18 Nov 2013
Investments of Hong Kong companies in Changsha
1. Hong Kong-invested enterprises in Changsha: overview
|High-tech industries are a major sector for Hong Kong investment in Changsha.|
Since the first Hong Kong company set foot in Changsha, Hunan in 1984, the city has to date approved the establishment of 578 Hong Kong-invested enterprises, making up 54% of all foreign-invested enterprises (FIEs) approved in the city over the past three decades. This year, 305 Hong Kong-invested enterprises participated in the joint annual inspection, accounting for 46% of all enterprises taking part in the exercise. The total investment of Hong Kong-invested enterprises participating in the joint annual inspection amounts to US$6.229 billion, while their combined turnover tops Rmb35.977 billion. Altogether they paid Rmb3.176 billion in taxes.
Hong Kong investment in Changsha is marked by the following characteristics:
- In terms of total investment, Hong Kong-invested enterprises make up the bulk of FIEs in Changsha and are the most important source of funds from FIEs.
- In terms of investment form, Hong Kong-invested enterprises are mainly wholly-owned operations. Wholly Hong Kong-owned enterprises make up 67% of the utilised foreign investment of all Hong Kong-invested enterprises in Changsha.
- In terms of investment sector, Hong Kong-invested enterprises are engaged mainly in the manufacturing and real estate businesses, contributing 56% and 24% respectively to the utilised foreign investment of all Hong Kong-invested enterprises in Changsha.
- In terms of operation scale, more and more sizeable Hong Kong companies are investing in Changsha. In recent years, some of Hong Kong’s Fortune 500 companies and other renowned companies have established a presence in the city.
To date, the biggest foreign-invested project in Hunan province is undertaken by Wharf Group’s Wise Noble Investments Ltd. With a total investment of US$1,400.95 million and a registered capital of US$992 million, the company is constructing the Changsha International Finance Square (IFS) project.
Up to now, three Hong Kong Fortune 500 companies, namely China Resources, Hutchison Whampoa and Jardine Matheson, have set up wholly foreign-owned enterprises (WFOEs) in Changsha with independent legal entity status. In September 2012, China Resources inaugurated its C’estbon beverage operations in Changsha’s Ningxiang with a total investment of US$57 million and a registered capital of US$20 million. Hutchison Whampoa has established Hutchison Whampoa Properties (Changsha Wangcheng) Limited with a total investment of US$49.9 million in the city’s Wangcheng district, and a Watson’s personal care store project with a total investment of US$6.49 million in Yuhua district. Jardine Matheson has set up Hunan Zungfu Hairun Vehicle Sales & Service Co Ltd in Kaifu district, dealing mainly in sales and repair of automobiles.
High-tech industries are another key sector drawing Hong Kong investment. Among the more representative enterprises are VIA Technologies Inc and Lens Technology (Changsha) Co Ltd. With a total investment of US$274 million, VIA Technologies deals primarily in electronic products. Lens Technology produces mainly optical lens, glass products, flat panel displays and 3D panel displays, and has made a total investment of US$180 million. Both companies are important Hong Kong enterprises in Changsha.
2. Protecting the interests of Hong Kong-invested enterprises
In recent years, Changsha’s Commerce Bureau has attached great importance to protecting Hong Kong enterprises’ investment rights and interests. It strives to improve the investment environment and enhance service standards to drive the rapid growth of Hong Kong economic activities in the city. Major measures undertaken include the following:
|Changsha city government welcomes investment from Hong Kong.|
(1) Strengthening systems establishment and regulating approval procedures
At the end of 2010, the Commerce Bureau revised the Collection of Documents of the Changsha Commerce Bureau on Implementing Checks and Balance Systems, which covers rules and work flows related to the System for Approving the Establishment of Foreign-Invested Enterprises and System for Approving Alteration of Foreign-Invested Enterprises. The formulation and implementation of the checks and balance systems are aimed at enhancing the openness, fairness, transparency and efficiency of the Commerce Bureau’s administrative approval process, and are major initiatives to improve the administrative environment and promote the growth of commercial activities.
(2) Building a service culture and raising approval efficiency
In accordance with the requirements of the Changsha city party committee and city people’s government to streamline approval procedures, slash approval items and shorten approval time, efforts will be made to provide one-stop services for enterprises. For licences issued to FIEs by the Commerce Bureau and approved by districts and counties (cities), the Commerce Bureau has further streamlined internal procedures to shorten the processing time from one working day to one hour, with efficiency in speed raised by over 90%. The approval process has been improved significantly and administrative efficiency raised. For FIEs falling within the Commerce Bureau’s approval scope, the system of “getting approval first, submitting materials later” will continue. For enterprises failing to furnish all the materials required for their application, approval will be granted first and the materials are allowed to be submitted later, as long as the approval does not go against any state policies. Enterprises have expressed appreciation towards such a highly efficient administrative approval system.
(3) Implementing joint annual inspections on FIEs to shorten processing time
Led by the Commerce Bureau, a joint annual inspection working group was established in 2005. It comprises representatives from different departments like provincial and city commerce, provincial and city industry and commerce administration, provincial foreign exchange, city finance, city state taxation and city local taxation. Joint annual inspections are conducted on all FIEs in Changsha with regard to FIEs’ performance on investment contracts and their production and operation situation. During the joint annual inspection period, responsible staff members from various departments work together in the city government services centre for two days every week. Like past years, enterprises this year can submit information and data needed for the inspection online. Upon vetting and approval by the respective departments, enterprises can download and print out the annual inspection report and bring it together with other required information to the city government services centre to complete the annual inspection procedures. This efficient online joint annual inspection mechanism helps cut enterprises’ costs substantially, and is much welcomed by FIEs including Hong Kong enterprises.
Information provided by Investment Promotion Office of Changsha Commerce Bureau
5 November 2013