The Shift in Business Dynamics: Why Companies Are Moving from Hong Kong to Shenzhen

The recent political and social unrest in Hong Kong has prompted a significant number of businesses to consider relocating their operations to Shenzhen. This article delves into the motivations behind this trend, focusing on concerns about taxation, governance, and security. We will also explore the logistics of moving a business and the advantages offered by Shenzhen.

Why Companies Are Considering a Move

One of the primary reasons for companies to consider moving from Hong Kong to Shenzhen is the volatile political environment. Many business owners and investors have decided to leave after witnessing or hearing about incidents of violence and protests that have dominated local news. The constant threat of civil unrest disrupts regular business operations and creates an uncertain business climate.

Taxation and Financial Concerns

Maintaining operations in Hong Kong can be costly, particularly when tax rates are factored in. Many companies are attracted to the lower tax rates in Shenzhen. According to various sources, a company operating in Shenzhen can save a considerable amount on corporate taxes, income taxes, and other business-related expenses. For example, the corporate tax rate in Hong Kong stands at 16.5%, whereas in Shenzhen, it is 25%. For high-value operations, this difference can be substantial.

Unfounded Sue Claims and Legal Issues

Financial concerns are often accompanied by legal and reputational risks. Several high-profile cases have raised questions about transparency and the rule of law in Hong Kong. Issues such as the 831 Incident, where over 70 people were killed by police during protests, and the sexual abuse allegations against Hong Kong police, have tarnished the city's reputation. The justice system in these cases has been criticized for its handling of such serious allegations.

Provider Statements and Relocation Decisions

One business owner, when asked if he would stay or move his company from Hong Kong to Shenzhen, stated, 'I am considering moving my company to Shenzhen. Why should I pay HK taxes when they are being spent on rioters? I neither want my money to support those involved in such activities, nor do I want to risk hiring any rioters.' He further added, 'They said it themselves: never forgive, never forget.' This sentiment is echoed by many, leading to a significant number of companies opting to leave Hong Kong.

The '831' Incident and Legal Disputes

The '831' Incident, where over 70 people were killed in a violent clashed at MTR Prince Edward Station on August 31, 2020, is another significant event that has contributed to the exodus of businesses. Similarly, the recent revelation that a court sentenced someone who falsely accused protesters of sexual abuse in the San Uk Ling Holding Centre has further deepened concerns about the justice system in Hong Kong.

Objective Statistics and Market Trends

According to a recent survey of 100 companies, 68% reported that they are seriously considering relocation to Shenzhen. While there is no concrete data on the number of companies that have already moved, reports indicate that the trend is growing, driven by low taxation and enhanced governance.

Logistics and Benefits of Relocating to Shenzhen

Moving a business to Shenzhen involves more than just changing locations. Companies need to consider aspects such as legal frameworks, infrastructure, and the availability of skilled labor. Shenzhen offers a streamlined bureaucratic process and a robust ecosystem that supports entrepreneurship and innovation. Additionally, the city's proximity to Hong Kong and its excellent transportation links make the transition smoother.

In conclusion, the move from Hong Kong to Shenzhen is a response to a complex mix of economic, legal, and security challenges. By relocating, businesses hope to mitigate risks and capitalize on the economic advantages offered by Shenzhen, ensuring a more stable and secure operating environment for themselves and their employees.