HONG KONG: A PLACE OF OPPORTUNITY, STABILITY, AND MINIMAL RISK Final Exam SNHU INT600 Submitted By Jeffrey D.

Cole

2 The following factors were critical in choosing Hong Kong as my preferred place to start an international accounting and finance consulting business: proclivity to the English language (Lesson 4), commitment to laissez-faire democratic economy (Lesson 2), low political risk (Lesson 9), low terrorism (safety) risk (Lesson 10), low economic risk (Lesson 2), high financial services in economy (Lesson 7), high receptivity to Western culture (Lesson 4), high availability of technology (Lesson 2). While 95% of the population is Chinese, Hong Kong shares English as the national language with Cantonese (CIA, 2012) thus the nation is populated by citizens who are either fluent or acquiring fluency in English. The younger generation learns English in the primary schools therefore possessing skills of communication early. This provides a workforce proficient in English, avoiding many of the challenge of transcultural communication of language. The human language and communication skills was the target of a study by Schermerhorn cited by Luthans and Doh (Luthans Doh, 194) wherein those possessing English still maintain cultural barriers to communication, such as culture, perception, and non-verbal communication. While these remain a barrier, I believe that having a foundation of English that exists in Hong Kong will minimize challenges that exist elsewhere where such English skills do not exist. Hong Kong is committed to a democratic laissez faire economy, a factor critical to my starting a business in that country. The CIA Fact Book reports that Hong Kong is a free market economy highly dependent upon foreign trade, including mainland China, which is a national economy positioned for tremendous strength and growth over the coming decade. As an international entrepreneur starting an accounting and finance business, I am positioning myself to take full advantage of Hong Kongs economy being comprised of 92% financial services and 12 % of the workforce serving in the financial services sector (CIA). The current developments and agreements with mainland China lower the economic risk confronting Hong Kong. Specifically, the Hong Kong Closer Economic Partner Arrangement, known as CEPA, has

3 made access to the mainlands economy seamless, and intentionally permits internationally owned Hong Kong based businesses to benefit by the agreement (Government of China). Many banks have become Hong Kong US business friendly, encouraging investment and business development between the nations. As I establish my business in Hong Kong, I would develop a banking relationship with HSBC Bank, working closely with them as I venture into Hong Kong. HSBC has developed many tools for entrepreneur ventures into Hong Kong, and has positioned itself as a leader and forward thinking resource for business owners wanting to establish a presence in Hong Kong, as evidenced by their publicly available comprehensive resource Doing Business in Hong Kong. Hong Kong has been governed by a Constitution since 1990, which provides a separation of powers among judicial, executive, and legislative branches (CIA). Their limited democracy form of government has proven stable now for over twenty years, thus minimizing political risk. Though they are no longer under British control, but have been transferred back to Chinese control, they function administratively as their own nation, having limited political influence from mainland China, but benefiting from economic ties. Furthermore, the CIA lists no transnational conflicts or disputes with which Hong Kong is currently engaged. A critical issue is safety. According to Stephen Cryne in Lesson 10, Canadian and American labor is less likely to travel because of risks to their safety abroad (Cryne, 1). This is an increasing concern that must be considered when starting a business internationally. Therefore a nation lacking any significant terrorist threat is a critical element in the geography of the business. Hong Kong is a nation leading the world in its low threat of terrorism. The United Kingdom states, There is a low threat from terrorism in Hong Kong (Foreign and Commonwealth Office of the United Kingdom). Likewise, the United States Department of State does not list Hong Kong as a travel warning nation.

4 The technology of Hong Kong is very favorable to productive business within the nation. The country ranks 47th (globally) in internet users, 48th in internet host companies, 55th in cell phone users, and possess their own domain suffix of .hk (CIA World Fact Book). Furthermore, the CIA comments that Hong Kong telephone modern facilities provide excellent domestic and international services (CIA). HSBC bank remarks that Hong Kong has a world-class infrastructure, providing technology and communications that operate without interruption or blackouts (HSBC, 10). In conclusion, let me directly address the questions posed for the final exam beyond what I have already addressed above. Hong Kong was an interest to me, first, because it posed a safe environment comparatively to the other nations of the world. Secondly, it is the most appeal economically of those providing a safe environment. The major positives that come with this new job include unlimited potential in economic growth, opportunity to expand my experience internationally, and opportunity to become enthused again about employment. The negatives include unknown risk to capital, development of new professional relationships, and learning a new culture and market. My new employment would be establishment of an international accounting firm providing a link between Hong Kong and United States based business. I believe an opportunity exists as Hong Kong business desire to expand their markets to America, and knowledge of American business and accounting practice would be needed to navigate the American market. I have worked internationally over the years, even taking my entire family abroad for a number of months. I also serve with the Army National Guard, so I continue to be at risk of serving internationally

5 at a moments notice. However, given my age (44), experience, and age of children, it makes more sense to me to achieve the same Hong Kong business opportunities by remaining domestically based.

6 References Central Intelligence Agency. The World Fact Book. Retrieved December 7, 2012, from https://www.cia.gov/library/publications/the-world-factbook/geos/hk.html. Marcial, Gene. Fast Growing Emerging Markets Are Again Attracting Investors As U.S. Economic Recovery Sputters (Forbes Magazine). Retrieved December 7, 2012, from http://www.forbes.com/sites/genemarcial/2011/06/09/fast-growing-emerging-markets-areagain-ttracting-investors-as-u-s-economic-recovery-sputters/. US Department of State. Hong Kong Specific Information. Retrieved December 7, 2012, from http://travel.state.gov/travel/cis_pa_tw/cis/cis_1136.html#safety. Luthans, F. & Doh, J. P. (2012). International Management: Culture, Strategy, and Behavior (8th ed). New York, NY. Government of Hong Kong. Doing Business in China. Retrieved December 9, 2012, from http://www.gov.hk/en/business/businessmainland/businessinfochina/. Mohan. (2012). Culture. Southern New Hampshire University INT600 Lecture. HSBC. Doing Business In Hong Kong. Retrieved December 8, 2012, from http://www.commercial.hsbc.com.hk/1/PA_esf-ca-appcontent/content/commercial/html/GatewayBrochure.pdf. Foreign and Commonwealth Office of the United Kingdom. Hong Kong (SAR of China). Retrieved December 9, 2012, from http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-bycountry/asia-oceania/hong-kong-special-administrative.

7 Cryne, Stephen. Foreign Assignments Increasing, Along with Employee Resistance (Canadian HR Reporter). Retrieved November 20, 2012, at http://www.cerc.ca/Portals/0/PDF%20Folders/About%20Us/In%20News,%20On%20Road/0927 04%20CHRR%20-%20Foreign%20Assignments.pdf.