Hong Kong's attraction as a place to do business is evident from the inflow of foreign direct investment (FDI) and the number of regional headquarters and regional offices in Hong Kong set up by companies outside Hong Kong.

A Census and Statistics Department survey shows that Hong Kong's FDI inflow in 2004 amounted to US$34.0 billion. According to the 'World Investment Report 2005' released by the United Nations Conference on Trade and Development, Hong Kong was the second largest recipient of FDI in Asia in 2004.

Hong Kong had 9 396 enterprise groups¹ with inward direct investment at the end of 2004, comprising 195 in the manufacturing sector and 9 201 in the non-manufacturing sectors. The market value of the stock of inward direct investment amounted to $3,521.9 billion. Chart 3 shows the major economic activities of these enterprise groups while Chart 4 shows source countries/territories of the inward direct investment. Regarding employment, 73 per cent of them were enterprise groups employing fewer than 20 persons (Chart 5).

Chart 3:

Position of Inward Direct Investment in Hong Kong at Market Value by Major Economic Activity of Hong Kong Enterprise Group at end-2004

Chart 4:

Position of Inward Direct Investment in Hong Kong at Market Value by Major Investor Country/Territory at end-2004

Note: British Virgin Islands and Bermuda are important offshore financial centres commonly used by investors to channel inward direct investment funds to Hong Kong.

Chart 5:

Number of Hong Kong Enterprise Groups (HKEGs) with Inward Direct Investment by Employment Size in mid-2004

According to a survey conducted by the Census and Statistics Department, as at June 1, 2005, 3 798 companies outside Hong Kong had set up either their regional headquarters or regional offices in Hong Kong compared to 3 609 in 2004, an increase of 5.2 per cent.

1	An enterprise group may consist of a parent company, its subsidiaries, associates and branches.