This is an extract from the Family Offices in Asia report featuring a contribution by Geoffroy Dedieu on behalf of FamilyOfficeHK, a body of the Government of Hong Kong. This is why they believe it is time for you to set up a Family Office in Hong Kong.
WORLD OUTLOOK
Over the past few years, Hong Kong has increasingly attracted global Family Offices looking to set up additional offices. These satellite Family Offices as they are called, typically provide easier access to investments in Asia and serve as convenient locations for part of the office's processes. Ultra-high -net-worth (UHNW) families chose Hong Kong primarily for its closeness to China and Asia, and with its top rank for economic freedom, free flow of capital within and access into and out of the Greater Bay Area (GBA) region, it is not hard to see why. It is largely a question of a change in world outlook.
I have been using an Asia-centric World map for 20 years. I often showed my students in my Family Office university course the two planisphere models, Europe-centric and Asia-centric. I asked them how they viewed the world.
There are over 80,000 UHNW families in Greater China, 17,000 in the GBA (within 45 minutes reach) and more than 5,000 in Hong Kong alone. Each of these families could arguably form its own Family Office.
UHNW families and their officers need to embed themselves in a good location, close to assets or family members and a good ecosystem. Hong Kong provides both. The Special Administrative Region (SAR) has one of the freest economies globally with a low and simple tax system, access to capital, deals and assets as well as a complete palette of professional services.
FAMILY OFFICES ARE A PRIORITY
In 2021, the Hong Kong government identified Family Offices as a priority for InvestHK, which has created a specialised team to support the setup of Family Offices in Hong Kong. FamilyOfficeHK is a team of dedicated Family Office experts based in Hong Kong, China, and Europe, here to help families plan, set up and launch their offices in the SAR. At the same time, we have been working hard to build bridges between family offices, their stakeholders, the regulators and Government with an aim to further optimise the FO ecosystem in Hong Kong.
We help define the value proposition for satellite offices of international Family Offices and we act as their local champions with various parts of the administration.
NO COMPETITION
I do not see jurisdictions and financial centres as competing for Family Offices but rather as offering complementary value propositions.
Hong Kong is a place for collaboration and partnerships. Most international Family Offices are multi-jurisdictional, they have people in various places serving different purposes. Having an office in Hong Kong allows an UHNW family to have professionals close to Asian financial markets, with direct access to China. A family holding company based in Hong Kong allows the family to have a strong Asia-Pacific headquarter and a family can also have part of its foundation's team based in Hong Kong to supervise grants and programmes across Asia.
Hong Kong is Asia's cosmopolis; many global families will wish to have a presence in the heart of Asia. It has no competition but that is not to say it should work exclusively.
I think Singapore and Hong Kong are complementary in Asia; each offers a different value proposition. Hong Kong offers a vibrant cosmopolitan environment, with access to private equity deals, capital markets, start-ups, and incubators, it is a vibrant World city.
For example, Greater China dominates Asia-Pacific deal flows and Hong Kong is at the centre of this market where families are typically investing alongside PE and VC firms. The SAR is also the leading regional centre for contemporary art, philanthropy and increasingly for impact investing.
Families and FOs making exploratory trips to Hong Kong often discover that the city has a vast "backyard", which certain places in Asia lack, not only in terms of green space for hiking (75% is countryside, over 20 parks and 40 beaches) but also in terms of market access (the GBA with over 70 million people and a network of bridges and highspeed trains).
POLITICAL UNREST
I would offer UHNW individuals and families unsure of the political climate in Hong Kong the same advice I would give to anyone looking to explore the whole of Asia or Africa. I arrived in Singapore in 1993, as a young French law student and it would not have come to my mind to craft a placard and demonstrate about something at the corner of Orchard Road. As foreigners, we need to behave as guests, wherever we are.
As professionals, Family Officers need a strong legal system, economic freedom, financial stability, an efficient administration, a good ecosystem of services and a safe, world-class location for their families. Hong Kong excels at offering each of these.
STRUCTURING A FAMILY OFFICE IN HONG KONG
Setting up a company in Hong Kong takes a few days and requires minimal administrative work, it is very different from the sorts of experiences one can have starting up a business in Europe. The tax system is extremely simple: no capital gains tax, no VAT, no estate duties, no wealth tax and a network of double-taxation agreements (DTAs).
The key challenge is to find the right people, since Family Offices are unique animals, each has a different culture and one cannot rely on normal recruiting channels used for bankers for example.
There is a breadth and depth of professionals in each of the relevant fields that Family Offices will need to hire from. Whereas most family offices globally (over two thirds) were created in this century, Hong Kong boasts the oldest Family Office sector in Asia, dating back to the pre-handover period (pre 1997), so we naturally have a pool of professionals with a level of experience that cannot be found elsewhere in Asia.
Download the full report here. Are you considering a move to Hong Kong?