Does Coronavirus Affect Opening a Company in Hong Kong?
6 minute read
It seems like there is no end in sight when it comes to the consequences and fear caused by the outbreak of Coronavirus in China. However, the Chinese authorities claim that the viral outbreak is being handled in the best possible way and that it will all soon be over.
The illness called Covid-19 is the one to blame for all the havoc. It started in Wuhan, China and it is caused by a member of the Coronavirus family that has never been encountered before.
Just like other coronaviruses, this one has come from animals too. The virus can cause pneumonia and those who have fallen ill are reported to suffer coughs, fever, and breathing difficulties. In more severe cases, there have been reports of organ failure too.
But, what does this mean for all of the entrepreneurs looking to start a company in Hong Kong? Is Hong Kong threatened by this virus? Should you avoid Hong Kong at all costs?
Take a look below to find out.
The current economic situation in Hong Kong and China
According to authorities in Hong Kong, the economic impact of the coronavirus outbreak could actually be more severe than in 2003 when the city was struck by SARS.
Paul Chan Mo-Po, the Financial Secretary, has claimed more than once that he expects more people to lose their jobs, admitting that the effects of the health crisis are more notable since the city’s growth has been based on tourism and retail in recent times.
“We still have to see how things go, to determine the economic impact of the coronavirus outbreak, but it does not seem to be optimistic, and could possibly be much more severe than in 2003.”
There is no doubt that retail and catering businesses are suffering the hardest hit right now. Retail sales recorded their highest ever drop of 24% year on year in the previous quarter, with total revenues for the catering industry dropping 6% in a first-ever plunge since SARS.
On the other hand, authorities state that there were no adjustments in the financial sector regarding areas such as bonds, foreign currencies, and derivatives. And, although there were some fluctuations in the stock market, it is still operating smoothly.
It was expected that the whole of China would suffer more serious consequences that would impair its overall growth. However, even though the consequences are there, they are nowhere near detrimental as some estimated.
How Hong Kong economy recovered after SARS
There is no doubt that the Hong Kong economy went through a sharp gyration during the course of 2003.
Even though the viral outbreak of SARS derailed the growth, the overall economic activity staged a speedy and broad-based recovery in the third quarter. The upswing spilt well into the fourth quarter upon a further lift in local sentiment.
Yes, there was a setback caused by the spread of Severe Acute Respiratory Syndrome, but the region’s economy still attained an appreciable growth in 2003.
As it was estimated, the external sector suffered a hard blow. Inbound tourism and everything travel-related was badly affected by the virus.
But, even though this sector suffered the biggest blow, it bounced back swiftly in the third quarter and distinctly more in the fourth quarter. This remarkable comeback was mainly driven by a strong pick-up in visitor arrivals from mainland China.
Following the Individual Visit Scheme in late July, the region experienced a spike in visits. After a couple of months, visitors from other parts of the world started making their way back to Hong Kong.
A lot of these visits were accounted to tourists, but many entrepreneurs came back to move on with their businesses in Hong Kong.
Exports and trade
Strong growth was recorded in merchandise export and offshore trade too. This was mainly due to the hectic growth in the mainland economy and the surge in intra-regional trade.
Additionally, enhanced competitiveness of Hong Kong’s exports, underpinned by the distinct weakening of the US dollar and further domestic cost adjustment, as well as deriving from increasing competitiveness of mainland products in the world market, rendered an additional boost to the export performance and trade.
Consumer spending was severely hit by the virus outbreak in the second quarter of 2003, but it was progressively resurrected in the third and fourth quarters.
Consumer sentiment was boosted by the rally in the local stock market, a more active property market, and a steady improvement in the overall employment situation.
Thanks to the improved economic conditions and brighter business outlook, investment spendings on machinery and equipment bounced back to notable growth in the later part of 2003.
Finally, the GDP grew by 3.3% in real terms, up from 2.3% growth in 2002.
Don’t let Coronavirus hinder your business goals
It is obvious that Coronavirus is not to be taken lightly even if you are not near the affected areas.
If you are traveling to areas affected by this disease, you need to take every measure to ensure your own safety. Always check whether authorities deem it safe to travel to affected regions. Some regions are even off-limits due to quarantine.
However, it is also important to note that Hong Kong is not affected to the same degree as some other regions are (Wuhan and neighboring provinces, for instance).
On top of that, if you are planning to open a company in Hong Kong, you shouldn’t be reconsidering your decision, since opening a company can be done digitally.
In other words, if you want to start a business with the help of Sleek, you don’t need to be physically present in the affected areas. Therefore, opening a company remotely will have absolutely no negative effects whatsoever!
Remember, the Coronavirus outbreak should not be underestimated. However, there are ways to keep your business afloat and even start a new one without actually being in danger of getting infected.
In addition, keep in mind that the region’s economy has already been hit by a virus and it recovered quite well and quickly.
If you have any more questions, feel free to reach out to us!