Hong Kong One Country,

Two Economies
Pavan Gantakoru, G049

INTRODUCTION

In 1989 China passed through another cycle of abrupt economy correction and a severe crack down
on political dissidents in Tienanmen Square.

Some people were confused over these issues and concluded that for a Hong Kong economically
dependent on an ailing economy managed by officials wearing Chinese jackboots, the future was dim

On July 1st, 1997 Hong Kong was returned to Chinese sovereignty and this territory is now called
Hong Kong Special Administrative Region (HKSAR) of China with a high degree of autonomy.

The Joint Declaration of one country, two systems, was registered at the United Nations in 1984.
Hong Kong remained a free port, a free trader and level playing field for business.

The Joint Declaration also states that Hong Kong is to be ruled by Hong Kong people (HKSAR 1997).
HKSAR has a great challenge ahead; which is to maintain and prove that HKSAR will still be a
competitive place for business and restoring confidence of existing and potential foreign investors.

GEOGRAPHY

The geography of Hong Kong primarily consists of three main territories: Hong Kong Island, Kowloon
Peninsula, and the New Territories

The name "Hong Kong", literally meaning "fragrant harbour", is derived from the area around present-day
Aberdeen on Hong Kong Island, where fragrant wood products and fragrant incense were once traded

Hong Kong is located in eastern Asia, on the southeast coast of the People's Republic of China, facing the
South China Sea.

NATURAL RESOURCES

Metalliferous minerals and non-metalliferous industrial minerals in the onshore area;

Quarried rock and building stone;

Offshore sand deposits.

Culture

Sophisticated fusion of East and West

It not only kept many Chinese traditions, but also experienced a baptism of western culture

Diversity of its culture and the people there are open-minded to accept variety

'family solidarity', 'family glory', 'saving face' and 'modesty' carry significant weight in Hong Kong's culture.

fastest and most efficient workers in the world

People - The population of Hong Kong is formed by Cantonese, Shanghainese, British, Indians and Jews mainly.

Language - Chinese and English are regarded as the official languages; Cantonese, Chinese mandarin and English are spoken languages.

Food - Hong Kong boasts various delicacies in the local or from overseas.

Kung Fu -Kung Fu is accepted as a form of entertainment and exercise

Gambling - horse racing and gambling

Religious Beliefs - Taoism, Buddhism, Christianism, Islam and other religious beliefs exit in the region. The Taoist concept of Fung Shui, or 'Wind
and Water', is believed by many locals

HOFSTEDE INDICES

Import and Export Trade Industry in Hong Kong

Hong Kong is the world's 8th largest trading economy.

Hong Kong is handling an increasing amount of offshore trade.

In comparison, the value of re-exports was HK$3,505 billion in 2013, up 3.8% over 2012. The amount of
offshore trade has surpassed the value of Hong Kong's re-exports.

In 2013, the sector accounted for about 20% of Hong Kongs GDP.

Hong Kong has been handling a significant portion of the Chinese mainland's

expanding external trade. In 2014, about 12% of the Chinese mainland's exports
(US$278 billion) and 13% of imports (US$251 billion) were handled via Hong Kong
and 60% of Hong Kong's total re-exports were originated from the Chinese mainland.

Source :HKTDC Offshore Trade Survey 2013

Political Scenario

Hong Kong is a part of communist China, but maintains its own capitalist system. Hong Kong
citizens enjoy certain freedoms that mainland Chinese citizens dont. Hong Kong has its own
judiciary, police force and currency, and its people have freedom of speech and assembly.

When the territory was handed over from the British to the Chinese in June of 1997, the two
powers agreed Hong Kong would be governed under this system for 50 years.

Hong Kong's business community is 'freaked out' over China's crackdown

Tensions flared again when booksellers who have published information critiquing the Chinese
Communist Party and President Xi Jinping went missing under suspicious circumstances

Concerns about Chinas increasing influence over the financial hub and its independent status
were cited as a possible factor in HSBC banks final decision on the relocation of its
headquarters.

ECONOMY

The Hong Kong economy regained some

momentum in the second quarter of 2016,
growing modestly by 1.7% in real terms over a
year earlier, up from 0.8% in the preceding
quarter

On the domestic front, private consumption

expenditure still grew slightly in the second
quarter. Meanwhile, the decline in investment
expenditure narrowed notably

Underlying inflation eased back in the second

quarter, thanks to largely moderate local cost
pressure and the absence of imported inflation

Looking ahead, barring any unforeseen

fluctuations in international energy and food
prices, consumer price inflation is expected to
remain benign in the near term.

Gross domestic product:

274 billion USD
(2013)
Population:
7.188 million (2013)
Life expectancy:
83.48 years (2012)
GDP per capita:
38,123.52 USD
Main industries:
textiles, clothing, tourism, banking, shipping,
electronics, plastics, toys, watches, clocks

McDonalds Success

From exotic to an integral part of Hong Kong culture

McDonald's alterations to Hong Kong culture - McDonald's also introduced public queuing and "civilized
order, Introduced children's birthday parties.

McDonald's adaptation to Hong Kong perceptions and practices

Smile in Hong Kong its meaning is shady. Not even a public concept of friendliness, instead, emphasis on
competence and directness.
Also conceding to customers refusing to bus their own trays and clean up
Not allowing self-service of napkins because of consumer pocketing

Conditions for MacDonald's success in Hong Kong

Emergence of a middle class of consumers in the 1970s.

Changes in child rearing values and practices

McDonald's as comfortable unwinding space for children after school

Conclusion
Although there is political unrest and few other challenges like environmental issues, Hong Kong is still
the best place to do Business

At the heart of Asias high-growth economies

Dynamic People A ready pool of expertise, enthusiasm and talent

Preferred Entry Point to China for Businesses

World-Class Infrastructure: Transport and Telecommunications

Strong Canada-Hong Kong Ties

Thank You