Chapter 1 Business in Hong Kong

Business is closely connected to our daily lives. A purchase act from convenience store is simply a

business transaction. Convenience store is also a business entity. Therefore, the environment in

which business operates greatly affects everybody in society.

1.1 Common forms of business ownership in Hong Kong

Business activities increase in diversity and quantity as a business grows, therefore different forms

of business ownership appear.

Private
Enterprise
_________________________ ( 私 營 企 業 ) are owned by individuals aiming at

profit making
_________________________.

Public
Enterprise
_________________________
government
( 公 營 企 業 ) are owned by the _________________________

providing the public with essential goods and services.

Three common forms of private enterprises are as follows:

sole
Proprietorship
_________________________ (獨資)

partnership
'

_________________________ (合夥)

limited
company
_________________________ (私人有限公司)

2021/22 S3 BAFS Notes by Mr. Simon Leung 3

1.1.1 Sole proprietorship 獨資

One
An enterprise owned and financed by _________________________
person
Pros
(i) flexible
Efficient and _______________ operations

- The owner makes decisions by his/her own, so he/she can respond to market

faster
change _________________.

(ii) close
_________________ relationship with customers & employees

- As the scale of business is small, the owner is able to give customers and

employees personal attention.

(iii) profit tax rate

Lower _________________________

- The profits tax rate for a sole proprietorship is lower than limited companies.

(iv) Simple set-up procedures

- Owner can start the business after obtaining a

Business
Registration
_____________________________.
certificate
Cons
(i) Lack of skills

- legal
A single owner may not have all _________________ to develop the business well.

Unlimited (¥P¥t¥¥¥*¥É± )
(ii)
liability
_________________________ of sole proprietor

- The owner is personally liable for the debts of the business without limit.

(iii) Lack of continuity

-
legal entity
With no _______________________, the business may end in case of the owner’s

illness or death.

(iv) Lack of capital sources

saving
- Apart from owner’s _________________ or personal loan, business may find it

difficult to obtain loans from banks.

2021/22 S3 BAFS Notes by Mr. Simon Leung 4

1.2 Entrepreneurs 企業家

risk to start a business for the purpose of making

Entrepreneur is a person who takes __________

profit
__________.

Examples of entrepreneur

Bill Gates of Microsoft

Li Ka Shing of Cheung Kong Holdings

Lai Chee Ying of Next Media

Characteristics of Entrepreneur

Willing to take risk (冒險)

leader
Have a strong desire to __________

Adapt to innovative ideas

independent
Seek for ___________ (獨立)

Source: Econschool Oct 2016

Importance of entrepreneurship in business development

(1) Promoting market competition (市場競爭)

industry
Entrepreneurs foster __________ (同業) competition which brings customers more products

and services in lower prices and better quality.

(2) Organizing production and enhancing production efficiency (效率)

Entrepreneurs organize the production of goods and services through putting people and

enhanced
resources together. As a result, production becomes more __________.

(3) Innovating new products and service

new
Entrepreneurs look for __________ ideas and turn them into new products and services that

satisfy customer demand. They create a new business and even an entirely new market.

2021/22 S3 BAFS Notes by Mr. Simon Leung 10