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Hong Kong's Basic Law

Essay by   •  February 17, 2013  •  Research Paper  •  1,504 Words (7 Pages)  •  1,780 Views

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Country risk: Hong Kong


Hong Kong's Basic Law stipulated that after the 1997 handover to China, Hong Kong would participate independently in international trade agreements and issue independent certificates of origin. The transition agreements ensure that Hong Kong retains its border controls with China, its own customs procedures and the right to conduct international trade relations. Hong Kong is a member of the World Trade Organization and the Asia-Pacific Economic Co-operation forum, which is moving to liberalize the region's import restrictions by 2020. Hong Kong signed a Closer Economic Partnership Arrangement (CEPA) with mainland China in June 2003. This gives Hong Kong access to the mainland market to virtually all goods manufactured in the territory and to many companies based in Hong Kong.

With the border controls in places, it is unlikely Hong Kong's government would apply any protectionist measures on import restrictions. When an import license is required, it can usually be obtained quickly, or even electronically, by filing an application with the Electronic Data Interchange Service via Tradelink Electronic Commerce which provides front-end services for processing official trade-related documents. (Hong Kong: Competition and price regulations, 2012)


The government, local business, media and the public welcome foreign investment. Attracting foreign investment is a priority, and the government has a worldwide network of economic and trade offices to promote overseas investment in Hong Kong. Foreign investment is widely considered beneficial, even crucial, for economic stability, and there is a tacit rivalry with Singapore over the amount of investment made in each country and even over the number of multinational headquarters in each region. (Hong Kong: Business environment at a glance, 2013)


Hong Kong is a Special Administrative Region of the People's Republic of China with a high degree of autonomy in all matters except foreign and defense affairs. According to the Sino-British Joint Declaration (1984) and the Basic Law, Hong Kong retains its political, economic, and judicial systems. This setup is often referred to as "One China, Two Systems". The city's appeal is built on its political stability, pro-business governance and free market principles. It is also cited as one of the most corruption-free economies in the world. (Choosing Between Singapore and Hong Kong, 2013)

An additional political risk involves the government being undertaken by a broad campaign to install Internet filtering software on all personal computers as part of an effort to create a so-called Great Fire Wall between computer users and pornographic and politically sensitive Internet sites. Access to social network and messaging sites is also being restricted. In 2006 a major Internet company, Google, admitted that it had censored its Chinese-language search engine to produce results deemed acceptable by the government. In March 2010 Google began automatically rerouting users from its mainland site to its uncensored Hong Kong site, but in July Google and the mainland government reached a new license agreement under which Google agreed to cut access on its mainland site to what the PRC termed "lawbreaking content." Mainland users may, however, continue to access the Hong Kong site. (People's Republic of China, 2012)

Cultural barriers

Knowing Hong Kong's culture will help establish successful business partnerships, the first to establishing a great partnership is knowing that impatience and aggressiveness are often perceived as negative character traits so steer clear of not much pressuring your business partners. Remembering small details such as colors; red is considered a lucky color. Wearing a red tie, a red blouse, or another red piece of clothing might have a positive effect.

Greet your business contacts with a handshake and a slight bow. Remember to respect the hierarchy that influences Hong Kong business culture. When you are introduced to a group of people, greet the most senior member first. Body language also plays a role in Hong Kong business culture. Therefore it is important to remain calm and polite, but also committed to doing business. Keep in mind that business can only be successful if you treat your partners with courtesy. (Hong Kong Business Culture, 2013)

Legal environment for intellectual property protection

Besides for being known for its geographical location, communications network, infrastructure, free-port status and the relatively low level of taxes; Hong Kong also has a well-established and transparent legal system inherited from the British. Likewise, there are no restrictions on foreign ownership of property or companies and no foreign-exchange controls. (People's Republic of China, 2012)

Country risk: Singapore


Singapore has traditionally been a transshipment point for much of South-east Asia, and it is the world's second-busiest port (after



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