Over 78 percent of financial service firms in Hong Kong agree the city is currently a very advantageous location for their activities, according to preliminary findings from a 917-firm study of the territory’s competitiveness by Dr Edmund R Thompson, Associate Professor, Graduate School of Management, Ritsumeikan Asia Pacific University, Japan.
Hong Kong’s top current competitive advantage for financial sector firms is found to be an open, world-class internet/telecommunications environment, which scores 5.33 on a scale of 1 to 6. In close second place is the locational advantage of a free international trade regime, which scores 5.32. Good geographical position comes third, scoring 5.26. In joint fourth place are a free-market business environment; a transparent, low-tax fiscal system; and a reliable international-standard legal system, which each score around 5.20. In joint fifth place are an excellent transport infrastructure and an internationally-oriented, well-regulated financial services sector, which both score around 5.10. The bottom score is for low levels of pollution, just 2.10 out of 6.
Among non-financial business service firms, 71 percent agree the city is currently very advantageous, but only 66 percent of manufacturing firms agree the same. Overall, 77 percent of all foreign firms agree the city is currently very advantageous, against 63 percent of local Hong Kong firms agreeing the same. Of foreign firms, 84 percent of British companies agree Hong Kong is very advantageous for their activities, the highest for any nationality.
Data are based on responses from 917 senior managers of firms in Hong Kong (110 being finance sector firms) and are part of an ongoing study of locational competitiveness in the Asia-Pacific due to be completed by Dr Thompson later this year.
“The large sample size means the findings are statistically highly reliable,” commented Dr Thompson. “That over 78 percent of financial services firms still regard the territory as very attractive for their increasingly mobile activities is positive for the ex-British colony, especially as Singapore and, to a lesser extent, Shanghai are becoming increasingly competitive compared to Hong Kong.”
“Although these are preliminary results, they underline the importance of both Mainland and Hong Kong governments fully recognizing and protecting the city’s open and free information technology and broader business environments,” continued Dr Thompson. “If policymakers can also avoid undermining the legal and fiscal systems, while tracking international best-practice in financial market regulation, Hong Kong ought to remain advantageous for financial service firms, a sector key to its current and future success.”
“However, these are big ‘ifs’, and with nearly 40 percent of local Hong Kong firms already disagreeing that the city is advantageous for their businesses, there is little room for complacency if the territory’s current locational competitiveness for financial service firms is to be retained in future,” said Dr Thompson.