F. Adverse factors to be considered

While the advantages for foreign businesses operating in Hong Kong are outlined in the previou section, there are a number of adverse factors to be considered before embarking any activities.

1 . High rental costs:

Rents for prime quality commercial premises are estimated at between US$60 and US$90 per square foot per annum. Average commercial space is available at approximately US$30 per squar foot. Office accommodation is currently in good supply. Two to three year leases are standard. Management/service charges are an extra 15% to 20% of rent.

2. High staff costs-

The average monthly wage for various non-production workers in the wholesale, retail, import and export trades, restaurant and hotel sector was US$l,l 00. Average annual salaries, including fringe benefits, for managerial and professional employees are over US$36,000.

3. High staff turnover@

In 1993, a survey was conducted by the Hong Kong Industrial Department to seek the foreign companies' views on the advantages and disadvantages of Hong Kong as a regional headquarter or regional office. In the survey, 36% of the respondents indicated that high staff turnover rate was a major problem.

4. Shortage of qualified personnel-

As 1997 is approaching fast, the uncertain future of Hong Kong has prompted an emigration wave of professional and technical talents. In addition, the high demand for managerial skills in the emerging China Market has also attracted many qualified personnel from Hong Kong.

5. The deteriorated political climate-

In the 1993 Survey of Regional Representation of Oversea Companies in Hong Kong, the political climate was considered by 60% of the respondents to have distinctly deteriorated.

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