April 30, 2014
In this week’s chapter 29 entrepreneurs share their tips and advice for successfully doing business in Hong Kong.
First of all, we think having a local business network is very important. It helps you find suitable vendors, partners and clients to facilitate your business development. In Hong Kong, there are different platforms, forums and business centres providing sufficient networking opportunities for start-ups to build a powerful network and find their peer group.
Once you have found a stable source of clients, it is almost essential to show a reliable image to your target clients (especially in a Chinese society) – one effective way is to situate your office in the central business district to boost your client’s confidence in your business.
If you are on a budget, you can try a virtual office for getting a grade-A office address yet the monthly cost is low. A virtual office address can be printed on your name card and shown on the website to help establish a premier image for your firm.
When your business is more mature, don’t forget to get a proficient accountant / tax expert to help you achieve good financial management and devise tax-efficient strategies to optimize your opportunity for investment success.
A well-constructed tax plan is always helpful when running your business here, particularly if you are coming from abroad and want to maximize the benefits you can acquire.
One of your first steps should be reaching out to InvestHK. Their mandate is to bring new businesses to Hong Kong and and they are incredibly helpful when getting established here for the first time.
They have representatives in nearly every major global city, so you can get in touch with them before you’ve even stepped foot in Hong Kong.
It is incredibly easy to set up a business in Hong Kong – you can incorporate in less than 24 hours for basically no money at all. However, be prepared for a struggle when opening up bank accounts, banks tend to be very strict here and require extensive documentation.
Know that Hong Kong is not the same as Mainland China. They are one country, two systems, completely different cultures. If your target is to get into China, it’s physically accessible from Hong Kong but don’t expect to be able to transition your business or your mindset directly from Hong Kong to China.
Think globally from the beginning – one of the best things about Hong Kong is that it is a global hub and trade centre. 50% of the world’s population is within a 5 hour flight of Hong Kong. Embrace this from the beginning instead of trying to turn Hong Kong into something that it is not.
Because of it’s diverse population and culture, Hong Kong is a perfect place to focus on getting traction within a niche community before expanding your target audience to the rest of the world. Take advantage of this opportunity to test assumptions and get feedback early on.
Hong Kong is a relatively compressed city where word of mouth spreads super fast. Consumers are savvy, fickle. One tip is that if you do things right, it’s kind of expected… get it wrong once and you may just be left behind as fast as you got here.
Get the right infrastructure partners especially when it comes to accounting, admin, legal, regulatory etc – saves you the headaches and gives you back time to concentrate on business development.
Also, put a solid foundation in place so that you have all the details under control and ready for due diligence when it comes time to seeking investor funding.
– Starting a business here couldn’t be easier. There is not much paperwork to do and the expenses are minimal, meaning you can afford to pay a local lawyer to make sure all your t’s are crossed and i’s are dotted!
– Put yourself out there and develop a network quickly. Take advantage of the frequent events where entrepreneurs can meet each other to share their experiences and resources and explore opportunities for collaboration. These are usually organised by the various chambers of commerce, co-working spaces, meet-up groups, startuphk.com and others.
– Sky-high rent is a big barrier for most people running their own business here but fortunately there are a variety of co-working spaces that have been popping up, such as PLATFORM, Cocoon, The Hive, Wynd… to name just a few! These are great places not only for affordable desk space, but also to network and get to know other entrepreneurs around town.
– Proximity to China can be very useful – not only for sourcing products or outsourcing various services but also for business development and expansion.
Even if Hong Kong is now part of China, Hong Kong has an history as a british colony. As such, commercial spirit is everywhere and the whole city is driven toward doing business.
So as long as you are respectful of the local culture and you are coming with a positive mindset to start and grow your business, nothing can stop you. Also, there’s a whole bunch of service providers here to assist you with legal, accounting and administration so you can focus on your core business and avoid some of the bureaucracy.
For instance, would clearly discourage any entrepreneurs willing to deal directly with the office of Intellectual Property: you’ll waste a lot of time and energy.
Accept that as a foreigner it will take you a lifetime to understand all the nuances of doing business in Hong Kong. Network with people from Hong Kong, find people you trust and ask for their help and advice.
Saving face is a big part of the culture here and often you will be given a lot of positive signals only to find out later you were being let down gently.
– Find the right partner(s) to work with. Many of the start-ups we know have been co-founded by 2-3 people.
– Keep up with the latest developments and trends in the industry you are thinking of setting a business up in, especially for the Hong Kong and Asian markets.
– Network! It is quite easy to meet people in Hong Kong, and the entrepreneur scene is growing. A good network never hurts any business.
When you think about it, Hong Kong is a tiny place with a population of 7 million people only. Whatever your business, there is a high chance it has been done already and probably is even saturated. Therefore do your homeworks properly, talk to the locals and go niche. That being said, I believe this “tip” can be applied everywhere.
Also, go out as much as possible, attend events and workshops as you never know who you are going to bump into. The entrepreneurial community is rather small in Hong Kong and you may meet people who can truly help you step up. At the end of the day, it all boils down to connections!
Stick to your guns. Don’t compromise your values and beliefs. Even though that can be quite difficult at times. Sometimes Hong Kong also tries to persuade you otherwise, but I believe that this will pay off in the long run. Be open. Share your ideas and share your knowledge. Expand your network and build good relationships, which are highly valued.
In Hong Kong, everything can be done. However entrepreneurs must not think that it is an eldorado, it is not! You will need to work hard to succeed.
Taxes are low. That is a great advantage for doing business in Hong Kong.
Foreigners need to get a visa to be able to conduct business in Hong Kong. There are different types of visas, but for each of them they need to show that they will make a substantial contribution to the Hong Kong economy.
For this they need to have a good business plan, contracts, enough money to support the business operation expenses for the first year, and show that they plan on hiring local employees. Thee plan needs to be good and and show that you will really create value.
If you intend to do online/digital business, keep in mind that it is not that easy to find good affordable developers in Hong Kong. I have many clients struggling on this point…
Networking is very important here; a lot of things can happen thanks to it. Hence, put a lot of focus and energy on building a great network here.
Reach out to people and be social. Hong Kong is a wonderful city because nowhere in the world can you get to know so many people so quickly. You could meet 100 people a day here if you wanted to, and people are overwhelmingly generous with their time and advice.
If you want to get involved in the startup community there are more events than you can possibly attend, and many organizations who would love to have your help. Once you start helping in an organization, you’ll make all sort of connections.
My warning to entrepreneurs is that here in Hong Kong your problem isn’t going to be one of trying to find ways to make money, but figuring out what not to do, because you’re going to have more opportunities than you can handle and you’ll have to learn how to turn down great opportunities.
I think Hong Kong is a unique city that is still moving from the old to new in many aspects. Although English is widely known and used, Chinese is still the main language so it’s important to focus on that segment of the market no matter what you do.
If you focus only on the expat or English-speaking crowd, then you’ll miss a very large portion of the market and you may see a competitor popping up to cater to that segment of the market.
Start networking by joining a coworking space, attending various networking events or reach out to the Hong Kong chamber of commerce.
Where necessary, talk to InvestHK, the government run organisation tailored to help overseas comers to establish businesses in Hong Kong.
Work with creditable accountants and lawyers to make sure your business is well covered. Sometimes, getting a local partner is definitely a good idea in order to build trust with locals. Finally, attend events and get connected with the community!
Act like a startup. It’s easy to get carried away by the charms of Hong Kong such as the fancy offices and fast cars. Rent is expensive therefore the sooner you? come out of this delusion, the happier your startup is going to be. Besides, a co-working space initially is a good idea to get started and meet, connect, network, get advises and kickstart.
Get freebies: Register with government support organizations such SME center and SCC (SME creative center) as they have many events and resources that could be of use.
Stay focused and do what you know: There are so many opportunities and thriving businesses here, that it’s difficult to control the urge of jumping at different opportunities. Therefore my suggestion would be to build your startup around your strengths and what you love to do.
If you come to the Hong Kong market you will be overwhelmed by the number of people open to work with you and help you. Make sure you understand what you need and what will identify the right partners to you or you can spend a lot of time in meetings that go nowhere.
Go global or go for the greater Chinese market.
As a former british colony, Hong Kong’s Chinese culture is heavily shaped by western influences. Hong Kong has easy access to mainland China, both physically and commercially. This unique cosmopolitan city has the right foundation to attract foreign talent.
Don’t forget to localize the business. Get a Chinese version website, poster, or banner. Its true that HK is a cosmopolitan city where English is widely understood, but its also true that 95% of the HK residents are Chinese, and most of them would prefer reading and communicating in Chinese.
In addition, Hong Kong has almost 20 million visitors coming from mainland China each year. They are the main money spenders. Chinese optimization is essential if you want to get noticed by the Hong Kongers.
Again, don’t underestimate the cultural differences and commercial habits of between Hong Kongers and the rest of the world. I would never do business here without a very local partner who could continually remind me of the local mindset.
There’s this funny Tall Poppy syndrome thing. Educate yourself about it, learn how to dodge it. You will encounter it.
Hong Kong taxes in general are easy, but watch out for US taxes if you are American or has a US entity.
Study staffing and housing to see if it is economically for your industry/company to move to HK. Housing and Rent is a bitch.
In general, Hong Kong is the best in terms of law, taxes, and efficiency, to start a company. It’s more about how you run your business.
The market in Hong Kong is relatively small and the demographics/culture is very different from the US and China. You may need to rebuild your products for bigger markets.
Hong Kong’s startup community is growing and the Hong Kong government is supportive of startups. Check out:
1. StartupsHK that connects all HK startups and organize regular events.
2. Cyberport CCMF or incubation programme that provides financial support from HK$100,000 to HK$530,000, and accepts foreigners to apply.
Hong Kong’s bureaucracy and government departments usually work very efficiently. If you search online about gaining work visas in Hong Kong, many consultants make it sound very difficult.
It may be difficult for some people in some situations, but I was able to secure work visas and HK IDs for foreign staff in HK within 4 weeks — much shorter than even the government’s website states the process will take. So the tip is to follow the instructions, don’t cut corners and you should be able to save time and money by doing things yourself.
Get a good HK CPA. You can find a CPA from friends, business groups, or just search online. Taxes in Hong Kong are not tough to understand, but how you record liabilities, when to record revenue, and how to work some assets in Hong Kong may be different than elsewhere.
Remember that Hong Kong runs on Hong Kong Financial Reporting Standards, which is similar to IFRS, but may be different than U.S. GAAP and mainland China’s accounting standards when it comes to your particular industry (i.e. China’s Tencent is a HK-listed company so can potentially record certain revenue that is not kosher to rival Sohu.com which is listed in the USA).
Your CPA will help you understand the accounting differences and how to plan.
With a small domestic market, raising venture capital is difficult.
Hong Kong is an easy place to do business from an administrative point of view- the government’s offers a host of resources for first time entrepreneurs. The red tape is minimal.
Work from home if you can in the beginning- office rents are killer. Be cautious when it comes to doing anything involving retail. Again, the rents will make it tough to break even. Network, network and network again. See above for starting points.
Network. The more you give to the community, the more they will help with your business in return. Target wisely and start to build strong relationships with as many person as possible.
I would recommend working at a co-working space and offer to help assist with their events. There are more and more co-working spaces opening up in Hong Kong, which is good news. The most famous ones are the Hive, Cocoon, Platform and the Wynd, but there are also many others.
Hong Kong is a metropolitan city but most of the people are chinese so there might a bit cultural differences here. With that said, there is a very unique Hong Kong elements in a lot of things. Hence, be aware what’s your business or your product is for.@FrankieTam / FifthWisdom
Hong Kong is the middle kingdom for a trading company. There are many financial and service sector industries here but very few few factories, most of them are across the border in Shenzhen, China. The advantage of low tax or zero tax on foreign income has led to many shelf companies and mirror companies being set up in China.
Doing business in Hong Kong is relatively easy. Unlike in China, you will be dealing directly with well educated and professional people who understand your needs.
Hong Kong being very small (geographically), it would be relatively easy for you to meet them face to face in their office; please don’t be put off by people sitting in tiny cramped area or business being conducted from a single table in a shared office: you will be surprised by the amount of turnover they would do in millions of dollars.
As in every city, if it sounds too good to be true, it probably is. Verify stories and talk to a lot of people.
Image credit: stuckincustoms