Opportunities and Challenges for Domestic Enterprises Setting Up Subsidiaries in Hong Kong

How Domestic Enterprises Can Successfully Establish a Subsidiary in Hong Kong Coexistence of Opportunities and Challenges

In recent years, with the rapid development of the mainland economy and the in-depth implementation of the going out strategy, an increasing number of domestic enterprises have chosen to set up subsidiaries in Hong Kong. This trend not only reflects the unique advantages of Hong Kong as an international financial center but also demonstrates the urgent demand for internationalization among mainland enterprises. However, in this process, domestic enterprises face numerous opportunities and challenges.

Firstly, from the perspective of opportunities, Hong Kong serves as a bridge connecting the Chinese mainland with the global market, boasting a sound legal system, mature financial markets, and abundant professional service resources. For instance, the Hong Kong Stock Exchange is one of the most influential capital markets in Asia. Many mainland enterprises have gained broader financing channels and development space after listing in Hong Kong. Hong Kong's low-tax policies also provide a favorable tax environment for business operations. According to reports by South China Morning Post, over 20 mainland enterprises established new branches or expanded their businesses in Hong Kong in the first quarter of 2025. These enterprises share the common belief in Hong Kong's hub position within the region.

However, opportunities often come hand in hand with challenges. For enterprises venturing into the Hong Kong market for the first time, cultural differences are an undeniable issue. Although both the mainland and Hong Kong belong to the Chinese cultural circle, there remain significant differences in commercial practices and management philosophies. For example, the business community in Hong Kong generally emphasizes contractual spirit and transparency, while mainland enterprises may lean more towards solving problems through networks of relationships. Mainland enterprises need to spend time adapting to these differences and adjusting their own operational strategies. Additionally, Hong Kong's high living costs cannot be overlooked. A survey conducted by Ming Pao revealed that in recent years, due to rising rents, the operating costs of some mainland enterprises in Hong Kong have increased by approximately 30%.

To better address these challenges, domestic enterprises should make adequate preparations when planning to establish a subsidiary in Hong Kong. On one hand, they can hire professional advisory teams familiar with both markets, including lawyers and accountants, to ensure the company meets high standards in legal compliance and financial health. On the other hand, enterprises should focus on cultivating local talent, which not only helps them integrate faster into the local market but also enhances their competitiveness. It is worth noting that in recent years, an increasing number of mainland enterprises have begun adopting a dual-headquarters model, retaining headquarters in the mainland while setting up subsidiaries in Hong Kong to handle overseas affairs. This approach allows enterprises to maintain their core competitiveness while achieving a global layout.

The advancement of technology has also provided new possibilities for mainland enterprises to explore the Hong Kong market. By leveraging cloud computing and big data technologies, enterprises can improve efficiency while reducing operational costs. For example, some mainland fintech companies successfully launched innovative financial service products targeting Southeast Asian markets by establishing R&D centers in Hong Kong. These cases demonstrate that as long as enterprises are adept at utilizing new technologies, they can completely overcome traditional geographical limitations.

In summary, domestic enterprises must confront the coexistence of opportunities and challenges to successfully establish a subsidiary in Hong Kong. By thoroughly understanding the characteristics of the Hong Kong market, actively adapting to cultural differences, and reasonably planning resource allocation, domestic enterprises can not only seize the vast development space offered by Hong Kong but also lay a solid foundation for their future internationalization. With the deepening construction of the Guangdong-Hong Kong-Macao Greater Bay Area, it is believed that more mainland enterprises will utilize the Hong Kong platform to step onto the world stage.