Phases of 3E Accounting’s 18 Months Expansion to HK Amid Covid-19
Covid-19 had drastically changed the boundaries of human interactions which made traditional methods of business impossible. The health crisis swiftly transformed into an economic crisis which forced companies to cut back on non-essential expenses and retrench workers. Nonetheless, we made the bold and aggressive business decision to expand our footprint into Hong Kong over the past 18 months.
We received multiple questions on how we expanded into Hong Kong. We are happy to share our experience openly as we are a company that stand for the free flow of information. We believe that the key to business success is not just the collection of information but the ability to execute your business plan efficiently, effectively and economically.
We will be sharing our carefully considered reasons to expand on Hong Kong on another article. For this article, we will focus on how we did it. The whole process took 18 months which can be divided into three distinct phases. Each phase lasted around of 6 months and represented a key decision point for us.
Phase 1: Market Feasibility via Digital Marketing – Jan to Jun 2019
The aim of any market feasibility study is to decide whether it makes sense for the company to enter into a new market. The traditional approach would be a top-down approach where you hire a market research company to conduct primary and secondary research into the market size, competitors, competitive advantage, pricing, geopolitical conditions and so on.
After spending between HK$50,000 to HK$250,000 over 3 to 6 months, the market research firm will produce a report with recommendations. The likely recommendation would be to avoid the Hong Kong market.
We chose the modern approach of digital marketing to determine market feasibility. During the 6 months period of January to June 2019, we spent HK$250,000 on labour, content and other marketing spend for our initial digital marketing efforts. Our marketing expert, Tommy Teo, led the digital charge. He started with the creation of our Hong Kong’s website and social media pages. He followed up with professional development in search engine optimization, digital advertising, listing management to test the market’s receptiveness.
The initial 3 months didn’t result in any market traction which is normal for digital marketing. On the fourth month onwards, we started to see meaningful traffic and keywords search leading back to our website. By the sixth month (arrows on dashboard above) in July 2019, we could observe sustained traffic above 7500 visits per month from the right business sources and more than 300 keyword searches. By the fourth month, we received about 100 queries which increased to 1030 queries by the sixth month in July 2019. Our social media marketing efforts also bore fruit.
We did not use any grant for our overseas expansion, but we can assist Singapore companies to utilize the Market Readiness Assistance (MRA) grant by Enterprise Singapore if required. Please contact us here if you wish to find out more.
Phase 2: Implementing the Decision to Enter Hong Kong – July to Dec 2019
All these marketing tractions gave the management confidence to invest an additional HK$1.5 million to open a new office in Hong Kong. The digital marketing efforts had generated about HK$100,000 in quotations which converted to HK$20,000 in monthly recurring sales. Our clients’ referral had generated about HK$40,000 in quotations which converted to HK$10,000 in monthly recurring sales.
Once the decision to enter the Hong Kong market was made, our first priority was to hire a highly competent and reliable key personnel in Hong Kong to handle the intense workload. We started our search on JobsDB and shortlisted 10 candidates. After 2 rounds of Zoom interview, we were left with 3 final candidates.
Founder & Chief Technology Officer of 3E Accounting – Chartered Accountant
Director of 3E Accounting Hong Kong Certified Public Accountant
Our founder, Lawrence Chai, flew down to Hong Kong for the final face to face interview. After careful consideration, Lawrence chose Wilson Lee to represent 3E Accounting in Hong Kong. Wilson spoke good English, demonstrated high level of technical competency, displayed good interpersonal skills and had excellent work attitude and track record.
Wilson’s first set of responsibilities was to apply his local knowledge in applying for various operating licenses and ensure compliance with local regulations. He then searched for an appropriate physical office in the business district with the eventual location at 2/F., Tern Centre, Tower 1, 237 Queen’s Road Central, Hong Kong. He went on to hire the right office renovators. He also went on to convert our prospects into clients, find our first hires of administration and corporate secretary personnel.
Phase 3: Physical Office Opening – Jan to Jul 2020
Our original plan was to open our physical office by January 2020. However, the Covid outbreak and civil unrest made it impossible for the contractors to start work at the start of the year. We had to wait until February before the renovation work started. That was the biggest unexpected obstacle that we faced as we opened in Hong Kong this year.
Nonetheless, the physical office was ready by April after a 6 months delay. We were ready to meet clients physically while adhering to safe distancing measures. We started drawing the attention of InvestHK government officials after we rented our office at the beginning of the year. They were a tremendous help in attracting new clients, suggesting the VIPs to invite for our grand opening and validated our presence on their official website.
We held our virtual office opening on 08 July 2020 over Zoom. It was well attended by the Chief Executive of Singapore Accountancy Commission, Assistant Secretary General of the National Trades Union Congress and senior officials from Enterprise Singapore and Invest Hong Kong. Overall, we spent around HK$3 million to setup our Hong Kong office over 18 months.
Standing by Our Decision
Considering that this is Hong Kong, the most expensive city in the world, we found that our expense of HK$3 million was reasonable. 3E Accounting had been practicing the publication of full information and price transparency for almost 10 years in Singapore. If you explore our website further, you will discover a treasure trove of information which most Hong Kong accounting firms would be unwilling to share.
We invested heavily on our in-house technology which improved our employee’s productivity significantly. This allowed us to offer competitive pricing while still maintaining profitability. We are currently on track for profitability by the start of the next year. Our decision to expand into Hong Kong was considered unconventional by our peers but we stand by our decision. It is also not as difficult as we had imagined despite having to overcome many challenges along the way.