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Serving as a gateway to Asia and the West, Hong Kong is in an ideal position to offer unrivaled access to a variety of lucrative markets. All of Asia's key markets can be reached within four hours, while half of the world's population rests within a mere five hours of travel.
Hong Kong is also one of the easiest markets in the world in which to do business. This is due largely to its simplified and streamlined process for starting new companies. The Hong Kong Companies Ordinance, passed in 2014, made exhaustive changes to the local corporate landscape by easing the legal structure which governs the formation and operation of companies.
This legislation, which also applies to foreign firms operating in Hong Kong, was a landmark step in local development of corporate law.
Why you should do business in Hong Kong
As a major worldwide financial hub and with booming media, film and information technology sectors, Hong Kong is an extremely appealing destination for foreign business and investment. Given the government's active efforts to promote these industries, Hong Kong is likely to remain an attractive market—and one worth exploring with the help of local experts to uncover opportunities that might otherwise be missed.
Perhaps Hong Kong's chief attribute as a destination for investment and commerce is its incredibly business-friendly climate. Hong Kong is ranked second worldwide by the World Bank in ease of doing business, and second in trade between borders.
Hong Kong makes it very easy to start a new business. The process, which can be handled online, is so streamlined that it takes as little as a single day to start a new venture.
Hong Kong also features a strong and independent judicial system steeped in the customs of English common law. This fusion of Eastern and Western elements may also be seen in the region's cultural awareness and high level of internationalization. While Hong Kong has filled a historical role as gateway to China, it also serves as China's gateway to the world, giving it a strategically vital position for business.
A friendly tax climate is another bonus for investors and business owners. Hong Kong's taxes are low and the system is simple to negotiate. Hong Kong has no capital gains, VAT, goods-and-services tax (GST), or withholding tax; dividends are also non-taxable.
The challenges of operating in Hong Kong
While Hong Kong offers a multitude of favorable conditions for new businesses, the environment isn't without challenges.
While the aforementioned Companies Ordinance of 2014 streamlined the process of starting a business, it also set forth a variety of new regulations. A new company in Hong Kong is required to have a Hong Kong resident or local corporation as company secretary. New companies must also have one natural person as a director and establish an office in Hong Kong.
Additionally, the ordinance restricted corporate directorship in private firms, introduced capital reduction procedures that are handled outside the court, strengthened the rights of auditors and introduced simplified reporting. While these new measures helped accelerate the business startup process, staying in compliance could prove tricky without the help of local experts.
Hong Kong also suffers from a high employee turnover rate, due in part to a mobile, ambitious workforce. Companies with more than 500 employees had a turnover rate of almost 25-percent in the first quarter of 2013, according Hong Kong’s JobsDB hiring index. Smaller companies are more fortunate, with a rate between 6.7 and 11.4 percent.
All Hong Kong companies must also submit to yearly audits. Profits tax and employee tax filings are also required, even if no tax is owed.
The challenges of operating in a new country are often daunting—regulations are constantly evolving and no business landscape remains static. Without a solid grasp of the issues at hand, businesses are exposed to tax penalties, and even the prospect of civil or criminal litigation.
If you are considering entering the Hong Kong market, it is critical to have an experienced partner with a global footprint. CT has a worldwide network of offices and partners who will make sure your local needs are met, accurately and on time.
CT can help you get set up, provide a single point of contact and provide you with customized solutions for all your needs. We know that one-size does not fit all. From incorporation to dissolution, major mergers and acquisitions, registered agent services and all the day-to-day compliance needs in between, we’ll make sure you have the right support tailored for your global needs.
We offer a full suite of international products and services for our customers, including:• Global Transactional Services• Global Managed Services• Global Business Expansion GuidesCT has helped businesses and law firms expertly manage compliance issues for 120 years. To learn more about how we can help you better manage your global compliance needs, contact a CT representative at 844-318-1457 (toll-free US).
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