1. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 1 2006 Annual Survey of Companies in Hong Kong Representing Parent Companies Located outside Hong Kong

2. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 2 (i)Survey conducted annually since early 1990s: Covers RHQs and ROs (ii)Since 2001: Extends to cover LOs (iii)Since 2004: Also collects views from LOs Background

3. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 3 (iv) Since 2006: Revised survey name Revised definitions of RHQ, RO and LO Background (Cont’d)

4. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 4 (i)To enumerate RHQs, ROs and LOs in HK representing their parent companies located outside HK (ii)To obtain basic information of these companies (iii)To seek views on the attractiveness of HK as a location for setting up RHQs/ROs and LOs Objectives

5. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 5 Covers companies that take charge of the operations/business in HK or in the region (i.e. HK plus one or more other places) on behalf of their parent companies (with final management control) located outside HK  Reference date: 1 June 2006 Coverage

6. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 6 Classification of a Company as an RHQ, RO or LO Taking charge of the operations/business on behalf of its parent company located outside HK? Non-RHQ/RO/LO No Geographical responsibility ? Yes LO HK only RHQ Yes Any managerial control over offices in the region? In the region RO (i.e. only coordinates offices and/or operations in the region) No

7. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 7 Country/Territory of Location of Parent Company of RHQs, ROs and LOs No. of companies

8. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 8 Geographical Responsibility of RHQs and ROs in the Region (other than HK) No. of companies

9. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 9 Views on Importance of Factors Affecting the Choice of Location for Setting up RHQs/ROs and LOs RHQs/ROsLOs 1Low and simple tax system1 2Free flow of information2Corruption free government 3 3Free flow of information 4Absence of exchange controls4 5Political stability and security5 6Rule of law and independent judiciary 6 Ranking in Descending Order of Importance

10. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 10 Views on HK’s Favourableness as a Location for Setting up RHQs/ROs Factor Favourable for HK Unfavourable for HK 1Low and simple tax system71%1% 2Free flow of information69%1% 3Absence of exchange controls69%1% 4Communication, transport and other infrastructure 67%1% 5Free port status66%1% 6Corruption free government66%1% 7Geographical location64%1% 8Availability of business services and professional support services 63%1% 9Rule of law and independent judiciary61%1% 10Political stability and security61%1% 11Availability of financial services60%1% Regarded the factor as

11. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 11 Views on HK’s Favourableness as a Location for Setting up RHQs/ROs (Cont’d) Factor 14% 16% 33% 32% Availability and cost of residential accommodation Availability and cost of business accommodation favourable for HKunfavourable for HK Regarded the factor as

12. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 12 Views on HK’s Favourableness as a Location for Setting up LOs Factor Favourable for HK Unfavourable for HK 1Low and simple tax system70%1% 2Free flow of information67%1% 3Absence of exchange controls67%1% 4Corruption free government65%1% 5Free port status63%1% 6Communication, transport and other infrastructure 63%1% 7Availability of business services and professional support services 60%1% Regarded the factor as

13. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 13 Views on HK’s Favourableness as a Location for Setting up LOs (Cont’d) Factor 18% 14% 31% Availability and cost of business accommodation Availability and cost of residential accommodation favourable for HKunfavourable for HK Regarded the factor as

14. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 14 Views on Overall Business Environment in HK as a Location for Setting up RHQs/ROs Comparing June 2006 with June 2005 Deteriorated 6% No comment 13% Improved 30% Same 50% Effect of CEPA Affected very much7% To some extent44% A little/not at all48% No comment1%

15. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 15 Deteriorated 6% No comment 14% Improved 34% Same 47% Views on Overall Business Environment in HK as a Location for Setting up LOs Comparing June 2006 with June 2005 Effect of CEPA Affected very much10% To some extent46% A little/not at all44% No comment1%

16. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 16 Views on Effect of CEPA Implemented since January 2004 on Investment Activities of RHQs/ROs Whether investment activities affected Effect No comment 14% No 76% Yes 10% Setting up new business8% expansion plans Advancing business2% expansion plans Cancelling business<0.5% expansion plans Postponing business<0.5% expansion plans

17. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 17 Whether investment activities affected No comment 14% No 78% Yes 8% Setting up new business6% expansion plans Advancing business1% expansion plans Cancelling business<0.5% expansion plans Postponing business1% expansion plans Views on Effect of CEPA Implemented since January 2004 on Investment Activities of LOs Effect

18. 2006 Annual Survey of Companies in HK Representing Parent Companies Located outside HKP. 18 2006 Annual Survey of Companies in Hong Kong Representing Parent Companies Located outside Hong Kong