Everything You Need To Know About Hong Kong in 2019

Table of contents

Abstract………………………………………………………………………………….. 3

Introduction……………………………………………………………………………… 3

Top five Import/export…………………………………………………………………. 3

Political system…………………………………………………………………………. 3

Local companies………………………………………………………………………… 4

          Invention and Innovation……………………………………………………….. 4

          Entry modes into international markets………………………………………………… 4

          Specialization-competitive advantages………………………………………………… 4

          The marketing mix of the company-the four P’s of international market………….. 4

Hofstede’s cultural dimensions…………………………………………………………

           Power distance……………………………………………………………………………. 4

           Uncertainty avoidance…………………………………………………………………… 5

           Masculinity vs. femininity……………………………………………………………….. 5

          Individualism vs. collectivism……………………………………………………………. 5

Conclusion………………………………………………………………………………. 5

Abstract

This paper aims to examine the role of Hong Kong not just as a renowned business region but to also explore the impact it has locally and internationally as it seeks to increase its global reach towards other new markets. Further analysis will be done on their import and export capacity as well as the economic environment that enables the region to operate efficiently and successfully that has led it to draw foreign direct investment from other countries.

Introduction

Hong Kong is an autonomous region which is located on the eastern side that harbors the Pearl River while also being located in the south of the mainland that is China specifically in the Guangdong province. It currently is in the first place when it comes to the Financial Development Index and is considered highly competitive and the freest business region globally.

Top 5 Import and export

In rankings, Hong Kong is the fifth biggest economy globally. It is documented that in 2016, the region exported five hundred and six billion dollars and imported a staggering four hundred and ninety-eight billion respectively. This resulted in a positive trade balance that netted an estimate of seven billion dollars. The top five exports that the area is known for include gold ($52.6B), cellphones ($51.7B), broadcasting tools and equipment ($23.3B), office gadgets and parts ($ 20.1B), as well as integrated circuits ($96.4B). Employing the revised harmonized system of 1992, its top imports include personal computers ($22.1B), gold ($ 28.4B), integrated circuits ($ 81.3B) as well as telephones ($40.3B). The region’s collective exports as of last year have seen a growth of 8% after a slight decrease of 0.5% at the end of 2016 Ho et al, 2016, p.25).

According to Ho et al (2016), the pillar commercial industries in Hong Kong include logistics and trading which account for a total of 21.7% of the total GDP, and that is concerning value added as of 2017. Production companies as well as the professional service industry both make-up a total of (12.5%). Tourism being the last makes a total of 4.7%. Upcoming potential sectors that can take advantage of the development and progress of the region include technology and innovation, medical and educational facilities as well as areas that deal with culture and creativity. Environmental conscious industries are also taking shape as the current state of the globe is deteriorating at a fast pace. Certification services that are also combined with testing are also another area that Hong Kong is witnessing a growth in. All these sectors though still little account in terms of GDP account for 8.9% as of 2017. (p.35)

Political system

The area is governed by the HKSAR (Hong Kong Special Administrative Region) which is a part of the People’s Republic of China. According to Lau (2013), the head of the organization is the Chief Executive and is tasked with making the major decisions that mostly revolve around policy implementation and works hand in hand with the executive council who also aid in the process. The administrative arm has a two-tier hierarchy system that makes up the government. At the center of the structure is the legislative council which has the responsibility of approving the expenditure of public services as well as acting as the watchdog of the other administrative branches (p.109). The district level, governance is split between 18 councils whose job is to advise as well as make changes to policies that affect their respective areas. The executive arm of the structure is divided into various government departments and the secretariat. This part of government has the responsibility of formulating policies as well as make recommendations for legislative proposals. The existing unit is tasked to implement accented laws as well as strategies and go further to serve the community through public service means. The judiciary is independent and is tasked with the dispensing of justice and the adjudication of particular cases as long as they are within the laws (Lau, 2013, p. 112).  

Local companies

Invention and Innovation

According to Forbes Sun Hung Kai Properties, China Merchants Holdings and Shanghai industrial are three local companies that are expanding their trade not only into the Chinese mainland and Hong Kong but also globally and are rapidly growing to become formidable competition.

Entry modes into international markets

They employ a cocktail of tactics when it comes to entry into global markets. They include joint ventures, exporting, licensing, online marketing as well as buying assets on foreign soil.

Specialization-competitive advantages

They have an abundance of raw materials, and their cost per unit is lower than other companies due to the availability of cheap labor as well as incentives that the government provides. They also sign free trading agreements that enable them export at company prices which make their products sell much faster. Their economies of scale allow them to manufacture a lot of goods at fair costs which make selling in bulk easier.

The marketing mix of the company-the four P’s of international market

Their products have a wide range of variety that enables them to customize an item to the specific wants of buyers who come from different regions. This stretches all the way from variety, size, warranties, services, brand name as well as quality. It also helps that their prices are heavily discounted, and in some cases, they allow for flexible payment periods which include favorable credit terms to their buyers. Once goods are manufactured, they have a seaport as well as efficient air transportation that enables the industries to transport goods to their clients efficiently. Promotion of the company’s products and services is done through sale promotions, online ads as well as expos that are done to encourage the meeting of buyers and sellers.

Hofstede’s cultural dimensions

Power distance

Hong Kong on the power distance index scores a 68 which translates to the belief that social inequality is accepted. This means that the subordinates can be abused by persons who are superior to them and the relationship thus takes on a polarized approach (Hofstede, 2008, p.164).

Uncertainty avoidance

With a low score of twenty-nine, this means that the laws in place can be bent and made flexible depending on the prevailing situation which includes accepting that pragmatism is part and parcel of life. The language itself is made up of ambiguous twists thus making it hard for foreigners to interpret (Hofstede, 2008, p.165).

Masculinity vs. femininity

Ranked at fifty-seven, the existing society leans towards a more masculine nature as it is mainly influenced by success and the drive to be better. This strive for success is brought out by the fact that the people in the society need to put in many hours working to ensure they are the best in their fields.

Individualism vs. collectivism

With a score of twenty-five, the culture present promotes the occurrence of a collectivist society. The main interests are collective in a group rather than taking on an individual nature. This goes further to the family unit whereby closer related groups in a family setting will benefit from preferential treatment (Hofstede, 2008, p.166).

Conclusion

From the above, it is evident of its growing capacity to handle global trade while also being able to meet demand that is growing on an annual basis.

References

Ho, S. S., Scott, R. H., & Wong, K. A. (2016). The Hong Kong financial system a new age (2nd ed.).

Hofstede, G. (2008). Europe Versus Asia: Truth Versus Virtue. The Virtuous Organization, 163-169. doi:10.1142/9789812818607_0008

Lau, S. (2013). The Middle Class and Politics in Hong Kong since the Handover. East Asian Policy, 05(04), 107-116. doi:10.1142/s179393051300041x

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