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Political Regulatory Environment And Related Government Policy

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Introduction
The article describes the background that the Tasmania whisky production constantly increases and demand of the barrels increases sharply as well. Chet, the CEO of New Heaven Import Export Co., plans to form a joint venture, New Heaven Liquor Co., with Hong Kong liquor distributor. The new firm will locate in Hong Kong and employ local people. This report addressed opportunities and threats of the joint ventures through analysing the political-regulatory, social-cultural and technological environment, and provide recommendations to help Chet make decision on whether the venture should be undertaken.

1. Political-regulatory environment
Hong Kong became the special administration region of China since 1997. The principle of …show more content…

Secondly, Hong Kong offered an open and friendly investment policy. It played a role of market regulator with less government intervention rather than market participant with more intervention. For example, Hong Kong did not impose regulation on working hours and terms of contracts, and it only regulated the statutory minimum wages per hours for labours (Hong Kong business forecast report 2015).Thus, the labour costs in Hong Kong are flexible and company has more rights on contract when hire employees. Moreover, government allowed foreign investors to legally acquire the ownership of property in most industrial sectors except for broadcasting industry (Country profile 2015) and to freely select investment area without restriction. Furthermore, government optimized the procedures of business registration, and it helped investors save time from application process. Besides, there is no different treatment between local investors and foreign investors. Government set the same business regulation to the same industry. Thus, foreign investors have equal chance to compete with local investors.
In addition, Hong Kong had ‘simple and low tax regime’. Company only need to pay the tax amount based on their revenue earned in Hong Kong, and they did not need to pay ‘sales tax, capital gain tax and withholding tax on dividends’ (InvestHK 2016). These tax exemptions would obviously reduce tax expense of the company. Meanwhile,

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