As the war among the United States, Israel and Iran damages the image of major Middle Eastern cities that have aimed to be "global financial hubs," Hong Kong, which has served as Asia's leading financial hub for decades, is enjoying a windfall. According to China Yinhe Securities, as large amounts of capital flowed into Hong Kong in the wake of the war, the average daily transaction value on the Hong Kong Stock Exchange in the first week after the outbreak reached 341.5 billion Hong Kong dollars (about 66 trillion won), up more than 40% from the previous week. The inflows are further strengthening Hong Kong's status as a financial hub while driving expanded investment in future industries.
Keeping pace with rising demand for artificial intelligence (AI), Hong Kong, which has focused on fostering advanced technology industries, is seeking to leap to a "global technology hub" on the back of the influx of capital. In this year's policy address and budget, the Hong Kong government identified AI as a key driver of the future economy and allocated at least 30 billion Hong Kong dollars (about 6 trillion won) to develop a technology hub in the border area to nurture the AI industry. At the forefront of this strategy is Invest Hong Kong, the government's dedicated investment promotion agency.
Invest Hong Kong's innovation and technology (I&T) institutional sector supports global innovation and technology corporations in entering Hong Kong and establishing operations, and helps them expand into regional and overseas markets using Hong Kong as a base. Through this, it plays a role in helping Hong Kong establish itself as a "global technology hub." Andy Wong, who heads this institutional sector, showed a strong will to cooperate with Korean investors and technology leaders by holding a seminar last month with the Federation of Middle Market Enterprises of Korea (FOMEK) on "the future and opportunities of innovation and technology in Hong Kong and beyond."
The expansion of investment centered on Hong Kong is also evident in cooperation with Korea. In 2024, Korea's semiconductor exports to Hong Kong reached about $23.3 billion (about 3.5 trillion won), and this year, investments by Korean individual investors in AI and technology corporations listed in Hong Kong have also surpassed $92 million (about 140 billion won), growing rapidly. We asked Andy Wong in writing whether Hong Kong could be a new opportunity for Korean technology corporations. The following is a Q&A.
— Why is Hong Kong focusing on fostering advanced technology industries?
"More than 100 initial public offerings (IPOs) took place on the Hong Kong stock market last year, and in recent years the share of fundraising in the technology sector has remained high. The boom in the IPO market has greatly increased global capital access for domestic and overseas technology corporations, and Hong Kong is pursuing the cultivation of innovative industries as a long-term strategy based on this financial foundation. The government also presents AI as a key driver of the future economy and is expanding large-scale investment. In particular, to respond to the rapidly growing AI industry, it is accelerating technology development and talent training."
— Why is Hong Kong attractive to Korean technology corporations?
"Amid growing uncertainty in the global economy, Hong Kong offers technology corporations a stable yet internationally well-connected platform. Especially as geopolitical tensions intensify, international capital markets like Hong Kong are drawing attention as strategic risk management bases. Under the "one country, two systems" framework, with legal stability based on common law, free movement of capital, and a currency system linked to the U.S. dollar, Hong Kong provides the institutional stability that global corporations require.
For Korean technology corporations pursuing global expansion, Hong Kong can also be a strategic base. Because it is adjacent to the Greater Bay Area (GBA), which unites Hong Kong, Macao and nine cities in Guangdong province into a single economic zone, it offers direct access to a massive market of about $1.9 trillion (about 2,900 trillion won). These geographical and economic advantages of Hong Kong serve as a starting point for corporations to secure market dominance and expand globally. In addition, the industrial ecosystem that combines Hong Kong's financial and research capabilities, Shenzhen's rapid prototyping capacity nearby, and Guangdong province's large-scale manufacturing supply chain is also a major strength."
— What differentiates Hong Kong from other global hub cities?
"Hong Kong is characterized by being a world-class financial market with direct access to technology industry regions. Over the past 10 years, it has consistently outpaced major Western stock markets in IPO fundraising, making it a leading capital market. As a gateway to the GBA, corporations can raise global capital while immediately leveraging the neighboring region's technological innovation capacity and advanced manufacturing base.
It is also highly competitive in terms of taxation. The top corporate tax rate is only 16.5%, and it offers tax credits of up to 300% for eligible research and development (R&D) expense. In addition, under the Patent Box regime, a preferential tax rate of 5% applies to income generated from intellectual property (IP)."
— What policy support does Hong Kong provide to Korean technology corporations?
"Beyond tax benefits, the government is actively supplying funds to corporations entering Hong Kong through various support schemes such as the Research Talent Hub, which supports the hiring of research personnel, and the Innovation and Technology Venture Fund, a 2 billion Hong Kong dollar (about 380 billion won) program that co-invests with private capital.
In the case of Invest Hong Kong, it also provides tailored advisory services for Korean technology corporations. As a dedicated local partner for corporations, it supports the entire process from providing market information and responding to regulations to establishing entities and linking to the innovation ecosystem. Our goal is to help Korean innovative corporations settle smoothly in Hong Kong and quickly expand their presence in the region by leveraging diverse capital networks."
— There seem to be several technology innovation hubs in Hong Kong.
"Innovation hubs such as Science Park and Cyberport are growing rapidly because they provide a tightly connected industrial ecosystem that goes beyond simple office space. Hong Kong Science Park currently houses more than 2,600 technology corporations from 26 countries, more than 1,500 of which are startups.
Cyberport has also established itself as a leading digital innovation hub in Asia, home to more than 2,000 startups. In particular, the state-of-the-art AI supercomputing center slated for completion this year is drawing significant attention. Through these hubs, Korean corporations can secure simultaneous growth paths that extend from venture funding and academic collaboration to commercialization."
— Are there cases where Korean corporations have entered Hong Kong and achieved major results?
"Kraft Technologies, an AI-based investment solutions corporation, is a representative example. With support from Invest Hong Kong, the corporation upgraded its Hong Kong office to a regional headquarters in 2024 and is using it as a base to expand into the European and Middle Eastern markets. An increasing number of Korean technology corporations are achieving meaningful results in Hong Kong."
— What challenges do Korean corporations face when entering Hong Kong?
"A representative challenge facing Korean technology corporations is the limitation in their perception of the market. If they view Hong Kong only as a domestic market, it is easy to miss its strategic value as a regional hub.
Because Hong Kong's business environment is highly international and intensely competitive, it is necessary to flexibly adjust products and business strategies to suit diverse global customer segments. Understanding the regulatory framework and securing top talent are also important tasks.
That said, Hong Kong is also a springboard for strengthening global competitiveness. If they collaborate with local partners and actively use government support programs, Hong Kong offers Korean corporations growth opportunities. We hope Korean corporations will use Invest Hong Kong's various free support policies to leverage Hong Kong as a strategic base for expanding into mainland China and Asian markets."