Successfully investing in Hong Kong (S.A.R.)

last updated on 10 October 2025 | reading time approx. 6 minutes

How do you assess the current economic situation in Hong Kong? »
How would you describe the investment climate in Hong Kong? Which sectors offer the largest potential? »
What challenges does a German entrepreneur face when engaging in Hong Kong? »
What is the concrete impact of Peking's influence on Hong Kong? »
How do you see Hong Kong developing in the future? »

How do you assess the current economic situation in Hong Kong?

Hong Kong's economy grew by a moderate 2.5 percent in 2024, primarily driven by foreign trade. Exports, in particular, performed well: exports of goods increased again following a decline in 2023, and exports of services continued to rise. Total investment increased, while private consumer spending declined slightly.

Total exports of goods increased by 4.7 percent in 2024, following a fall of 10.0 percent in 2023. A strong recovery was seen in exports to mainland China in particular. Exports to the USA increased, while those to the EU declined, albeit less sharply than previously. Exports to the ASEAN markets also demonstrated a distinct upturn.

The increasing escalation of global trade tensions, particularly due to the unpredictable US tariff policy since April 2025, remains a factor of uncertainty. Nevertheless, the sustained growth in Mainland China, coupled with Hong Kong's strategic initiatives to forge new trade relations, could potentially stabilise or enhance the trade balance. The Hong Kong government is providing active support to companies as they seek to overcome external challenges.

Last year, private consumption continued to present challenges, with a slight decline in 2024 as consumption patterns evolved. Following a slight increase in the first quarter, private consumer spending fell in the subsequent quarters, with the decline slowing towards the end of the year. In 2024, private consumer spending fell by 0.6 percent overall in real terms, following an increase of 6.8 percent in 2023. In contrast, government consumer spending rose by 1.0 percent in real terms after falling by 3.9 percent in the previous year. The government is optimistic about a recovery in the consumer climate, with plans to stimulate growth through major events, targeted consumer incentives and an increase in tourism. In 2024, the number of tourists increased by 31 percent compared to the previous year, though this figure is still below the pre-crisis level.

Overall, the economic situation remains robust. Inflation remains low, with an unemployment rate of just 3.1 percent at the end of 2024. Real GDP growth of between 2 percent and 3 percent is expected for 2025, provided that geopolitical tensions do not escalate further and that global monetary policy remains expansionary.

How would you describe the investment climate in Hong Kong? Which sectors offer the largest potential?

Hong Kong remains one of the world's freest and most competitive business locations. It regularly occupies top positions in international rankings, for example in terms of economic freedom, investment-friendliness, and trade volume.

The city offers excellent infrastructure, including an international airport, a free port, a modern range of office space, a reliable technical infrastructure, a free flow of information and a high quality of life. The use of English as an official language is also conducive to effective communication with the authorities. From a strategic standpoint, Hong Kong's location is highly advantageous. It serves as an optimal gateway to China and is in close proximity to the vibrant Greater Bay Area, which is a major center of economic activity. All major Asian markets are within a four-hour flight.

The investment environment offers excellent conditions. Companies can be set up easily and within a few days, and the tax system is straightforward and supportive of businesses. Value added tax and withholding tax on interest or dividends are not applicable, and offshore profits are tax-free. The independent judiciary ensures legal certainty, and judgements from Hong Kong courts and arbitration institutions are recognized and enforced in most countries worldwide, as are German judgements in Hong Kong. Thanks to its excellent education system, Hong Kong has a highly skilled workforce. Labor law is extremely employer-friendly. As an international financial center, Hong Kong has an excellent banking system.

Hong Kong is the global leader in offshore renminbi trading, handling over 70 percent of global RMB trade. The CEPA free trade agreement with mainland China offers companies extensive market access, irrespective of their origin. Integration into the Greater Bay Area offers businesses additional advantages. The ASEAN Free Trade Agreement is of benefit to companies by facilitating access to ten additional markets.

German companies can take advantage of a variety of opportunities, particularly in the following areas:

Logistics and sourcing: Hong Kong's strategic location and robust business infrastructure make it an ideal location for purchasing companies and diversifying supply chains.
Regional headquarters: Many companies use Hong Kong as a strategic location to implement compliance requirements, for example within the context of the Supply Chain Duty of Care Act.
Healthcare: The ageing population represents a significant opportunity for investment in the pharmaceutical and medical technology sectors.
Retail and tourism: Although the recovery is not yet complete, Hong Kong remains an attractive destination, particularly for Chinese tourists in the luxury segment.
FinTech and e-commerce: The city is a dynamic center for digital business models, offering direct access to the Chinese market.
Infrastructure projects: German companies are well-positioned to capitalize on opportunities in public tenders, particularly in areas such as water management and waste disposal.

What challenges does a German entrepreneur face when engaging in Hong Kong?

Hong Kong is one of the world's most expensive cities. This is particularly evident in the cost of living in general, especially rent. This has an impact on the wages of foreign workers, with companies having to expect significantly higher wage and salary costs. In addition, the labor market for skilled workers is currently tight. As with any foreign assignment, there are differences in mentality and cultural contrasts in Hong Kong. Expatriate specialists and managers should be aware of this and possess the necessary intercultural skills.

Furthermore, opening a bank account for newly established companies can be a lengthy and bureaucratic process. Almost all banks have tightened their procedures in this area, primarily due to stricter anti-money laundering regulations.

What is the concrete impact of Peking's influence on Hong Kong?

Since Hong Kong's return to China in 1997, the “one country, two systems” principle has been in effect. As a Special Administrative Region, Hong Kong retained its own legal system, free market economy, currency, judicial system, laws, a political system with democratic elements and guaranteed civil liberties such as freedom of expression, freedom of the press and freedom of assembly. In recent years, this model has faced mounting pressure. Notably, the recent Security Law has imposed substantial restrictions on civil liberties. Significant changes to the political system have also been brought about by the marginalization of democratic parties and the reform of the electoral system.

The Security Law is causing considerable uncertainty, both within the population and among international organizations. Political activities by foreign institutions are now prohibited. Similar national security and counter-espionage laws, which already exist in mainland China, are now being extended to Hong Kong. Overall, Beijing is expected to continue exerting strong influence over Hong Kong's domestic policy, particularly with regard to citizens' political activities, restrictions on press freedom, and stricter regulation of the education system.

At the same time, Hong Kong remains largely autonomous in many other areas. These include the economy, currency, legal system, membership in international organizations, free flow of information, free movement of goods and capital, and more. Hong Kong is also not subject to any tax and duty law directives from Beijing. Despite the political changes, Hong Kong still differs significantly from mainland China in many respects. Hong Kong citizens and companies continue to enjoy significantly greater freedoms than those in mainland China.

How do you see Hong Kong developing in the future?

In view of Hong Kong's economic and, in particular, financial importance, it is reasonable to assume that its special status as a Special Administrative Region will continue in the future. For instance, the framework plan for the development of the Greater Bay Area shows that Hong Kong is set to play a central role, a role that assumes the continuation of its special status.

Planned developments include expanding Hong Kong's status as an international financial, shipping and trading center, a global aviation hub, an offshore RMB trading center, and an international center for asset and risk management, dispute resolution, and intellectual property trading.

Hong Kong will continue to serve as a gateway to mainland China and remain strategically located for managing economic activities in East and Southeast Asia. The city continues to welcome investment, offering investors excellent business conditions and diverse opportunities.