Hendrik Hillebrecht
Leiter Geschäftsentwicklung & Innovation
+852 2532 1218 hillebrecht.hendrik@hongkong.ahk.deAccording to most survey respondents, Hong Kong excelled in aspects such as taxation (with an average rating of 4.47 out of 5) and infrastructure and connectivity (4.35). However, the political climate (2.75) and office rental and housing costs (2.00) were ranked significantly lower, reflecting a certain level of unease among businesses about the sustainability of operating in the city, particularly when looking ahead to 2025. While some respondents were expecting improvements with regards to the overall economic development (24.3%) as well as infrastructure and connectivity (20.8%) in the coming twelve months, many were anticipating a further deterioration in the political climate (43.9%) and challenges in attracting talent from overseas to the city (38.3%). With regards to recruiting and retaining staff, respondents reported high living costs, a shrinking talent pool, and industry-specific difficulties in attracting skilled workers as particular challenges. A widely perceived decline in the English language standard and Hong Kong’s international appeal further exacerbated these staffing issues.
Meanwhile, business confidence in Hong Kong improved from the previous years with an average rating of 3.36 (on a scale from 1 to 5), nearly matching the pre-Covid rating from August 2019. Confidence among respondents’ international stakeholders remained noticeably lower, but likewise improved from 2023. The impact of the new security law on Hong Kong’s international reputation was a point of worry, with some respondents questioning the city’s ability to maintain its status as a global financial hub. Despite these concerns, 86% of respondents stated their company was not considering a relocation in the immediate future, while one in four (24.3%) indicated further investments in Hong Kong in the next two years, suggesting a commitment to maintaining stable operations in Hong Kong.
The survey results show mixed sentiments with regards to how German companies perceive and engage with the Greater Bay Area (GBA). Nearly every third respondent (31.4%) found their company was benefiting from Hong Kong’s integration in the GBA, with many already invested in neighbouring cities like Shenzhen (28%) and Guangzhou (25%). At the same time, a much smaller group (15.2%) was able to identify specific advantages that distinguish the GBA from other regions in Mainland China.
The close physical and logistical ties between Hong Kong and the rest of the GBA were seen as a major advantage, facilitating easier travel, supply chain management, and business operations. Respondents also noted tax incentives and the relative ease of travel within the GBA as compared to other regions. Moreover, the GBA was acknowledged for its rapid development in technology and innovation, which presents opportunities for businesses looking to tap into cutting-edge markets.
Yet, despite these recognised benefits, investment plans in the GBA remain cautious. Some companies were planning to establish new offices, innovation hubs, or testing laboratories in the GBA over the coming two years. Specific mentions included expanding merchandising functions and setting up data management offices in Shenzhen. However, nearly 63% of respondents stated there were no investment or expansion plans. Practical and regulatory challenges, such as difficulties in opening bank accounts in Mainland China, were cited as barriers limiting the full exploitation of GBA opportunities and tempering the enthusiasm for broader investment. In addition, one in five respondents was experiencing issues regarding cross-boundary data transfers between Hong Kong and the Mainland.
The Delegation of German Industry and Commerce (GIC) and the German Chamber of Commerce, Hong Kong (GCC) conduct a joint Business Confidence Survey each year to gauge the current sentiment and outlook of the German business community, and to provide a helpful reference for business leaders and policymakers locally and overseas.
This year’s survey gathered a total of 119 online responses between June and July 2024. The lowest number of registered answers for any of the questions included in this summary report was 89. Survey respondents include corporate members of GCC (92.4%) as well as non-members (7.6%) including local subsidiaries or branches of German parent companies, sales agents and distributors of German brands, as well as locally established entities under German ownership. One in four surveyed companies (25%) were locally established companies, while the vast majority (75%) had their parent companies located outside of Hong Kong and either fulfilled the function of a regional headquarters with managerial responsibility for all business operations in the region (30.6%), a regional office overseeing some other markets/countries (25.9%), or a local office with sole responsibility for the Hong Kong market (18.5%).
The survey respondents come from a wide range of service/industry sectors. The largest share (38.6%) was active in the consumer goods industry, followed by accounting and professional services (13.9%), electronics and electrical parts (13.9%), as well as banking, finance and insurance (11.9%). In terms of the number of employees in Hong Kong, survey responses were largely distributed between small offices with 10 employees or less (40%) and medium-sized offices with 11 to 100 employees (38.3%), while 21.7% of respondents were working in large offices with more than 100 staff. As for their respective companies’ global headcount, 43.1% of respondents estimated 500 employees or less, while 29.3% worked in companies with over 10,000 employees worldwide.
Leiter Geschäftsentwicklung & Innovation
+852 2532 1218 hillebrecht.hendrik@hongkong.ahk.de