Hong Kong Firms Shift Expansion Focus to Mainland China, South Asia Amid Trade Barriers

Hong Kong companies are increasingly focusing on expanding their businesses into mainland China and South Asia, driven by rising tariffs and trade barriers in the US and Europe. A survey by HSBC reveals that half of Hong Kong firms prioritize mainland China, while a quarter target South Asia, favoring regional markets to mitigate risks such as high shipping costs and tariffs. This strategic pivot is supported by efforts from Hong Kong and Beijing to strengthen ties with Southeast Asia and the Middle East amid ongoing US-China trade tensions heightened by President Donald Trump's reciprocal tariffs and EU punitive tariffs on Chinese exports. Hong Kong ranks as one of the least complex jurisdictions for doing business in APAC, offering a favorable environment compared to mainland China, which is among the most complex due to regulatory challenges. Despite trade uncertainties, nearly three-quarters of Hong Kong businesses remain confident about global growth prospects over the next two years. The trend reflects a broader geopolitical shift towards regional alliances and intra-Asia commerce as companies adapt to evolving global trade dynamics.