Start A Business in Hong Kong, benefits of setting up a company in Hong Kong,

Asia has always been known as an attractive continent for business opportunities—one of the top places being Hong Kong. Starting a business in Hong Kong is on the minds of many entrepreneurs and investors.

Doing business in Hong Kong is one of the best ways to establish a presence in the Asia Pacific market. At the same time, Hong Kong provides key factors that may not be found in other Asian countries, regardless of the industry.

The business-friendly city offers countless prospects for a brand to flourish without burdens and restrictions. Making it a location more businesses should consider for either starting or expanding their business.

In this article, we will highlight the top 10 reasons to start a business in Hong Kong today. These reasons may prove that Hong Kong might be the perfect place to turn that idea into reality.

10 Reasons to Start a Business in Hong Kong

1. Easy & Inexpensive Process to Start a Business 

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Most believe starting a business is a long-complicated process with countless paperwork and payments. One of the top reasons to start a business in Hong Kong is the easy and cost-effective process of registering a company.

Hong Kong’s main company registration process is only around 5-8 steps. The common steps include choosing a name, appointing a company secretary, preparing incorporation documents and finally submitting with the payment to the Hong Kong Registry. The average company setup costs are around HKD 10,000, depending on the specific industry. 

There are countless websites, including government sites, that can help with the process. In addition, unlike many Asian countries, Hong Kong offers 100% foreign ownership. Hence, almost anyone can start a business without being born in Hong Kong or even a permanent resident.

2. Free Economy

Experts at the Fraser Institute reported that Hong Kong is among the freest economic countries in the world. The country offers a dynamic economy with free trade and free flow of capital.

It is a benefit that is very rare in most countries due to restrictions and hidden laws. Hence, it’s an ideal reason to start a business in Hong Kong. Although even though Hong Kong is a free port, it does exercise certain taxes on alcoholic liquors, tobacco, hydrocarbon oil and methyl alcohol.

A transparent economy allows businesses to compete fairly and grow with fewer economic constraints. However, it is important to understand that free trade only benefits legal products and businesses. 

3. Low Tax Regime

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In addition to a free economy, there is a lack of business tax in Hong Kong. Hong Kong does not have standard taxes such as Value-Added Tax (VAT) or Goods and Services Tax (GST). In addition, all profits made outside of Hong Kong are tax-free.

The only tax businesses and entrepreneurs may need to pay is profits tax (for incorporated bodies), salaries tax (for personal income) and property tax (for income sourced from Hong Kong property).

The low amount of tax helps businesses increase their profit and reinvest it into what matters. These tax regimes also make Hong Kong even more business-friendly and perfect for foreign business. 

4. Access to the Chinese Market

The China market is one of the biggest untouched markets. It is incredibly tough to infiltrate the market as a foreign company. Although, a vital reason to start a business in Hong Kong is the access Hong Kong companies have to the China market. 

In fact, there is an agreement called Closer Economic Partnership Arrangement (CEPA), a free trade agreement signed between the Central Government of the People’s Republic of China and the Hong Kong SAR Government in 2003.

The access allows businesses to potentially reach billions of customers and millions of possible business partners or clients. Therefore, Hong Kong businesses can gain a market advantage over worldwide companies, increasing profits and relations.

However, it is important to understand the market and have the right staff that can assist in successfully entering the Chinese market.

5. Supportive Hong Kong Government

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When someone starts a business in Hong Kong, they receive constant support from the government. This increase in Hong Kong companies leads to economic development through the rise in employment rates, increase in visitors, and more.

The government always provides initiative and funds to help companies grow and compete. There are several business support schemes in various industries that can be the perfect boost for small and new business needs.

Companies in Hong Kong are protected by strict government business laws and regulations that aim to prevent fraud, theft, and other business crimes.

6. Productive Workforce

Having suitable and professional employees is vital to any business workforce. Employees in Hong Kong are typically highly trained, educated and adapt to businesses very quickly. The city has a wide range of multicultural talent, from locals to expats.

Unfortunately, like in most countries, there is a slight struggle to find the perfect employee, but it can be solved with the right recruitment processes and patience. The right employees can help reach new markets with their language and business skills.

In addition, the city’s attractiveness as a workplace makes it easier to recruit professionals from various parts of the world. Professionals who would love to work for a fast-growing company in Hong Kong.

7. Countless Partnership Opportunities 

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There are around 132, 000 incorporated businesses from various industries in Hong Kong, according to a 2023 survey. The number of industries and expertise provides countless opportunities for suppliers, partnerships, clients or sponsorships.

The opportunities are a great way to grow the brand and improve the product or service without spending too much on international costs. For instance, a corporate business can work with professional event companies to help host a conference or even sponsor a Hong Kong event.

It is a great reason to start a business in Hong Kong, as companies can always find expert partners in or out of their own industry. Moreover, international companies can partner with current Hong Kong companies without moving their business.

8. Range of Target Consumers

It is rare to find a place where there are customers for every product or service. Hong Kong has a diverse demographic that includes people from different cultures, age groups, and income levels. This territory is suitable for almost every business because it is easy to find a target market.

Hong Kong has everything from budget to luxury brands; hence, there is always a demand. As long as the product or service is legal and marketed successfully, it will find the right customers

However, every business planning to move to Hong Kong should conduct market insight research specific to its product or service.

9. Strategic Business Location

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Most successful companies have or want clients/businesses in Asia. These countries include China, Vietnam, Singapore, Malaysia, Thailand, India and more. Having a business in Asia means travelling to meet clients often and attending various events.

When working in Hong Kong, travelling or working with clients in these locations becomes more accessible and more time efficient. As Hong Kong is statically located due to travelling reasons and time zones. Hence, an entrepreneur doesn’t need to travel for a day or wake up at 2 am to speak/meet their Asian clients. 

It is a small reason that can make a big difference when one starts a business in Hong Kong. In addition, many multi-currency Hong Kong banks make it easy to transfer funds all over Asia without losing a hefty amount on exchange rates.

10. A Great Place to Grow and Live 

Finally, one of the main reasons to start a business in Hong Kong is because the city is fascinating and encouraging. Unlike many other cities, Hong Kong residents can work hard during the week and enjoy the city’s scenic beauty on weekends without travelling far.

Hong Kong has been home to many small companies that have grown into international success stories and entrepreneurs who never plan to leave. It is an ideal place to achieve new levels of success and establish connections with new partners rapidly while enjoying everything the city has to offer.

Why Does Every Business in Hong Kong Need Insurance?

As great as Hong Kong is as a business location, there are some business risks. You can read about the specific risks in our article on ‘Hong Kong Business Risks. These risks can be sudden situations, lawsuits or accidents that negatively affect the business and its future.

It is important for every company that starts a business in Hong Kong to consider having the right insurance portfolio. There are several insurance policies that every business may need to protect itself. Proper insurance policies can help a company avoid massive financial loss, reputation damage and jeopardise its future success. 

As Hong Kong business founders or managers, you can seek advice from the professionals at Red Asia Insurance to obtain top-notch insurance knowledge and the best possible protection against potential business risks.

The above are just ten reasons to start a business in Hong Kong, but there may be many more related to your industry and business plan.

 

 

To Learn More about various business insurance policies and protect your Hong Kong business, contact Red Asia Insurance.