Hong Kong as the hub for the internationalization of Chinese firms: contributing factors and implications.

Abstract

Through the years, Hong Kong developed to be an international financial centre and under the ‘one country, two systems’, its economy is increasingly interdependent and integrating with the second largest economy of the world, Mainland China. As a matter of fact, Hong Kong has been playing a key role as the main gateway for Chinese investors and companies to reach foreign markets, as well as for overseas investors to enter the Chinese highly controlled market. At the same time, the Chinese government, well-conscious about Hong Kong’s importance for its economic growth, put a lot of effort for the integration of the two markets, by introducing a series of policies and economic agreements. This paper begins with an analysis of the factors which make Hong Kong the favoured platform for Chinese firms’ internationalization. Then, the dynamics of how Hong Kong channels Chinese capital are presented in detail. These arguments give a deeper understanding of the reasons why some companies prefer to list on Hong Kong’s Stock Exchange, as well as why Hong Kong has been chosen as the location for RMB offshore market development. Finally, examples about the internationalization process of two Chinese companies from different industrial sectors, are analysed.