Setting up a new company is a complex endeavor full of financial and legal implications, which are made even more complicated when you choose to establish your business overseas. Having realized the potential for success, many entrepreneurs see Hong Kong as a desirable location to base their business. If this is something you’ve considered, reading this guide will be a useful first step in that process.
Why set up a business in Hong Kong?
If you plan to set a company overseas, you may be wondering what makes Hong Kong the ideal location. There are many benefits to choosing Hong Kong, starting with the fact that it is an internationally recognized financial center considered a gateway to China and the wider Asian market. Let’s explore some of Hong Kong’s other advantages:
- Hong Kong has the busiest international cargo airport and one of the world’s largest international container ports.
- The region is one of the largest financial centers in Asia, second only to Tokyo, and the fifth largest in the world.
- There is a thriving presence of international companies, estimated to be well over 6000.
- Hong Kong is not on The Organisation for Economic Co-operation and Development’s (OECD) blacklist of tax havens. This means that businesses based in Hong Kong are not perceived as offshore companies and, therefore, will not run into problems when attempting to build relationships with European and American companies.
- There is a large banking network that includes reliable international banks that offer multi-currency accounts.
- The legal system is based on British common law, which is flexible and business-friendly.
- Hong Kong uses the territorial taxation system, which stipulates that only income procured within the country is subject to taxes. Income procured outside of HK is tax-exempt.
- HK is a free port, so no customs tariffs are applied.
Company registration in Hong Kong
To establish a new HK company, it’s essential to register with the Companies Registry, a government department under the Financial Services and the Treasury Bureau of the Government of Hong Kong. Most business owners in Hong Kong opt to register as Limited companies because it offers numerous advantages and protections. The Companies Registry is responsible for the incorporation of your company.
In order to complete your company registration and set up your business, you must appoint a Registered Company Secretary, also known as a Registered Agent, who will represent your company with the Hong Kong registry office. As a foreigner, it is highly recommended to work with a reliable registered agent service.
Opening a business bank account in Hong Kong
One of the first steps you will expect to take when setting up a company is opening a bank account. In Hong Kong, this can be quite a challenge for international business owners as there are certain restrictions, such as the need for existing Asian customers or suppliers.
There are several options when it comes to bank accounts for businesses in Hong Kong, for example:
- Opening a bank account in Hong Kong with a bank.
- Opening a bank account in Hong Kong with a Fintech company.
- Opening a bank account outside Hong Kong with a bank.
Due to the complications involved with this process, it’s advisable to work with a corporate service provider.
Obtaining business licenses in Hong Kong
Depending on what type of company you wish to set up in Hong Kong, you may require a business license. This can only be obtained once your business has been registered with the Companies Registry. Your company’s nature and activities determine the type of license your business will need. Let’s take import-export businesses as an example and briefly look at some of their requirements.
The licenses and permits required for this kind of company and which government department they must be obtained depend entirely on the type of goods imported or exported. Examples of items that require licenses or permits include:
- Plants: importing plants into HK requires a Plant Import License from the Plant and Pesticides Regulatory Division, Agriculture, Fisheries and Conservation Department, with the exception of plants imported from mainland China which are exempt from this requirement.
- Controlled chemicals: the import/export license can be acquired from the Customs and Excise Department of Hong Kong.
- Pharmaceuticals: the import/export license must be obtained from the Pharmaceuticals Import/Export Control Unit, Pharmaceutical Service, Department of Health.
- Dutiable goods: some items such as liquors, tobacco, and hydrocarbon oils are dutiable in HK. To import/export these goods, you must procure a license from the Customs and Excise Department of Hong Kong.
In addition to these licenses, when importing or exporting goods to or from Hong Kong, you must file an Import/Export Declaration with the Commissioner of Customs and Excise within 14 days.
Translation and localization for Hong Kong-based businesses
Hong Kong has two official languages: Cantonese and English. While the widespread use of English makes it much easier for international entrepreneurs to establish companies in HK than in many other places, it’s still prudent to work with a professional translation service provider, both for translation and localization purposes.
These services will be essential in many elements of your business, from setting up a website to choosing an appropriate name for your company.
Now that you’ve had an insight into what it takes to set up a company in Hong Kong, we hope that you see both the great potential you can take advantage of and the benefits of working with a corporate service provider to ensure success.
Once you’ve made the decision to establish your new business in Hong Kong, you will find yourself in need of high-quality English to Cantonese translation. BeTranslated’s experienced translators and efficient project managers are here to support you in your endeavors. For more information or a free, no-obligation quote, get in touch today.