The Essential Guide to Conducting a Business in Hong Kong – Everything You Need to Know
Thinking about starting a business in Hong Kong? This quick and essential guide is going to tell you everything you need to know before you begin conducting business in Hong Kong.
Why Conducting Business in Hong Kong?
There’s something about Hong Kong that has attracted foreigners to its shores for years. As one of the most bustling business hubs in Asia, the country has seen a surge in entrepreneurs eager to start a business in Hong Kong. The question is, why?
What is it about this island that appeals to investors so much?
For one thing, Hong Kong is deemed the “freest economy in the world” by the Heritage Foundation and Wall Street Journal for a reason. Other factors that make conducting business in Hong Kong an ideal setup for entrepreneurs include:
- It’s strategic location which enables easy access to a lot of other major Asian economies, especially China.
- Sound infrastructure facilities that are world renown.
- Transport facilities that provide top-notch, world class service for all.
- Sophisticated telecommunication infrastructure.
- Simplified tax system.
- A legal system which is fair and transparent.
- Free trade policy which makes it one of the most liberal economic systems in the world.
- No limit when it comes to offshore and onshore investments for foreigners.
- No trade barriers.
- Absence of tariff quotas.
- No fees for import and export trade.
- English is widely spoken, making it easy to conduct international business.
The Ease of Conducting Business in Hong Kong
Not only is Hong Kong an ideal place to conduct business, it is also an easy place to do it. Unlike a lot of other Asian countries that place restrictions when it comes to foreign business ownership, China is welcoming towards any foreigner eager to register a business in Hong Kong. It even goes a step further by providing the necessary tools needed for successful business growth, making it possibly one of the easiest places to start a business in Asia.
Making Hong Kong even more desirable are its tax rates. Despite its popularity, Hong Kong is home to some of the lowest tax rates worldwide, which complement its simple tax system setup.
Working in partnership with the U.S. government, SelectUSA was formed in 2011 by Executive Order of the President. This government-wide initiative is aimed at promoting foreign direct investment in U.S. to help spur economic growth, provide jobs and boost American competitiveness. Hong Kong was one of the 10 pilot business markets which were chosen to be part of this program.
U.S. based suppliers especially find doing business in Hong Kong to be excellent for prospects. Many of the leading export sectors for U.S. based companies include:
- Electronic components
- Medical equipment
- Airport equipment
- Safety and security equipment
- Infrastructure for transportation
- Education and training services
- Tourism and travel services
- Financial services
- Retail and consumer goods
Is Doing Business in Hong Kong the Same as China?
No, it isn’t. They may be neighbours, but Hong Kong and China have their own system in place when it comes to conducting business. Although technically, it is part of China’s Special Administrative Region (SAR), the Chinese government has very little involvement in Hong Kong’s business.
In fact, SAR’s slogan happens to be “One country, two systems”, and that is very much the case. Hong Kong’s priority is – and will continue to remain – to keep business running smoothly by maintaining the status quo.
The benefit of being under SAR though, is that Hong Kong enjoys preferential access to the mainland Chinese market, thanks to the Closer Economic Partnership Arrangement (CEPA). CEPA extends beyond the World Trade Organisation (WTO)’s commitments that China has, and businesses in Hong Kong enjoy the perks of having no tariffs and privileged access to some of China’s service sectors. Even foreign companies benefit from CEPA too.
Possible Challenges with Conducting Business in Hong Kong
Every business market comes with its own set of challenges, and Hong Kong is no different. Among the challenges you can expect to face when conducting business in Hong Kong include:
- Tighter requirements by banks to open a business account in Hong Kong.
- Competition from the mainland, which also happens to be in the sights of many foreign companies who are just as eager to set up a business in China.
- Insolvency issues in Hong Kong can take up to 11 months to resolve.
- Buying or renting a home in Hong Kong can be challenging and costly.
- Property registration in Hong Kong can take up to a minimum of 20 days to complete.
For more information about doing business in Hong Kong, contact us today.