I remember watching a cartoon on Saturday mornings called Hong Kong Phooey. It was about this kung foo fighting dog that battled crime in Hong Kong. Now, I didn’t know where Hong Kong was or how to get there or if I would ever go there, but, I dug that kung foo dog and the way that good prevailed over evil.
Now that was the early 70’s and I was probably a burgeoning teenager with two karate lessons under my belt, which I quit because I couldn’t touch my toes and would rather have been playing basketball. 35+ years later and here I am in Hong Kong drinking coffee on a Wednesday morning before the organized chaos begins and I’m reading an article in the Asian Wall Street Journal about the influx of foreign (outside of Hong Kong) companies desiring to list on the Hong Kong stock exchange.
I thought, of course they want to list in Hong Kong because of the lower cost of listing, fair but not burdensome compliance – unlike the U.S. Sarbanes Oxley laws which make it cost prohibitive to list on the NASDAQ or NYSE for many firms. Also, the transparent and safe banking system and the access to capital. Why wouldn’t they want to relocate their company or alternatively set up a new company to handle their international or Asian business?
Freest country in the world. Easiest to do business. 16.5% flat corporate tax. 15% flat personal tax rate – even lower if it means you can pay less tax. No death tax, no capital gains tax, no tax on dividends, no sales tax, no consumption tax. No graffiti. World class medical care, world class schools, clean, safe, a bit crowded for those accustomed to living in a rural or suburban environment, but, a very livable city. In fact, Hong Kong was ranked number 1 in the Heritage Foundations 2011 Index of Economic Freedom.
I have to think that Hong Kong Phooey had something to do with this. Now, unlike Hong Kong Phooey, I don’t have a Phooeymobile to travel around Hong Kong, but I don’t really need it because the public transportation is the best I’ve ever experienced anywhere in the world – and it’s cheap. Anyway, if I had a Phooeymobile I would certainly get confused driving on the wrong side of the road, and those roundabouts would have my head spinning. I do have something similar to Hong Kong Phooey’s Hong Kong Book of Kung Foo which he consulted to fight bad guys, only to be saved each time by his trusty sidekick Spot – go figure a cat saving a kung foo fighting dog. What I have is a book of knowledge gained from being on the ground here in Hong Kong, advising my clients on Asian (specifically China) market entry via Hong Kong and on numerous transactions, mergers and joint ventures.
What I know is I am big fan of Hong Kong Phooey and a bigger fan of Hong Kong. I was with one of my clients yesterday and we were talking about Hong Kong – she’s been spending more time here as her global business grows. She said, “Hong Kong has everything, it is safe and easy and a world class city, I love it here.” What you should know about her is that she is a very experienced, talented and successful entrepreneur and has chosen to base her new ventures in Hong Kong specifically because of the economic freedom. She didn’t mention that her country, which is supposedly the “freest” in the world comes in at a distant number 9 on the list, which is generous and just one slot ahead of the economic megalopolis of Bahrain.
So, next time you and your business are feeling overburdened by regulations and taxes and lack of capital, look to the kung foo fighting dog and his trusty sidekick Spot. Look to Hong Kong Phooey!!
The post was written by Frank Caruso, the chair of the China Practice Group at IPG Legal.