Greetings from Hong Kong
By John Dietz - 
Email Editor
Date : 13-Nov-2007
Dear Subscriber:
According to the 2005 report on Economic Freedom of the World, compiled by the U.S. based Cato Institute, Hong Kong is the freest economy in the world. In that study, Hong Kong was rated first among 127 economies. Fast forward to today, and Hong Kong with its English common law system, non-tolerance for bribery or cronyism, and with its proximity to Mainland China, it is prospering like never before.
Perhaps beauty promotes business growth, and this being the case, Victoria Harbor is still as beautiful as ever. Although I must say with current development in the harbor, the distance between central Hong Kong and Kowloon is becoming narrow. We may see a time when you will be able to walk from one side of the harbor to the other on a tiny footbridge.
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As an international business center, Hong Kong is numero uno in this part of the world. Currently two thirds of the enterprises (57,500 in total) in the Pearl River Delta are Hong Kong businesses. These companies employ almost 10 million people. As China matures, so will its tax policies. Last year brought with it personal income tax for the first time. This year we are seeing new corporate tax policies throughout each region. The landscape is once again changing, particularly in and around the Pearl River Delta.
After July of this year, exporters in the Pearl River, with its close proximity to Hong Kong, will have to pay a deposit equal to half the amount they spend on importing goods. Included are 1,853 types of raw materials, metals, plastics and textile products among others on the list. The Hong Kong Trade and Development Council estimates that nearly 15,000 Hong Kong firms will be seriously affected by China’s new policy.
The move is seen as the government of the Pearl River Delta maturing and wanting to move business models toward service-ibased industries and perhaps more eco-friendly companies. Sound familiar? The maturing of businesses and tax systems in China will bring changes and reinventions that cannot clearly be defined at this moment in time.
It is estimated that 2,000 plus Hong Kong companies will go out of business due to this new paradigm shift. I have no doubt that Hong Kong will be affected in the near term by changes in the Pearl River Delta; however the mechanics of being an international financial center will blossom new ventures to other regions. It appears that Vietnam will be the first beneficiary of this new trend.
You may be asking yourself if you sit in the U.S., what, if any of these distant lands, have anything to do with my own personal Asset Protection Plan? The answer is everything. We are, for better or worse, inexorably connected to the rest of the planet, economically, socially, and of course, environmentally.
Just one year ago in China, there were a total of 15 billionaires; today there are over 100 according to the recent Huron Report. NO, this is not a typo and the word is billionaire. Millionaires are being made daily in this region. For some continuity, the U.S. is number one in the billionaire category with 415. China is second and obviously closing fast. This rapid change from communism to capitalism may have started with one man. In 1980 Deng Xiaoping, then member of the Chinese Communist Party broke the Maoist dogma by announcing “to get rich is glorious”.
Today, Hong Kong is still one of my favorite places on the planet. It operates like a Swiss rail system; it has all the panache of London, the food of New York and a worldview second to none. It seems to attract the best of the best from all of the other cities I have ventured to for business and for pleasure.
Until next time,
John
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ABOUT THIS EDITOR:
John Dietz is a strategic advisor at Trustmakers.com with a passion for client solutions that can encompass your business, your real estate, and your personal assets. Mr. Dietz serves to educate you on the latest in asset protection planning.
11 NOVEMBER
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