Ch. 1: Business in the Economy of Hong Kong

Learning Objectives Recognize the importance of business activities. Describe the role of business in Hong Kong ’ s economy. Analyze the factors affecting business in Hong Kong. Identify the risks to business in Hong Kong.

Business All profit-oriented activities and enterprises that provide goods and services for sale.

Economic system Mechanism by which resources are brought together to produce and distribute the goods and services that consumers need and want.

Private enterprise system Economic system characterized by the rights which belong to the individual in the system. These rights include private ownership of resources, the opportunity to compete, profit incentives and freedom of choice.

Competition The battle among businesses for consumer acceptance.

Productivity A measure of efficiency in producing products and services.

Gross Domestic Product (GDP) A figure to illustrate how big an economy is.

Per capita GDP Dividing total GDP in a year by the corresponding population of that economy.

Importance of business activities Provide income for other business Provide employment opportunities Offer products and services to the market Enhance productivity Raise living standards Enhance economic growth

Factors affecting business in Hong Kong Economic Environment: Interest rates Exchange rates Inflation Labour market Trade environment Finance sector

Social Environment Political Environment Legal Environment Government Environment Physical Environment

Operating business in Hong Kong Risks to Business Susceptibility to overseas conditions Fluctuation of exchange rates Volatile market Changes in legislation Capacity constraints Dependence on external trade Trade barriers

Impact of Legislation: Consumer protection e.g. Consumers Goods Safety Ordinance Toys and Children ’ s Products Safety Ordinance Employee protection Occupational Safety and Health Council Ordinance

Government Authorities and Organizations Consumer Council Customers and Excise Department Environmental Protection Department Hong Kong Export Credit Insurance Corporation Industry Department Hong Kong Industrial Estates Corporation Hong Kong Monetary Authority Hong Kong Productivity Council

Trade Department Hong Kong Trade Development Council Hong Kong Tourist Association World Trade Organization