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Asia’s CBD

Hong Kong’s multiple strengths lie in its strategic geographical location, low risk, ease of doing b  

Hong Kong’s multiple strengths lie in its strategic geographical location, low risk, ease of doing business and strong institutional structure (photo: iStockPhoto.com)


As the economic gravity shifts from West to East, the role of a central business district (CBD) is likely to become more significant. An HKTDC survey shows that, when compared to such regional competitors as Singapore and Shanghai, Hong Kong leads the way in CBD functions. 

A good deal of Hong Kong’s CBD qualifications can be put down to its close location and relations with the Chinese mainland. Hence, given the attraction of the mainland markets, one may also include Hong Kong’s relations with the wider Asian region and position as a springboard for mainland companies’ international aspirations. Indeed, a Hong Kong government survey shows that there were just fewer than 7,000 overseas and mainland companies operating regional headquarters, regional offices and local offices in Hong Kong last year. That’s up almost six per cent on 2010, and about 56 per cent over the past decade to 2011.  

Among those 6,950 overseas and mainland companies, 1,340 of them were regional headquarters, rising more than four per cent on 2010. Roughly half came from the United States, Japan, the Chinese mainland and the United Kingdom. In the decade to 2011, the number of US companies in Hong Kong rose 64 per cent, while the number of companies from Japan, the mainland and the UK expanded by 26 per cent, 100 per cent and 39 per cent respectively. Over the same period, the number of companies from Taiwan and Singapore also surged – 99 per cent and 90 per cent respectively. 

Growing Role

  Asia’s central business district

Asia’s central
business district
(photo: iStockPhoto.com)

The study looks at Hong Kong’s competitiveness in six sectors: merchandise trade, banking and financial services, professional services, intellectual property trading, logistics services and tourism and MICE (meetings, incentives, conventions and exhibitions). 

Conducted in the first half of 2012, the survey interviewed 500 senior business executives from Asia-Pacific-based companies with regional business, spanning six industries in 10 cities. The respondents were all involved in selling or acquiring goods or services in Hong Kong and other regional markets. More than half of the respondents came from companies with offices in places other than the city where the interview took place. 

On average, the multinational companies had seven offices in the region, with Hong Kong, Seoul and Tokyo being the key headquarters for global and Asia-Pacific operations. Apart from close connections with Hong Kong, the companies also worked closely with Shanghai, Singapore, Beijing and Guangzhou through a business partner, agent or services used. 

Fifty-seven per cent travelled to Hong Kong at least twice a year, followed by Shanghai (38 per cent), Singapore (28 per cent), Guangzhou (28 per cent) and Beijing (25 per cent). 

Asia’s Preferred CBD

Hong Kong leads in banking and financial services  

Hong Kong leads in banking
and financial services
(photo: iStockPhoto.com)

More than half of the survey respondents put Hong Kong ahead of either Singapore or Shanghai as Asia’s top CBD (52 per cent for top choice, and 77 per cent for top two choices combined).This result highlighted Hong Kong’s multiple strengths, which include excellent geographical location, low risk, ease of doing business and a strong institutional structure.  

Nonetheless, Hong Kong as a CBD also faces the challenges of enhancing cost-effectiveness, human capital and the living environment. Respondents were asked to identify the essential functions for a place to become an effective Asian CBD, without specifically being questioned on preferences on each contesting city. 

They regarded a “marketing and sourcing platform” and “gateway to the Asian market” as the two most important functions of an Asian CBD. Such roles or functions as an “information hub” or “lifestyle trendsetter” were regarded as least important.  

Based on the rankings of such CBD functions, respondents were asked about their preference among the three competing cities of Hong Kong, Singapore and Shanghai. Of the 10 CBD functions listed, more than half of the respondents invariably put Hong Kong ahead of either Singapore or Shanghai. 

While Hong Kong enjoys a comfortable lead over the two cities in the top two CBD functions, the lead is actually more pronounced in such aspects as being a “lifestyle trendsetter” and a “middleman in business.” Hong Kong’s lead as a “transportation hub,” however, is the narrowest among the 10 CBD functions.

While respondents ranked Hong Kong higher than Singapore and Shanghai in 2012, they consistently ranked Singapore above Shanghai as a CBD serving Asia.  

The scenario changed, however, when respondents were asked about their preferences in 2017. While they’re optimistic about the sustained lead of Hong Kong as Asia’s CBD over other regional contenders, in the near term, they expect Shanghai to emerge as a stronger competitor in Asia, out-ranking Singapore as a “marketing and sourcing platform” and “lifestyle trendsetter.” Shanghai also narrowly contests Singapore in many areas, in particular as a “middleman in business” and a “gateway to the Asian market.”  

A closer look at a CBD’s most important function, as a marketing and sourcing platform, showed that Hong Kong ranked consistently above Singapore or Shanghai in terms of seeking or obtaining cross-border buy orders, and placing cost-effective procurement orders for regional and international distribution.

On the six industries surveyed, Hong Kong ranked highest across the board among the three cities though, admittedly, respondents said that Hong Kong’s strengths as a CBD serving Asia were not entirely uniform. The widest margins in rankings were for “financial services,” followed by “merchandise trade,” with the narrowest being “logistics.” Hong Kong’s lead as a CBD in respective industries widens if the market is confined to Greater China rather than Asia as a whole.   


Top Financial Centre


For the second year running, Hong Kong has been named the world’s top financial centre by the World Economic Forum (WEF). Hong Kong finished first in banking financial services, second in business environment and fourth in financial access and financial markets in the WEF Financial Development Index, which surveyed 62 of the world’s leading financial systems and capital markets. “We will continue to strengthen Hong Kong in various aspects as a leading financial centre and as the Chinese mainland’s offshore renminbi centre,” said John Tsang, Financial Secretary of the Hong Kong Government.

The United States, the United Kingdom and Singapore followed Hong Kong in the 2012 rankings.

This is in light of the overriding importance of “geographical location” in respondents’ rankings of the preferred CBD, given Hong Kong’s geographical proximity to Taiwan, and the Chinese mainland being its immediate hinterland. 

Hong Kong’s perceived lead over Singapore is widest when it comes to serving Greater China with “banking and financial services,” followed by “tourism and MICE” and “merchandise trade,” with the narrowest lead in “logistics.” 

From the narrow perspective of banking and financial services in serving the Greater China market, Hong Kong has a clear lead over Singapore, given its prominent role in offshore fund-raising for mainland companies. 

Hong Kong has also grown into the largest offshore renminbi centre since launching  its corporate renminbi and trade settlement business in 2009. Singapore’s CBD role shrinks considerably compared with Shanghai in serving the Greater China market, with Singapore out-ranked by Shanghai in “banking and financial services,” “merchandise trade,” “intellectual property trading” and “tourism and MICE.” These findings only pertain to the current perceptions on respective industry leadership.  

On balance, more than half of the respondents viewed Hong Kong as better able to maintain or strengthen its perceived industry leadership in Asia over the next five to 10 years. Nonetheless, the risks appear to be greater in merchandise trade and professional services, due to competition from Shanghai and Singapore.  

For more on markets trends, please see the September issue of the HKTDC Trade Quarterly.

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