Hong Kong
Hong Kong is a unique urban region with diverse cultural elements located in the Asian continent. The administrative region belonging to the Chinese territory has witnessed a series of transformations over the years (Chu, 2017). The origin of this place dates back to 1841 when the British traders wanted to expand their business relationship with China (Chu, 2017). This native Asian region has a population of approximately 7.507 million as of 2019 (Wang, 2020). Moreover, in the same year, Hong Kong recorded an average household income of US$3541.52 per month (Chu, 2017). In 2018, this region documented an all-time high of 3.8832 million people employed (Wang, 2020). The official languages spoken by the people of Hong Kong are Chinese and English. In addition, the region’s geography can be described as hilly and mountainous while it lies on the coast of the Asian mainland, covered by steep igneous rocks and volcanoes (Wang, 2020). This paper explores the business environment of Hong Kong, analyses its cultural elements using Hofstede’s framework, and offers recommendations to the challenges of conducting business in the region.
Business Environment of the Country
Hong Kong is regarded as one of the best regions for enterprising individuals and companies. It offers a stable and well-organised business landscape with its cutting-edge infrastructure and telecommunications considering its $365.7 billion Gross Domestic Product in 2019 (Wang, 2020). It is also well-known for its Laissez-faire economic system, suggesting that its government does not practice interventionism, thereby allowing businesses to expand as the society also develops (Chu, 2017). However, its administrative bodies only get involved with public limited companies. Due to Hong Kong’s low tax approaches, this region collects revenues by selling and levying taxes on land and also encouraging foreign direct investments from individuals and corporations in other countries. Hong Kong’s main income sources have been attributed to its significant industries such as financial services, especially banking and insurance, trade facilitation and logistics, and tourism (Wang, 2020). The region’s leading imports are integrated circuits, diamonds, office equipment, telephones, and many more. In contrast, its primary export products are gold, broadcasting equipment, watches and clocks, and appliances.
Cultural Analysis Based on Hofstede’s Framework
Hofstede’s framework is a model used to distinguish the cultural dimensions of different countries and understand how business can be conducted across diverse cultures. Developed by Geert Hofstede, it utilises several elements to explain the differences in various groups of people (Huang & Crotts, 2019). For example, the power distance index (PDI) indicates the degree to which power is disseminated and how inferior groups of people agree that authority is distributed unevenly (Huang & Crotts, 2019). Hong Kong’s PDI of 68 is considered above average, and it implies that the citizens of this region believe that disparities are acceptable (Wang, 2020). Moreover, individualism shows the extent to which a given community of people is interdependent. With a score of 25, Hong Kong is considered a collectivist unit where individuals act in the masses’ interest and not for themselves (Wang, 2020). Therefore, this attribute influences hiring and promotions in the workplace, with groups such as families getting special treatment.
A high masculinity score means that a society is more masculine and does not imply values for caring for others similar to femininity. Therefore, Hong Kong’s 57 is considered somewhat a region with masculinity, implying that it is driven by achievement, success, and dominance (Chu, 2017). In contrast, uncertainty avoidance explains the degree to which people feel threatened by unknown variables and have established attitudes to avoid them. Hong Kong’s index of 29 is considered low implying that observing rules and regulations is adaptable since the citizens of this region are comfortable with uncertainty (Wang, 2020). In essence, the citizens are flexible and entrepreneurial in their decision-making processes.
Moreover, long-term orientation explains how societies are willing to forego short-term success to prepare for the future. With a high score of 61, Hong Kong is considered to be a pragmatic culture, meaning that individuals are inclined to save, invest, and practice thriftiness (Wang, 2020). In addition, people from this region encourage modern education as a tool for preparing for the future. Lastly, indulgence shows the degree to which individuals attempt to satisfy their fundamental human wants. Hong Kong’s 17 shows that it is more restrained than indulged (Wang, 2020). This index implies that this culture is inclined to skepticism and pessimism. In addition, Hong Kong has the tendency to avoid leisure time and regulate the gratification of their impulses. In essence, this Asian region remains a good business destination for entrepreneurs.
Business and Social Customs
In Hong Kong, business customs are more formal than in any other place in the world. For example, getting a person’s name is vital as Hong Kong people prefer to be called by their first name, similar to Western culture (Chu, 2017). Moreover, the concept of avoiding humiliation is imperative in this culture as individuals disregard public embarrassment. Respect is also considered paramount, as seen in the case of a business contact where a light handshake is a norm. The concept of gift-giving is significant, especially when invited to someone’s home; the visitor is expected to bring presents such as flowers, fruits, or imported spirits (Wang, 2020). In essence, Asian countries value both business and social etiquette since it plays a vital role in their society.
Challenges of Expanding a Business to Hong Kong
A business venture in Hong Kong comes with several challenges. For example, starting an enterprise in this region is subject to several permits from the Hong Kong government depending on the category of products or services. In addition, a prospective company has to consider competition laws stipulated by the parliamentary Counsel in 2012 (Wang, 2020). This regulation prohibits organizational rivalries based on the abuse of market influence, anti-competitive contracts, mergers, and acquisitions. While Hong Kong remains a region with easy tax compliance, potential businesses will have to pay profit, salaries, and property taxes (Chu, 2017). Overall, although this region may have some minor problems associated with running a business, it is still one of the most lucrative places in the world to establish a brand.
Recommendations for a Successful Business Expansion
There are several strategies that aspiring businesses can incorporate to achieve success in the Hong Kong market. For example, entrepreneurs can consider implementing and developing an inbound marketing approach. This method involves creating valuable content and experiences that suit consumer preferences, thereby establishing long-term customer relationships. Moreover, an enterprising individual can also consider designing multiple streams of revenue to protect their business while also facilitating growth and bolstering customer loyalty.
In conclusion, this paper has analysed the cultural features which influence business operations in Hong Kong. The Hofstede diagnostic framework has been used to analyse this region’s social aspects and discovered that Hong Kong is a collectivist society having a high-power distance. Moreover, this territory remains one of the most lucrative business destinations for any company intending to expand its operations. It is because it has various laws and regulations that bring more benefits than shortcomings to enterprises.
References
Chu, Y. (2017). Hong Kong culture and society in the new millennium (1st ed.). Springer.
Huang, S. S., & Crotts, J. (2019). Relationships between Hofstede’s cultural dimensions and tourist satisfaction: A cross-country cross-sample examination. Tourism Management, 72, 232-241.
Wang, K. (2020). Hong Kong Popular Culture (1st ed.). Palgrave MacMillan.