Basic Things to Consider Before Building a Startup in Hong Kong
28 March, 2019
With the advent of technology and global opportunities, we all familiar with the startup worlds of Silicon Valley, and Berlin, but 'where do you look for Asia's startup hub?' As a matter of fact, with the abundant availability of accelerators, and incubators and the talented/skilled engineers studied from the eminent colleges, Asia has become a hotbed for technological innovation.
So, the main question that arises here is where you should set up your business; Hong Kong, Switzerland, Russia, or Tokyo. Several entrepreneurs wanted to embark into the Asian market but worried about the location. Some people want to switch their gaze away from the skyscrapers of Switzerland, the busy routines of Tokyo, and the yet too uncertain landscape of Russia. So, 'where you would like to embark into the race?'
Starting a new business in a new place is quietly daunting; however, Hong Kong is the place which is attracting the maximum attention of the young entrepreneurs. Known to be the financial center and a tourist destination, Hong Kong is repositioning itself for the innovation era to boost its economy to the next level.
But one thing we want to clarify that whether you are going to launch a company in Hong Kong or Switzerland or another place, it is strongly advisable to know about the economic climate, development stages and cultures so that you can operate your business efficiently. Just saying this because without knowing the positive and negative points of the business culture of a specific area, you wouldn't be able to beat in the race.
Let's take a simple situation!
Suppose you are going for Hong Kong for the first time with the full dedication and enthusiasm of opening a business over there. And you have no idea about Hong Kong's business culture. You don't know anything about the procedure for opening a bank account, how to attract customers, what are their festivals, and the government procedure. Think about that situation.
Now you got my point? Brilliant!
Let's start with the Hong Kong Startup scene!
Hong Kong is Emerging as Asian Startup Hub
Before understanding the business culture of Hong Kong, I believe that you should know about the Hong Kong startup scene. As per the government's data of Hong Kong, this place is quickly converting into a center for startups in Asia that is filled with hunger and raw talent that's just waiting to be discovered.
That's why with 2,625 such businesses are operating in the freest economy of Hong Kong. In fact, the number of people working at the startups surged around 50 percent over the same period of time to 9,548 amid generous government support geared to promoting entrepreneurship.
Moreover, the investment promotion agency of Hong Kong has also compiled all the data based on the tenant lists from significant startup-incubation facilities and coworking spaces.
Do you want to know about that data? Well, don't worry!
Here are some of the data of the business entities so that you have a little bit about that.
The e-commerce and distribution businesses making up 11%, consulting services 11%, and the financial technology companies accounted for 16% of the tally. More importantly, in the accounting sector, Hong Kong natives are holding the remarkable record of about 62% of the founders, with 17% from the U.K., 16% from the U.S. and 12% from mainland China.
This was about accounting, and other business set up, the next thing that we want to highlight here is about Hong Kong's deep and extensive worldwide connections. That is making another comfort zone for the young entrepreneurs so that they can set up their business effectively.
The government department of Hong Kong has also been providing the tax and other incentives in order to aid business owners with the gaze to ease the economy's dependence on the real estate and financial sectors. As a result, the number of startups has more than doubled in four years. GoGoVan is one of the company that has risen due to the benefits offered by the economy of Hong Kong.
Do you have any idea GoGoVan? Great! Well, it is one of the renowned smartphone apps that lets users order delivery via van. In fact, it is among the rising stars, as is mobile pay company TNG.
All thanks to the involvement of government support, simplified company incorporation procedure and English as an official language. More importantly, being the business hub at the doorstep of Mainland China along with efficiency, the strong rule of law, protection of intellectual property, and entrepreneurial culture, Hong Kong has given a plethora of chances to the young business owners to incorporate their business in the global financial hub of the world.
Ease of doing business in Hong Kong as per World Bank Report
After knowing the reason behind the emergence of Hong Kong as one of the most important places for setting up a business in the Asian market, it's a high time to know the statistics of Hong Kong as per the World Bank Report.
There is no denying the fact that the expansion of the business to the Asian market is a valuable business choice. And when you choose the right place with the perfect jurisdiction, then it acts like the cherries in the cake.
Being the financial center, the business hub of the country, and the gateway to China, Hong Kong presents a wealth of opportunities to the people in doing business. In fact, from the past ten years, Hong Kong is maintaining its position among the world's top ranking economies in the report with its no bankruptcy protection law, and business premises.
All thanks to the access to a trustworthy economy, world-class infrastructure, tax-friendly jurisdiction, international market, and a productive legal system. According to the World Bank's 'Doing Business 2019' report, the special administrative region's ease of doing business (EODB) score, which ranks economies according to their regulatory practices, has improved from 83.44 last year to 84.22 in 2018.
Therefore, Hong Kong is now the fourth easiest place in the world to do business, up one place from last year. Several American and European companies are shifting their companies to Hong Kong in order to enjoy the maximum benefits of operating a business.
Basic Things to Consider Before Starting up a Business in Hong Kong
Well, we believe that now you have a better idea about 'why Hong Kong is considered as the best place to incorporate business when we think about embarking into the Asian market.
Let's begin with the things that you need to consider before even setting up an organization in the freest economy of the world.
Are you the one who is thinking of shifting to Hong Kong in order to set up a business? If so, you need to apply for a visa for self-employment or investment. Even though there are no specific requirements for you to prove that your entrepreneur will fill the void which the local people can't able to satisfy, still, you need to show how you are going to make a substantial contribution to the economy.
More importantly, before applying for the Hong Kong self-employment visa, you need to fulfill the usual criteria of having a good education and professional qualifications.
Now comes the turn of the business plan for your organization. No matter where you are going to set up your new venture or thinking of expanding your business in the Asian market, you need to have a business plan at your desk. It will be your business plan that will help you to not to fall in the race.
We know you must be thinking 'how?' Well, a detailed business plan will serve as a roadmap for your organization in order to help you accomplish your goals. It will incorporate all the goals, objective, and principles, whether it is based on a long-term project or short-term.
Another important aspect that you need to consider while setting up a business in Hong Kong is 'which type of company you want to set up?' Keep on reading the blog so that you can figure out the answer.
You have the following options:
This type of business entity is the most common business vehicle among entrepreneurs in Hong Kong because of its miraculous advantages. In fact, several
business owners whether they own small or medium-sized enterprises often set up as private LLC's.
For this type of business entity, you need to have a business name, at least one director and shareholders, and more importantly, a company secretary, a (physical) address in Hong Kong, and some capital.
Branch, Subsidiary, or Representative Office
Being a foreigner if you want to establish a business in Hong Kong, then you can opt for this kind of business entity. You can set up a branch office, subsidiary or a representative office in Hong Kong.
Do you want to set up a small scale business in Hong Kong with only one owner? If so, sole proprietorships would be one of your best choices. However, this type of business entity is not strongly recommended to the entrepreneurs as it does not constitute a separate legal entity. Moreover, it doesn't protect the owner's personal assets from business liabilities.
And here comes the business entity- partnerships. Well, as its name suggest that at least two people govern this type of enterprise. Partnerships enable a sharing of responsibility and increase the ability to raise funds. Although, partners are jointly and individually liable for the actions of the other partners!
Hong Kong Company Incorporation
No matter where you are incorporating, you need to make sure that you are registering your business with the government authorities. Similarly, in Hong Kong, you are required to register and set up with the Hong Kong Companies Registry.
So, don't waste your time, just submit your business details at the e-Registry and start doing your business. But one more thing that I want to notify here is that
there are several fees involved for incorporating a company that you can figure out our Startupr and Hong Kong government websites easily!
No funding, no business! Well, if you want to operate your business in the competitive business world, you need to have enough capital for your enterprise so that you can operate it legally without any tension about funding. If you have enough capital for your business, then you are already one step ahead from your rivals.
But if you haven't! Then don't worry! Every problem has a solution. All you need to come out from the circle of your problem, and you will find a plethora of remedies for your difficulty.
No issues! No doubt, you are thinking of setting up the business in Hong Kong, but do you know about various funding schemes that are initiated by the Hong Kong government. One commonly used scheme is the SME Fund which helps small and medium enterprises secure financing for installations and equipment, and expanding markets.
What is more, if you are operating a web designing startup, there is one DesignSmart Initiative to nurture your design start-ups. Moreover, the CreateSmart Initiative which supports businesses that support creative industries. Or the Technology Business Incubation Programmes, that specifically assists tech start-ups. Got it now! Great! That's why I was saying that all you need to gaze for all the resources in Hong Kong; your problem of funding is already solved.
Building A Team
And last but not least, building a team for your startup.
Before penning down anything, we want to ask one question, 'Do you think you can control all the requirements of your business alone?' No naa! Obviously! You need to outsource some of your work to your employees so that you can meet
each and every requirement of your business. But you need to have a brilliant team who are energetic, ready to take any kind of risk, persistent, and more importantly, loyal.
However, when you are starting your business in Hong Kong, you don't have to really work hard to find out the best-talented employee for your organization. Hong Kong is already filled with an ample number of digital talented people who are just ready to be plucked for the right opportunity. So, step into the competition like a savage and set your kingdom in the freest economy of Hong Kong without any legal system problems!
How Can Startupr help you?
Ready to embark into the race? Great! You are done with the selection of your business name, type of business entity that you want to incorporate, and funding, but 'do you know, you need a company secretary in Hong Kong?' Yes!
While setting up a business you need to hire a professional so that you can operate your business legally without any hassle. And here comes the role of Startupr. We will provide you all the freedom to build your business while we take over the administrative maze.
So, in spite of getting frustrated with operating a complex foreign process, with its unexpected delays, just leave all the legal responsibilities on our dedicated team and concentrate on running your company and making it grow.
Even Startupr ensures to safeguard your information, especially when operating overseas. We will also keep your data strictly confidential. We never share your business ideas and concepts with anyone.
All of these qualities make a difference to entrepreneurs launching and growing successful companies. Contact us at Startupr to get your company incorporated in no time!
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