FIRMS involved in China’s electric car industry are setting up shop in Hong Kong to leverage the city’s financial system for their global expansion, investing over US$1 billion so far and creating hundreds of jobs.

The world’s largest battery maker, Contemporary Amperex Technology Co. (CATL), said earlier last month it plans to open its international headquarters in Hong Kong with some HK$1.2 billion (US$154 million) and hire 500 employees.

Hong Kong’s sophisticated financial sector, along with its free capital flows and the world’s largest offshore yuan market, can help electric car companies where mainland banks cannot, according to Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers (CAAM).

“The mainland’s big four banks aren’t yet able to directly support the needs of our automakers overseas, including for consumer auto loans, fundraising by dealerships or foreign direct investment to build factories,” Xu said at an event in Hong Kong on Dec. 14.

“Mainland carmakers have arrived at the stage of expanding internationally, and this needs financial support. Hong Kong is a good starting point.”

As overseas sales grow, China’s EV makers and associated companies are expanding at pace.

BYD Co. said it will build an EV factory in Hungary two weeks ago, its first on the continent, while other Chinese auto manufacturers, including SAIC Motor Corp. and Great Wall Motor Co., are looking to localize production in Europe.

Other companies that have set up in Hong Kong recently include Hozon New Energy Automobile Co. and autonomous driving outfits Black Sesame Technologies and Beijing Horizon Robotics Technology R&D Co.

To date, mainland EV-related firms have pledged HK$8.6 billion in investments and announced plans to hire 1,300 local workers, Hong Kong’s Office for Attracting Strategic Enterprises said.

CATL and Hozon are also considering going public or conducting a secondary listing in Hong Kong, whose stock exchange already hosts BYD and Geely Automobile Holdings Ltd., the listed arm of Zhejiang Geely Holding Group Co.

The CAAM, meanwhile, is planning an Overseas New Energy Research Center in Hong Kong, which will also act as a service hub for its members.

Outside of its financial appeal, Hong Kong, a city that drives on the left side of the road, is also often the first market for mainland carmakers when launching right-hand drive models.

XPeng Inc. and Geely-owned Zeekr are bringing their first right-hand drive cars to the city, for example. (SD-Agencies)