6 steps to start your business in Hong Kong
Hong Kong is one of the major financial hubs in Asia – and for good reason. Its highly developed financial system and relatively lax regulations for businesses make it a popular choice among entrepreneurs. Beyond that, it is a beautiful city that has a unique charm to it. Modernism meets wild, preserved nature here to create a lively, dynamic city that is lovely to both live and work in.
There are many other benefits to establishing your start-up in Hong Kong. It is an excellent entry point to China and has the advantage of a more liberal economic model that will greatly benefit your business. Plus, it has a multicultural environment where business can be conducted in both Chinese and English.
In this article, we will provide you with a comprehensive guide on how to establish your start-up in Hong Kong. Once you have your business plan in hand and a good network, follow our steps and watch your business flourish in this vibrant city.
#1: Get the right visa
The biggest question on anyone’s mind when establishing a business abroad is about visas. There are three ways you can go about it:
Get a dependent visa
For this, you will need to be married to a Hong Kong citizen or permanent resident or to someone holding an employment visa who will then act as your sponsor. Do note that if you are in a same-sex marriage legally recognized in the country you were married in, you are still eligible for this visa. Additionally, you may also be considered if you can prove a long-term relationship with your partner (i.e. sponsor) as well as if you have a citizen/PR parent aged 60 and above or a child under the age of 18 residing in Hong Kong. When you have a dependent visa, you are free to live and work in Hong Kong.
Get an employment visa
Employment visas are a little trickier to obtain than dependent visas. The main requirement is to have secured a job in Hong Kong as your employer will act as your sponsor. Your remuneration package should also be in line with the current market rate, and you should be able to prove your educational qualifications or professional experience. Once you secure your employment visa, you can apply for permission to launch your start-up.
Get an entrepreneur visa
While the process of getting this visa is a little more complex than the previous two, it’s certainly simpler than in many other countries. There are two key requirements for eligibility – you need to prove that you have good educational qualifications and/or professional experience, and you will need to demonstrate your ability to make a substantial contribution to Hong Kong’s economy. Note that start-ups backed by government-based programmes, such as the Cyberport, the Hong Kong Science Park Incubation Programmes and InvestHK’s StartmeupHK Venture Programme, are more likely to be accepted.
Once you’ve got your visa settled, it’s time to establish your business!
#2: Establish your business identity
Incorporating your business identity in Hong Kong is a pretty straightforward process, plus, it’s cheap! What you do need is an official Secretary Company to support you. You should opt for incorporation packages from companies that include a business address or a virtual office as this will save you the hassle of procuring one yourself. Alternatively, you can check out FLYDESK’s virtual office offers here.
Additionally, look for a package that also offers annual Secretary Company plans. This will aid you in ensuring all the nitty-gritty details are in place so you can focus on nurturing and growing your business. Sleek is an excellent company that offers all these services so you can rest easy knowing your business is being well taken care of. Plus, FLYDESK CLUB+ members get $500HKD off, ask for your coupon code!
There are multiple types of legal business entities you can opt for, but the most common one is the Limited Company – 99% of companies in Hong Kong are Limited Companies. This gives you access to all the tax benefits and concessions available to businesses, including the Closer Economic Partnership Arrangement (CEPA), which is a free trade agreement with Mainland China.
Alternatively, if you are managing your business as an individual, you can opt for the Sole Proprietorship model. This is an extremely simple and straightforward legal business entity perfect for small-scale businesses. All it takes is a one-step registration with the Inland Revenue Department in Hong Kong. However, it does not offer protection of personal assets while the Limited Company entity does.
#3: Get your tax and audit sorted out
To operate a business in Hong Kong, you will need to have a well-defined tax and auditing process. It is mandatory for most business entities, including Limited Companies, and is generally good practice for your business. You will need a third party to handle your annual audit reports. Luckily, most companies that offer the aforementioned business incorporation services, such as Sleek, offer tax and auditing services too!
#4: Open a bank account
Despite being one of the biggest financial hubs in the world, Hong Kong is not the best place to open a business bank account. While it is a highly modern country in many ways, it has yet to reach a good level of digital administration and services. There are many barriers to opening a business bank account in Hong Kong – it can be expensive, the process is slow, customer service is subpar, and you have to be physically present. In fact, the hassle of opening a business bank account in Hong Kong is a big factor as to why many businesses prefer to establish themselves in other countries like Singapore. This is a BIG red card for Hong Kong financial institutions and administrations.
However, there is a way you can circumvent this issue. As an alternative option, you can create a global bank account through fintech companies such as Neat, Currenxie, AirWallex and more. This greatly reduces the hassle and complexity of the process, and you can rely on DBS’s virtual banking services (a Singapore Bank) too. If you’d like to learn more, read our research on virtual banks for startups.
#5: Hire candidates
There are two key aspects to keep in mind when hiring employees for your business. The first is the Mandatory Provident Fund (MPF), which is a compulsory saving scheme meant for the retirement of residents in Hong Kong. Both you and your employees will contribute towards their MPF, although the exact amount is dependent on their salaries and period of employment.
The other aspect to remember is the Employee’s Compensation Insurance (EC). It is the law in Hong Kong that all employers hold insurance for their employees should they suffer any illnesses or injuries during the normal course of their work. This insurance also ensures the employer is protected; should the employee suffer an injury while on the job, the employer will not be held liable.
To recruit talent, platforms such as JobDB and LinkedIn are a great choice. Recruiting via LinkedIn also gives you the added advantage of viewing their professional profile and learning more about the candidate than what they have included on their resume. You can also use start-up platforms like WHub for recruitment. That’s what FLYDESK used when starting activity in Hong Kong.
#6: Find your workspace
The Executive Center
Finding the perfect workspace that meets all your business’s needs is certainly a time-consuming task. With the current global situation due to the COVID-19 pandemic, flexible offices for rent are becoming an increasingly popular choice, as is flexible work. Coworking spaces are therefore a good option for start-ups as they offer greater flexibility than traditional offices, while still providing you with a range of additional perks and amenities such as meeting rooms, complimentary refreshments, cleaning services, WiFi, 24/7 access etc.
FLYDESK has one of the widest network of coworking spaces you can browse through to find the perfect one for you. We simplify the entire process for you – tell us what you need and we’ll find it and take care of all the tiny details so you can have a hassle-free experience.
Last few tips
- Use Meetup to network and find business opportunities. Attend the Startup Impact Summit which is the best introduction to the startup scene in Hong Kong.
- Look into local government organizations that help start-ups such as InvestHK and StartMeUp.
- Apply to incubation programs such as HKSTP or Cyberport; this will also boost your visa application.
- Explore the different government funding options available such as SME Export or BUD Funds.
- Check out whether your home country offers any additional support for your business in Hong Kong; for example, French nationals and French speakers can join a network of talented individuals and enjoy many other perks via the French Chamber of Commerce in Hong Kong, the French Founders or the FrenchTech.
- Be flexible to resist any crises – as demonstrated by the current COVID-19 pandemic, flexibility is extremely important! That’s why renting flexible offices or coworking spaces are a good choice, as is having a remote/flexible work policy. You can read more about how to create a flexible work policy that suits your business.
Do keep in mind that you may experience some culture shock, as you would when moving to any country for the first time. Keep your mind open and aim to understand the local culture so you can communicate with your employees, clients, and partners productively.
Overall, establishing a start-up in Hong Kong is a great choice for those who want a business presence in Asia. If you’re interested in doing so, contact us at FLYDESK and we’ll help you through the process – after all, we speak from personal experience!