Why HK Businesses Choose to Set Up Wholly Owned Subsidiaries on Mainland China? Analysis of Advantages and Opportunities

Why Choose to Establish a Wholly-Owned Subsidiary on the Mainland? The Advantages and Opportunities for Hong Kong Enterprises

In recent years, with the continuous growth of the mainland economy and the continuous release of market potential, more and more Hong Kong enterprises have chosen to establish wholly-owned subsidiaries on the mainland. This trend not only reflects the deepening integration of the economies of the two places but also demonstrates strategic adjustments made by Hong Kong enterprises in response to global challenges. This article will explore why Hong Kong enterprises choose to set up wholly-owned subsidiaries on the mainland and analyze their underlying advantages and opportunities.

The Attractiveness of the Mainland Market

In recent years, the mainland market has attracted the attention of many foreign enterprises due to its large consumer base and rapidly growing economic strength. According to statistics from the Ministry of Commerce, actual foreign investment in the mainland increased by 7.1% year-on-year in the first half of 2025, with the service sector and high-tech industries becoming key areas of foreign investment focus. For Hong Kong enterprises, the mainland market is not only a vast stage for products and services but also a strategic high ground for long-term development.

For example, the well-known Hong Kong retail brand Chow Tai Fook Jewelry Group has recently intensified its layout in the mainland market. According to reports by the South China Morning Post, Chow Tai Fook plans to open 500 new stores within the next three years, mainly in secondand third-tier cities. This expansion strategy is driven by the strong demand among mainland consumers for high-quality jewelry products and the huge business opportunities brought about by consumption upgrades.

A series of preferential policies introduced by the mainland provide convenient conditions for Hong Kong enterprises. For instance, the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area clearly supports Hong Kong and Macao enterprises integrating into the national development landscape and encourages Hong Kong-funded enterprises to set up headquarters or branches within the region. These policies offer institutional guarantees and support for Hong Kong enterprises entering the mainland market.

Unique Advantages of Hong Kong Enterprises

Despite the fierce competition in the mainland market, Hong Kong enterprises still possess competitive advantages in many aspects. First, as an international financial center, Hong Kong boasts a well-developed financial services system and rich international experience. This enables Hong Kong enterprises to better seize cross-border capital flow opportunities and provide professional services such as financing and investment consulting for mainland enterprises.

Second, Hong Kong enterprises have accumulated rich experience in brand building and marketing. Take Sun Hung Kai Properties, the largest real estate developer in Hong Kong, as an example. By introducing advanced property management models and technical means, the company has successfully developed a series of high-end residential projects in multiple cities across the mainland. The successful operation of these projects not only enhances the company's brand image but also brings substantial economic benefits.

Furthermore, Hong Kong enterprises excel at integrating resources to create synergies. For instance, Kerry Logistics Network Corporation, a major logistics giant in Hong Kong, has actively expanded its presence in the mainland market in recent years. Through collaboration with local partners to develop supply chain solutions, the company has achieved rapid business expansion. This resource integration capability helps Hong Kong enterprises overcome numerous obstacles in entering new markets.

Opportunities and Challenges

Of course, establishing wholly-owned subsidiaries in the mainland is not without challenges for Hong Kong enterprises. On one hand, the complex and diverse legal and regulatory environment in the mainland imposes higher compliance requirements on enterprises; on the other hand, intensifying regional competition puts some enterprises under pressure. However, overall, the opportunities outweigh the challenges.

From a macro perspective, the mainland economy is currently undergoing a critical period of transformation and upgrading, with emerging industries such as new energy vehicles and artificial intelligence showing strong momentum. If Hong Kong enterprises can seize the opportunities in these fields, they may gain greater development space. For example, SenseTime, a Hong Kong technology company, has recently increased its investment in the mainland market. Leveraging its leading artificial intelligence technology, the company has achieved significant results in smart city and smart healthcare applications.

From a micro perspective, as mainland consumers' pursuit of quality lifestyles continues to rise, Hong Kong enterprises also face new development opportunities in health foods and fashion design. According to reports by the People's Daily, a Hong Kong food brand quickly gained popularity in the mainland market by launching low-sugar, low-fat healthy snacks, achieving double-digit growth in sales for two consecutive years.

Conclusion

In summary, establishing wholly-owned subsidiaries in the mainland is both a choice that aligns with the times and a necessary path for the self-development of Hong Kong enterprises. With its unique geographical advantages, rich international experience, and keen market insight, Hong Kong enterprises can find their place in the mainland market and achieve long-term development. In the future, as cooperation between the two places deepens further, it is believed that more Hong Kong enterprises will join this, jointly writing a new chapter of mutual benefit and win-win outcomes.