With a highly concentrated population of 7.5 million, Hong Kong has the second highest household expenditure per capita in the world – and there is no shortage of savvy consumers seeking out trendy products.  

But Hong Kong is so much more than an attractive initial market for selling consumer goods in Asia. It offers a simple and business friendly tax system and an efficient banking system and plenty of available support for small and medium-sized enterprises as well as investment incentives. And that’s far from all. 

Western companies in Hong Kong are often impressed by its skilled workforce trained at world-class universities, advanced logistics and transport infrastructure and high levels of digitalisation. Coupled with its strategic location at the mouth of the Pearl River Delta, Hong Kong is increasingly the first step to entering mainland China. 


While entering the Chinese market can be a complicated regulatory matter, compounded by cultural and language barriers, overseas companies are attracted to Hong Kong by its connector role to mainland China and other key cities in the region.  

Low barriers of entry mean that companies entering Hong Kong receive immediate market response. Besides this, public investments aim to turn Hong Kong into a regional research and development hub within emerging fields such as sustainability and deep tech, where Swedish companies have an edge and local development is only now catching up.  

Here are three key reasons why Hong Kong is a gateway market in the region:   

  • Proximity to China 

Strong ties to mainland China combined with an openness to the world makes Hong Kong a test bed for companies wanting to gauge Chinese potential with a smaller investment. The Business Climate Survey 2023, published by Business Sweden, showed that over half of all Swedish small and medium-sized enterprises in Hong Kong use the city for its position as a gateway to and from mainland China.  

The survey also showed that the SEK 150 billion+ in cross-border consumption by overnight visitors to Hong Kong from mainland China unlocks growth potential extending well beyond Hong Kong’s 7.5 million inhabitants. Chinese authorities’ familiarity with Hong Kong corporate structures makes ownership of a Chinese Foreign Invested Enterprise (FIE) easier from an entity in Hong Kong than from overseas markets and can reduce bureaucracy. 

  • Integration of Guangdong-Hong Kong-Macau Greater Bay Area (GBA) 

The Greater Bay Area contains three separate economies (Guangdong-Hong Kong-Macau), but local integration reduces the barriers between them. One example is that certain product registrations and professional licenses carry over from Hong Kong to Guangdong. For example, Hong Kong-registered medical devices can be sold to designated hospitals in Guangdong without registering them in mainland China.  

Hong Kong currently has no mandatory registration for medical devices, but manufacturers and importers can opt for voluntary registration of Class II, III, and IV devices which takes between six months and a year. Conversely, in mainland China the product registration is mandatory with a timeline of between six months and 2.5 years, depending on classification.  

The more rapid process in Hong Kong creates opportunities for a stepwise entry into the Chinese market by starting in Hong Kong and entering the Greater Bay Area before establishing a stronger foothold in mainland China. 

Several joint initiatives are also taking place through projects such as the Hong Kong-Shenzhen Innovation and Technology Park, and cross-border investments are becoming easier. This creates opportunities to access the 127 million inhabitants of Guangdong from Hong Kong and is the reason why two thirds of the 150 Swedish companies in Hong Kong use their Hong Kong office to cover the Greater Bay Area. 

  • Favourable trade policies 

The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) covers trade in goods and services, investments, and economic and technical cooperation. Under CEPA, companies can export to mainland China by setting up a company in Hong Kong. Products originating in Hong Kong enjoy zero tariffs, and businesses trading in services can enjoy benefits under a preferential treatment scheme. By setting up operations in Hong Kong, Swedish companies can simplify entry into the Chinese market. 

Want to know more? Stay tuned to our article series “Bridging the gap – how Swedish companies can maximise growth in Hong Kong” or contact our local advisors.