Doing Business in Hong Kong

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Introduction

The report below talks of doing business in Hong King. It addresses the business structure, communication style, and management style adopted by businesses in Hong Kong.

In addition, the report talks of the etiquette of business meetings in Hong Kong, the role of women in business, dress code, and successful entertaining.

Background to Business in Hong Kong

Although Hong Kong only has a population of approximately 7 million people, there are over 470,000 SMEs in the country (CIA-The World Factbook 2012). This is an indication of the vitality, hunger and health of the Chinese business community.

If you intend to do business in Hong Kong, it is important to first study the business environment in the country as it will be affected by issues like the decision-making process, management style, and attitudes. These issues may affect the long-term relationship of a business partnership.

Country History and geography

Hong Kong is made up of the Hong Kong Island, the Kowloon Peninsula, the Stonecutters’ Island, and the New Territories that borders mainland China.

In 1841, China surrendered the island of Hong Kong to Britain (CIA-The World Factbook 2012) Geographically, Hong Kong is located in Eastern Asia and it borders China and the South China Sea.

Business Structures

The structure of business in Hong Kong is influenced by the colonial history of the island and the business practices in China. Most multinational organisations demonstrate a ‘managed’ approach (AGC Seminars 2008).

However, majority of the SMEs in Hong Kong have been founded and are controlled by Chinese families. The SMEs are characterised by a centralised decision making process owing to the family connection.

Management Style

Due to the rich Chinese heritage, Confucian thinking influences the management style of businesses in Hong Kong. Although local ideas have also been influenced greatly by many years of colonial rule, such century old beliefs like seniority and respect for the aged are still upheld by the Hong Kong people (Mayerbrown n.d.).

As such, managers in Hong Kong like to adopt a paternalistic approach while dealing with subordinates and the subordinates are expected to implement instructions given by their seniors with little or no objection. The decision making process tends to be centralized as many local firms are entrepreneurial in nature.

Meetings

The etiquette of business meetings in Hong Kong varies markedly, based on the type of firm in question. For example, multinationals are likely to adhere to the standard meeting style with regard to minutes, agendas, etc.

Conversely, small firms are more informal in their meetings (Runckel & Associates 2005). When dealing with either the multinationals or the local firms, foreign businesspersons are advised to address the senior person during business meetings, even if they do not speak fluent English.

Business discussions tend to be polite and diplomatic but voices and emotions could be raised when things are not going according to plan. The Hong Kong people accept gifts during business meetings as they signify the development of a business relationship.

Team Working

Hong Kong is a Confucian society and as such, it culture is largely group-oriented, with the family forming the strongest group ties. This means that people in Hong Kong are more likely to make effective group members as long as there is a safe and harmonious group environment (Communicaid 2009).

When it comes to choosing long-term loyalty for team members, people in Hong Kong will always prefer family members. The manager is expected to issue instructions to team members, who are in turn expected to foster a close working relationship with the manager.

Team managers are expected to provide complete and clear instructions as anything left out may not actually get done. The maintenance of ‘face’ by group members is important and as such, it is important to avoid mocking co-workers as this may lead to ‘loss of face’.

Communication styles

Although Hong Kong was under the British rule for long, English is still not universally spoken. Most employees working at the large corporations are very fluent in English, but this fluency tends to reduce as the size of the firm decreases.

As such, a foreign businessperson should be expected to encounter communication difficulties (Hong Kong Planner n. d.).

Owing to western influence, the Chinese in Hong Kong are by far more direct in comparison with the other Asians. Such directness is mainly confined to peer-level discussions as opposed to the higher ranking employees.

Women in Business

Women are influences business decisions in Hong Kong, especially in the larger multi-nationals. However, some SMEs still retain the conventional Confucian attitude towards the role of women in the workplace (Communicaid 2009).

Working in Hong Kong is not a big bother for visiting female businesspeople although the views of their male counterparts are more likely to be listened to keenly.

Dress Code

In Hong Kong, the dress code differs slightly based on the industry sector and size of the firm. Men can wear shirts, ties, and dark suits.

Women can also wear conservative business suits as well, although wearing of skirts is preferred to trousers (AGC Seminars 2008). Summer time is always hot and humid in Hong Kong and typhoons tend to be common.

Top Tips

Few conglomerates dominate business in Hong Kong. There are all kinds of businesses, and SMEs dominate the business environment in Hong Kong.
Business relationships rarely affects a deal in Hong Kong
Most Chinese businesses are family-run, and the oldest members of the family are the decision makers.
The Confucian values affect the management style of businesses in Hong Kong
Family members are preferred in businesses that require long-term loyalty
Owing to the Confucian roots, team working in Hong Kong companies is largely group-oriented.
Giving of gifts is acceptable in Hong Kong as it signifies the development of a business relationship.

Successful Entertaining

Business entertaining is very common in Hong Kong, and the inviting party always pays for the food. During meals, avoid topics like human rights and politics, but topics such as sports, the weather, family, and education are common (Communicaid 2009).

Eating everything on the table is considered an impolite gesture as it means that the host did not give you enough food. Slurping and belching after a meal is welcome as it signifies appreciation.

Facts and figures

Hong Kong has an estimated population of 7 million people with a land area of 1,075 sq km. The HK dollar is the national currency in Hong Kong, while the country’s GDP is estimated at US$ 211bn (CIA-The World Factbook 2012). In addition, 46 percent of the population in Hong Kong traces their roots to China.

Conclusion

If you are interested in doing business in Hong Kong, it is important to first learn about its history, geography, and business etiquette, cultural, social and economic factors affecting the country as they will also affect the way business is done.

Reference List

AGC Seminars 2008, Business Culture in Hong Kong. Web.

CIA-The World Factbook 2012, Hong Kong. Web.

Communicaid 2009, Doing Business in Hong Kong| Hong Kong Social and Business Culture: A Hong Kong Overview. Web.

Hong Kong Planner, Doing Business in Hong Kong. Web.

Mayerbrown, Guide to doing business in Hong Kong. Web.

Runckel & Associates 2005, Business and social etiquette in Asia: Hong Kong. Web.

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