The Irvine Chamber of Commerce has reserved a spot in line when it comes to attracting investments from China, eyeing this long-established bastion of capitalism as a matchmaker. Officials in Hong Kong are anxious to play the role. They’re offering a relatively simple and low corporate tax structure—currently a flat 16.5% rate on profits—along with other business-friendly traditions as incentives for Chinese companies and individuals to use the financial center as a gateway for investment in the U.S.
“58% of Chinese money going out goes through Hong Kong,” according to Raymond Yip, assistant executive director of the Hong Kong Trade Development Council. “Beijing has been encouraging its companies to go out [and spend]. They have the capital. And Chinese companies establish investment vehicles [in Hong Kong].”
The Irvine chamber recently linked up with a new promotional push by the trade council, which serves as the global marketing arm for professional services firms, manufacturers and other businesses in Hong Kong. The council has 40 offices around the world, including four in the U.S.
The chamber is among the supporting partners of Think Asia Think Hong Kong, a symposium the trade council will present this summer with a goal of boosting its middleman status on business between the U.S. and China.
Chinese investment money coming into the U.S. has been on the rise in recent years, according to data from the Heritage Foundation, a public policy research group in Washington, D.C. China-based companies accounted for $17.7 billion in investments and contracts in the U.S. last year, versus $2 billion in 2011, and $9 billion in 2010.
The U.S.’ share of overall outbound Chinese capital also has been increasing. Last year, the U.S. grabbed about 22.2% of total investment that flowed out from China, compared with nearly 3% in 2011 and 14% in 2010, according to data from the foundation.
Hong Kong and Irvine have something extra going for them as they seek to host more of the business links between the two countries. Hong Kong has had status as a Special Administrative Region since the People’s Republic of China resumed sovereignty from the British 15 years ago. Its free-market heritage and proximity to China proper—Hong Kong includes several islands, as well as territory on the mainland—is generally seen as a benefit for businesses with customers, suppliers or plants across the border.
“[We are] looked at as a dependable gateway into China,” Yip said. “It’s a place of rule of law, and foreign companies can put their hearts at ease when they’re dealing with Hong Kong.”
Irvine’s advantages include significant numbers of Chinese immigrants and Chinese- Americans as residents and business owners.
The city has a population of about 223,000, and about 40% of its residents have ethnic ties to Asia, with China being a prime source.
Irvine’s business landscape is dotted with enterprises that show the Chinese influence, ranging from manufacturing operations to retailers grouped together at Diamond Jamboree retail center in the area near John Wayne Airport and other strip malls along major thoroughfares in the city. The city’s highly regarded public school system and a lineup of colleges anchored by the University of California, Irvine, also are a draw for the current crop of newly wealthy Chinese.
Now is an ideal time to build links between Irvine and Hong Kong, according to Irvine Chamber President and Chief Executive Tallia Hart.
The Think Asia Think Hong Kong events come as the chamber aims to “showcase some of the programs that we offer in promoting global business,” she said.
Among the chamber’s efforts is a series of webinars designed to help companies locate opportunities overseas and make decisions about imports and exports. The resources are offered under the chamber’s Export Trade Assistance Program, which launched in 2010.
Think Asia Think Hong Kong is slated for June, with one-day events in New York and Los Angeles. The two sessions will cover similar subject matter, but with distinct speaker sessions to fit the business landscape of the respective coasts. There might be more to it than tapping Chinese money. The demand for U.S. technology products in Hong Kong and other parts of Asia may also serve as a boon for companies here.
“Hong Kong has a big appetite to handle technology products from the U.S.,” said the trade council’s Yip. “We don’t produce enough of those products. That’s why we need to import from around the world. It’s not just [about] investing money directly.
The simplest thing is to trade. We would encourage U.S. businesses to export to Hong Kong ... and [have] as many U.S. [small-to-medium enterprises] as possible to use Hong Kong as a platform.” U.S. exports to Hong Kong grew 37% on a year-over-year basis in 2011 to $36.45 billion, with a smaller gain last year to put the total at more than $37 billion. A bulk of the amount that Hong Kong imports from the U.S. typically gets redistributed to China, Yip said.
Hong Kong’s interest in technology plays well into the partnership between the council and Aliso Viejo-based networking organization Octane, which also has signed on as a supporting partner of the upcoming Think Asia Think Hong Kong initiative.
Octane aims to grow the tech business sector in OC by connecting businesses and entrepreneurs to capital and other resources. It has helped more than 500 companies to connect with LaunchPad, its startup accelerator program that was formed in 2004, according to the organization.
Octane draws about 7,000 people annually to various events, including an annual VC in OC event that brings companies together.
This year’s VC in OC is slated for next month in Irvine, with software entrepreneur and venture capitalist Vinny Smith among the keynote speakers