Boomerang Entrepreneurs: Hong Kong to Canada and Back
Dana, Leo Paul, Journal of Small Business Management
Life in Hong Kong
Life is good in Hong Kong. Per capita, Hong Kongers drink the most cognac; drive the most Mercedes Benz cars (the highest Mercedes Benz market share in the world, over 12.5 percent of the colony's private cars); export the most textiles, toys, and watches; gamble the most; and read the most newspapers in the world. The colony has 69 registered newspapers, including two English-language dailies (among them the South China Morning Post which developed the world's first Braille daily). Hong Kong also has more cellular phones per capita than anywhere else in the world, providing communications for entrepreneurs, bankers, brokers, bullion centers, etc. Ninety-eight percent of Hong Kong households own televisions.
Hong Kong has one of the world's most comprehensive public transportation systems; it is privately-owned and unsubsidized. The underground Mass Transit Railway carries over two million people daily, while about 3 1/2 million passengers use at least one of Hong Kong's three bus services. Hong Kong also has 163 electric trams. The new airport, scheduled to open in 1997, is part of the largest civil engineering project in the world. Hong Kong's Kwai Chung container port is the biggest in the world. A railway links Hong Kong with China. Demand for transportation is so high that sometimes trains are fully booked; the author once had to purchase a ticket from an entrepreneur on the black market.
The Regulatory and Tax Climate in British Hong Kong
Hong Kong has long benefitted from being a duty-free port, that is, the colony has no important tariffs. The only duties are those on alcoholic beverages, cosmetics, hydrocarbon oils, methyl alcohol, motor vehicles, and tobacco.
Unlike many governments which fund new ventures and offer loans to entrepreneurs, Hong Kong offers no special incentives. Instead, a laissez-faire policy of free trade and low taxation, coupled with minimal regulation and an excellent infrastructure has made Hong Kong an attractive manufacturing and financial center, the eleventh largest trading entity in the world. It is relatively easy to create a new venture in Hong Kong; even foreigners have no obstacles to set up an enterprise there. A company may be established within 72 hours of application. Establishing a branch office of a foreign company with limited liability is also simple. The income tax is a flat 15 percent, and there is neither sales tax nor V.A.T. in Hong Kong. Perhaps most symbolic of the lack of government involvement in the economy is the fact that there is no central state bank in Hong Kong; currency is issued simultaneously by the Hong Kong and Shanghai Banking Corporation and by the Standard Chartered Bank.
China's Impending Takeover and Potential for Adverse Change
According to the Joint-Declaration of the 1984 Sino-British Agreement, Hong Kong will revert to Chinese rule on July 1, 1997, at which time the People's Republic of China plans to march 15,000 troops into the former colony. The agreement stipulates that Hong Kong is to become a "Special Administrative Region" with its own legal and judicial system alongside economic autonomy until the year 2047. Despite the Joint-Declaration, numerous entrepreneurs in Hong Kong have doubts about the survival of Hong Kong as an international finance center with free movement of capital after 1997.
Table 1 Emigration from Hong Kong Year Total Emigrants(1) Immigrants to Canada from Hong Kong(2) 1980 22,400 6,309 1981 18,300 6,451 1982 20,300 6,542 1983 19,800 6,710 1984 22,400 7,696 1985 22,300 7,380 1986 19,000 5,893 1987 30,000 16,170 1988 45,800 23,281 1989 42,000 19,994 1990 62,000 29,261 1991 60,000 22,340 1992 66,000 38,841 1993 60,000 40,000 1994 61,600 43,710 1 Source: Estimates based on unpublished data from Government Secretariat, Hong Kong. …