16
July
2014
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00:00
Europe/Amsterdam

Hong Kong is fourth most desirable market for business expansion

Attractive tax and governance regime are most desirable elements 
According to The art of connecting global business, an international report published by BT, Hong Kong is the fourth most desirable economy in the world for business expansion, beating other markets such as Germany, Singapore and India. 

China has been selected as Asia’s most desirable country, and third in the world, by companies looking to expand their business overseas. Thirty two percent cites the Special Administrative Region’s attractive tax and governance regime as the most desirable element for expansion into Hong Kong. 

The report surveyed 1150 business decision makers based in 13 regions around the globe, exploring the reasons for international expansion, which markets are desirable and why, the effects of being a ‘digital first’ economy and barriers to expansion. 

It found that an overwhelming 80 percent of business decision makers believe that international expansion is highly essential for the success of their organisation. Seventy-five per cent say that growth opportunities are the main reason prompting them to look to expand overseas. The survey also highlights several technology factors that businesses look for when expanding into other countries, with 62 percent of respondents flagging the quality of IT infrastructure and services, 60 percent the quality of digital and communications infrastructure and 52 percent the IT skills of the workforce as being important in decision-making. 

Kevin Taylor, president, Asia, Middle East and Africa, BT Global Services, said: “It’s great to see so many executives around the world aiming for international growth. Those countries rated as highly desirable places to expand into not only have economic potential but the right blend of business culture underpinned by an extensive digital infrastructure, skills and sound regulation.” 

Despite the rise of the ‘BRICS’ (Brazil, Russia, India, China and South Africa) and ‘MINT’ (Mexico, Indonesia, Nigeria and Turkey) economies, the report finds that established markets remain the most desirable to expand into. 
Overall, the US is the most desirable for expansion (33 percent), followed by the UK (30 percent), China (29 percent), Hong Kong (27 percent) and Germany (26 percent). The top three countries were ranked highly based on their potential customer base and the average affluence and disposable income of their citizens. 

Business decision-makers believe Hong Kong has the most attractive tax and governance regime in the world with 32 percent citing this as the most desirable element for expansion into this market. In addition, the affluence of its population (31 percent) and potential customer base (28 percent) further add to its allure. 

With a population well over a billion people, 44 percent of surveyed business decision-makers see the potential customer base as an appealing element for expansion into China. More than a third (35 percent) see affluence of citizen as attractive, and three in ten (29 percent) believe the IT skills of Chinese workforce are important. 

Figure 1 Criteria seen as attractive for expansion into Hong Kong 

Source: The art of connecting global business, British Telecommunications plc, April/May 2014 

Significantly, 91 per cent of businesses say that if a country is a “digital-first” economy then this is of “great help” when expanding into it. “Digital-first” economies are those which have a ubiquitous, nationwide, high speed internet connection. 

The challenges that organisations face when they are looking to expand internationally are also emphasised. Thirty seven per cent of firms globally still don’t have the technologies needed to achieve their international ambitions. This is the top internal barrier to international expansion, ahead of personnel issues (31 per cent), logistics (30 per cent) and regulation and tariffs (29 per cent). Thirty-seven percent of Hong Kong respondents cite personnel within their own organisation as being a barrier to expanding overseas. 

Taylor continued: “Firms expanding to international markets will want to have consistent communications and IT networks they already enjoy in developed markets. Such facilities will enable them to orchestrate their business and bring the right people and technologies to help them solve business problems. BT is here to help them achieve great business outcomes.” 

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About The art of connecting global business The art of connecting global business: A barometer of executives’ views on the opportunities and challenges of international growth is a new report commissioned by BT based on survey of 1,150 company executives based in 13 regions worldwide. The companies covered by the sample each employ over 100 staff and are all in the process of, or are considering, international expansion. The survey was conducted by international market research agency Vanson Bourne on BT’s behalf. It can be downloaded from www.bt.com/ifb-research-2014