Hong Kong is the best anchor for Chinese firms seeking global waters

Last year, China’s outward direct investment climbed 7 per cent to US$174 billion while overseas mergers and acquisitions rebounded to over US$43 billion, up nearly 40 per cent, according to EY data. Clearly, China’s appetite for global deal-making has returned.

But the approach has changed. A decade ago, outbound investment was largely asset-driven, shaped by relatively light regulatory constraints and limited oversight. The prevailing mindset was simple: enter the market at all costs and fix problems later.

Success today hinges on building a globally competitive brand, one that requires a strong bridge between Chinese companies and international markets. In this new phase of global expansion, Hong Kong and the Greater Bay Area are emerging as that critical connector. 

Long regarded as a threshold between East and West, Hong Kong is becoming an increasingly important gateway to global success, as the city can clear four major barriers in one move. 

First, Hong Kong helps mainland Chinese companies tackle the intellectual property challenge, which emerges as firms move from contract manufacturing to brand-led expansion. With credible IP protection now a baseline requirement, Hong Kong’s common law framework, aligned with international standards such as the Trade-Related Aspects of Intellectual Property Rights (TRIPS), delivers enforceable trademark rights and transparent dispute resolution. This builds trust with foreign partners and customers. 

Second, the credibility problem. When it comes to important markets, Hong Kong lends credibility. Europe, the Middle East and Southeast Asia all view Hong Kong as a more “legible” jurisdiction, one that adheres to international accounting and corporate governance standards, enabling clear, comparable financial reporting. 

Third, the capital efficiency problem. Hong Kong offers the region’s most efficient infrastructure for cross-border investment, profit repatriation and treasury management. It has at least 51 double taxation agreements in force, alongside a free flow of capital and connectivity programmes such as Stock Connect and Bond Connect. Two-thirds of China’s inbound and outbound foreign direct investment originates from and intermediates in Hong Kong. 

Finally, Hong Kong solves the talent problem, offering unmatched advantages in building the teams capable of supporting truly global operations. The city boasts multiple high-quality talent streams: from its world-class universities – the only city with five universities in the Times Higher Education’s global top 100 list – to policies like the Top Talent Pass Scheme and a deep pool of international professionals. 

Taken together, these advantages are transformational. Hong Kong’s unique strength is its ability to act as a bridge between China’s regulatory and commercial realities, and the expectations of global markets. 

Hong Kong’s strength is amplified by the Greater Bay Area on its doorstep. With a combined economy surpassing 15 trillion yuan (US$2.2 trillion) and a population exceeding 87 million, the region would be the world’s 12th largest economy if it were a single market. 

This is the ideal ecosystem where companies can seamlessly draw on Hong Kong’s world-class financial hub while tapping into the Greater Bay Area’s manufacturing depth, research and development talent, supply chain excellence and operational scale. 

Nowhere is this more visible than at the newly opened Hong Kong side of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone. Built to reduce cross-border friction, the zone aims to enable freer movement of talent, capital and ideas, while providing direct access to advanced manufacturing capabilities. The result envisaged is a zone that truly bridges “one country, two systems” – accelerating innovation, commercialisation and large-scale manufacturing. 

So, there is no shortage of opportunity, but execution matters. In our work with Chinese companies expanding overseas, the ones that get it right have a few things in common. They treat their corporate structure as a strategic asset, not as paperwork to be dealt with later. 

The most effective outbound strategies follow a clear, interconnected pathway – linking mainland strength to international standards via Hong Kong, establishing a solid regional platform before scaling globally. Companies that try to jump straight from the mainland into a distant market without this intermediate step often run into problems they could have avoided. 

The companies that succeed think global, act local and plan ahead. Chinese entrepreneurs expanding overseas are considering exit strategies and capital-realisation options from the outset.

Progressively, Hong Kong, sometimes coupled with additional structures in other offshore jurisdictions, is used as the base of the parent company for overseas subsidiaries to facilitate global operations, acquisitions and optimise international tax planning. 

They invest in compliance, understanding that companies showing strong governance, robust IP protection and regulatory readiness face fewer barriers on market entry and access opportunities beyond their competitors’ reach. Most importantly, they centralise coordination. In a multi-jurisdictional operating environment, effective decision-making requires a strong central hub, and Hong Kong is a natural choice. 

Having spent more than 30 years advising mainland companies on cross-border expansion in this region, I can say with confidence that the runway for Chinese outbound investment is long. The winning companies will be those with the smartest structures combining robust IP protection, regulatory credibility, capital efficiency and operational scale in ways that hold up across markets and over time.

For Chinese companies serious about building sustainable and resilient global businesses, Hong Kong and the Greater Bay Area are an obvious strategic anchor. The differentiator will be how effectively companies engage with the right partners to unlock their full potential.