2016年CRI Hong Kong reinforces role as hub for corporate treasury centres

"We hope to reinforce Hong Kong's role as a springboard. With our new policies and their related services, we can better exert Hong Kong's role as China's financial and capital raising market to help Chinese businesses as they enter overseas markets."

Francis Ho, associate Director-General of Invest Hong Kong.

This is the Hong Kong government department responible for direct investment into Hong Kong.

Invest Hong Kong is now actively 1 attempting to court more mainland companies into the city by promoting its recently-launched tax breaks for companies which set up a Corporate 2 Treasury 3 Center.

A CTC is the equivilant of an in-house bank for multinational 4 corporations, acting 5 as a central conduit to accept and transfer funds among a company's divisions and groups.

Under a new program launched in June, companies which set up a corporate treasury center in Hong Kong will see their profit taxes cut from 16.5 to 8.25 percent, and will also qualify for additional tax deductions 6.

Francis Ho with Invest Hong Kong says they believe many mainland companies stand to benefit from using Hong Kong as their financial hub as they begin investing in other countries.

"Firstly for companies, they are able to utilize 7 the financial platform of Hong Kong, because there are more financial products available here, and it is also easier for them to bring down their costs when it comes to raising capital. Secondly 8, by centralizing the management of their overseas currency in Hong Kong, these companies will be better able to use the knowledge of Hong Kong's financial professionals. Together with the tax benefits, I believe Hong Kong is an attractive move for mainland companies."

The China General Nuclear Power Corporation became one of the early-adopters of using Hong Kong as the home of its corporate treasury center, setting up Huasheng Investment in 2010.

Huasheng's General Manager Lu Gang explains the reason.

"Currently all the capital from our overseas subsidiaries is pooled through our Hong Kong platform, which allows us to optimize 9 our financial movement when one of our subsidiaries needs cash. At the same time, being a corporate citizen in Hong Kong not only brings us a 50% reduction in our profit taxes, but it also allows us more tax deductions on the interest we pay on our loans we provide to our subsidiaries."

Li Nan with Standard Chartered Bank in Hong Kong says the maturity 10 of the banking 11 sector 12 in Hong Kong compared to the mainland when it comes to foreign markets is also a major benefit for mainland companies.

"The Hong Kong financial market responds very quickly to tax, interest rate and foreign currency price movements. And when there are restrictions 13 on the outflow of RMB on the mainland, companies registered in Hong Kong will still be able to raise money to pay their overseas debt obligations on-time."

Statistics from China's Ministry 14 of Commerce show nearly 35-hundred mainland companies registered in Hong Kong last year.

That's a 12-fold increase from the number of listings just 10-years ago.

For CRI, I'm Zhao Jianfu.