Hong Kong
Hong Kong-Macau - Market Overview

Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant, the top reasons why U.S. companies should consider exporting to this country, and other issues that affect trade, e.g., terrorism, currency devaluations, trade agreements.

Last published date: 2019-10-13

Hong Kong> The Hong Kong economy grew moderately in 2017. Hong Kong, a Special Administrative Region of the People’s Republic of China (PRC) since its reversion in 1997, has proven in past economic crises to be exceptionally resilient. Dominant and sustained drivers of economic growth include private consumption (retail), logistics and business services, financial services, real estate development (bolstered by ongoing public infrastructure works), and tourism. Hong Kong has benefited from continued economic integration with mainland China’s growing economy. In particular, Beijing’s policy of opening its service sector and gradually expanding the scope of the offshore renminbi (RMB – the PRC’s currency) market in Hong Kong and the sustained high numbers of mainland Chinese visitors have strengthened Hong Kong’s economy.

Hong Kong is an ideal platform for doing business in Asia, especially mainland China. Hong Kong is a free port that does not levy any customs tariff and has limited excise duties. Its strong rule of law and respect for property rights make it a strategic platform for U.S. companies, especially small- and medium-sized firms, seeking to do business in Asia. Hong Kong’s statutory trade promotion body, the Trade Development Council, seized upon this unique positioning to create the Pacific Bridge Initiative in late-2010, the first such agreement with a foreign government affiliate to explicitly support the U.S. National Export Initiative (NEI). Hong Kong’s businesses enjoy close links to mainland China and the rest of Asia. According to Hong Kong Government statistics, there are 1,313 subsidiaries of U.S. parent companies in Hong Kong, making the United States the second largest source of subsidiaries in Hong Kong. Among those U.S. subsidiaries, 726 are regional headquarters or regional offices.

Hong Kong’s key characteristics are its openness, tourism, trade and investment.

  • Population: 7.41 million (end-year 2017)
  • Visitors: 58.5 million (2017)
  • Total GDP: US$341.2 billion (2017)
  • GDP Per Capita: US$46,150 (2017)
  • GDP Growth: 3.8 percent (2017)
  • Trade to GDP Ratio: 309 percent (2017)
  • U.S. Exports: US$39.9 billion (2017).

Major Trading Partners.  Mainland China, United States, EU, Japan, and India.
Key Characteristics. World-class infrastructure; free flow of information; no restrictions on inward or outward investment; no foreign exchange controls; no nationality restrictions on corporate or sectoral ownership; simple, low-tax regime; and world financial hub.
Hong Kong is a Special Administrative Region of China. Hong Kong enjoys a high degree of autonomy, except in foreign affairs and defense. It has its own common law legal system (as distinct from the PRC), currency, and customs jurisdiction. There are numerous business opportunities given Hong Kong's expertise in finance and marketing, sophisticated infrastructure, and access to mainland China’s manufacturing base. A majority of Hong Kong manufacturers has moved production to South China’s Pearl River Delta (PRD), with Hong Kong functioning as the region’s services and trade hub. Mainland China is Hong Kong’s largest trading partner.

Hong Kong enjoys growing preferential access to the mainland. The Closer Economic Partnership Arrangement (CEPA) offers Hong Kong's products and firms preferential access to the mainland's market. CEPA goes beyond China's World Trade Organization (WTO) commitments, eliminating tariffs and allowing earlier or preferential access to some services sectors. Overseas companies can also benefit from CEPA. For trade in goods, foreign investors can set up production lines in Hong Kong to produce goods that meet the CEPA rules of origin requirements. For trade in services, companies incorporated in Hong Kong by foreign investors can make use of CEPA as long as they satisfy eligibility criteria of a “Hong Kong Service Supplier” (for example, they must be engaged in business operation in Hong Kong for three to five years) or by partnering with or acquiring a CEPA-qualified company. Macau>

Macau is also a Special Administrative Region of China that shares many structural similarities with its close neighbor Hong Kong, yet offers U.S. suppliers a market with distinct characteristics and opportunities. In this Guide, Macau is treated under each chapter following Hong Kong, with emphasis placed on those areas where the business climate diverges.

Macau enjoys significant autonomy. Formerly a Portuguese colony, Macau became a Special Administrative Region (SAR) of the People's Republic of China (PRC) upon reversion to China on December 20, 1999. Macau maintains a high degree of autonomy except in foreign affairs and defense, and retains its own currency, laws, and border controls. Macau does not use common law, but uses code law patterned on the Portuguese system.

Macau’s GDP surged by 9.1 percent in 2017. The economic growth was mainly driven by gaming sector. Like Hong Kong, Macau is a free port with low taxation. Since liberalizing the gaming industry in 2002, industry experts calculate that Macau has received US$23.8 billion in U.S. foreign direct investment in the gaming industry (through 2016), spurring visitors and consumption. Other recent growth areas include finance, insurance, construction, real estate, and retail. Macau’s exports include textiles, garments, machines and apparatus, footwear, tobacco and wine. The main export markets are Hong Kong, mainland China, Japan, EU and the United States, while imports originate primarily from mainland China, Hong Kong, EU and Switzerland.

Macau’s huge gaming sector dominates the economy. Gaming revenues recovered significantly mainly due to gaming capacity increases, attracting visits from recreational gamblers. Taxes on gaming revenues accounted for over 79 percent of the Government of Macau’s (GOM) revenues in 2017, generating a significant budget surplus (10 percent of GDP).

Macau’s Key Characteristics are its rapid growth in tourism and inbound investment.
Population: 653,100 (end-2017)
Visitors: 32.6 million (2017)
Total GDP: US$50.5 billion (2017)
GDP Per Capita: US$77,590 (2017)
U.S. Exports: US$502.1 million, 5.5 percent of Macau’s imports (2017)
Trading Partners: Mainland China, Hong Kong, Japan, EU, Switzerland and United States.

Macau enjoys a Closer Economic Partnership Arrangement (CEPA) with mainland China. Macau’s 2003 agreement with mainland China – largely parallel to the arrangement Hong Kong enjoys with the mainland – has enhanced its economic integration with the PRC.  In October 2017, Macau and Hong Kong signed a CEPA to strengthening economic and commercial relations between the two cities.