among the investments made by the Hong Kong government to support IT sector growth is its Cyberport – a digital technology hub which is now home to over 1,500 technology enterprises, including 380 fintech companies housed in over 4,000m2 of dedicated facilities and engaged in such diverse areas as blockchain, cybersecurity, AI, big data, wealth management and transaction engineering. Cyberport enables fintech start-ups through an incubation programme, start-up support and professional services support. Hong Kong Science & Technology Parks Corporation’s Hong Kong Science Park offers facilities such as labs, co-working spaces, and the InnoCell smart living and co-creation space.
Hong Kong’s Applied Science and Technology Research Institute Company Limited (ASTRI) also supports R&D in areas such as fintech, smart city technologies, intelligent manufacturing, health technologies, and application specific integrated circuits.
Hong Kong is Asia’s leading business destination and recognised as the gateway to Mainland China and Asia. The Special Administrative Region is now stepping up its efforts to attract African and South African business, with the opening of InvestHK representative offices in South Africa and Kenya. Hong Kong, located within five hours’ travel of two-thirds of the world’s population, is the ideal entry point to the region, Phillips says.
Phillips says there is growing interest among African businesses in the potential for expansion into the Asian market. “For years, there has been Chinese investment into Africa and cordial relations between China and some African countries, and we are now seeing the start of flowback investment into China out of Africa,” he says.
With a local population of 7.5 million and 86 million from the Greater Bay Area, Hong Kong is a significant art, food and consumer goods market, with significant opportunities for Smart City and IoT technology, electronics and green technologies. Its ageing population and growing wealth also drives demand for healthcare and life sciences solutions.
“Hong Kong offers a route to growth markets in Asia, with their demographic dividends, high rate of tech adoption and growing intra-Asian investment flows. Of course, there is also the economic beast – mainland China – with opportunities to enter the market through JVs and partnerships,” Phillips says.
Hong Kong is an international finance centre with an independent legal system, rule of law, free flow of information and capital, and a competitive tax system. Profits tax for the first HK$2 million of profits of corporations is 8.25%, while tax on profits over that amount is capped at 16.5%. Hong Kong has zero sales tax and no import tariffs on almost all products.
Hong Kong has Free Trade Agreements with the Mainland of China, New Zealand, the Member States of the European Free Trade Association (EFTA), Chile, Macao, the Association of Southeast Asia Nations (ASEAN), Georgia and Australia, with further agreements under discussion. Hong Kong has also signed Investment Promotion and Protection Agreements with 20 economies.
Phillips noted that business people moving their offices to Hong Kong could enjoy a world class lifestyle, with easy international access, a cosmopolitan culture, advanced facilities, bustling city life, a low crime rate, and vast open spaces with parks and beaches.
InvestHK offers free advice and consulting to South African and pan-African businesses considering moving or expanding their operations to Hong Kong. For more information contact Bernice Robbertse at email: brobbertse@investhk.com.hk or Mobile: 0732516706.