Trade in services of an economy includes exports and imports of services. Exports of services are the sales of services to the rest of the world, whereas imports of services are the purchases of services from the rest of the world.

For exports and imports of services, the service purchasers and the service providers usually remain in their respective economies. However, exports and imports of services may also take place with the service purchaser moving outside his/her resident economy and purchasing services in another economy.

On the other hand, with increasing globalisation of the world economy, it becomes popular for multinational enterprises to provide services to customers in another economy through setting up affiliated companies abroad.  In view of the growing importance of services supplied via this mode, the Census and Statistics Department has developed a statistical framework for compiling relevant statistics.  Such statistics are known as foreign affiliates trade in services (FATS) statistics.

Inward FATS statistics measure the commercial presence of foreign service suppliers through setting up affiliates in the local economy.  These statistics cover a range of operating characteristics of the inward foreign affiliates, e.g. employment, value added and compensation of employees.  Meanwhile, outward FATS statistics provide useful information for understanding how companies of an economy conduct their business activities through setting up affiliates abroad.  According to the recommendations in the Manual on Statistics of International Trade in Services, foreign affiliates covered in FATS statistics should be "majority-owned foreign affiliates", which are defined as firms with a single foreign investor, or an associated group of foreign investors acting in concert, owning more than 50% of the ordinary shares or voting power.

For concepts and method of compiling FATS statistics for Hong Kong, please refer to the pamphlet on "Foreign Affiliates Trade in Services Statistics for Hong Kong". As regards the inward FATS statistics for Hong Kong, please refer to the feature article "Foreign Affiliates Trade in Services Statistics for Hong Kong" in the August 2010 issue of the Hong Kong Monthly Digest of Statistics.