3 Most Important Things When Doing Business in Hong Kong
by Arina Smith Business 16 October 2021
It is no longer a secret that taking a business offshore is an excellent step for leveraging it into a multinational. Hong Kong has particularly stood out because of its supportive administration and simplified business incorporation procedures. So, if you are considering doing business in Hong Kong, the truth is that you will be following in the footsteps of other top-rated brands on the globe. In this post, we will tell you the most important things when doing business in the Hong Kong Special Administrative Region of China (SAR)
Hong Kong is a small island, but it has installed extraordinary policies that aim to attract more foreign companies. The secret to this is that more businesses will pay taxes when they succeed, helping to support the Hong Kong economy. Therefore, the Hong Kong administration takes matters of taxation very seriously, and you should make sure the books of accounts, tax payment, and filing returns are done in line with the Inland Revenue Department (IRD) guidelines.
If you want to reach neighboring markets or others across the globe, you need to get a tax residency certificate from IRD by demonstrating tax substance. In addition to helping you access a larger market, a tax residency certificate also helps to avoid double taxation. Tax substance is a demonstration that your company is helping promote the growth of the Hong Kong economy. The first step of demonstrating tax substance is ensuring the business pays all the required taxes on time. Other tips for demonstrating tax substance include:
- Holding board meetings in Hong Kong.
- Partnering with other local businesses.
- Buying products from Hong Kong-based companies.
- Maintaining a physical office with staff and other requirements for running it.
- Going the extra mile to help other local businesses to grow.
Compliance with ESG Reporting Requirements (for listed firms)
If your new company targets listing in the Hong Kong Stocks Exchange, one of the new requirements is environmental, social, and governance (ESG) reporting to promote sustainable corporate operations. Under this requirement, the company’s management must rethink its operations and anticipate challenges it is likely to face in the future. Then, it should highlight elaborate strategies for overcoming them. This approach has become very useful, especially for investors, in the following ways:
- They can assess the expected future performance of a company and make decisions on whether to invest in it.
- It becomes easy to identify companies that are focused on promoting social, corporate, and environmental sustainability.
- The company and investors can feel they are part of a solution that is addressing global challenges, such as global warming.
This is never easy, especially for companies that are targeting to start the process. Even for the firms that had already listed with the exchange, the process is still challenging, and they should consider working with experts.
The Right Marketing Strategy
The bottom line for doing business in Hong Kong successfully is drawing a robust marketing strategy that can help the enterprise to grow until you can achieve the targeted goals. To craft a great strategy, it is paramount to have the right information, such as the nature of the market, targeted segments, competitors, and local regulations. Then put all of them together and identify the most viable product, target, and method of winning customers. For example, you might want to work with fitness, learning, and hospital institutions if your company deals with medicine and fitness-related products.
These are the three most crucial components you need to make significant moves and finally succeed in doing business in Hong Kong. Remember to bring onboard experts because they can help your company with many things, including company registration, demonstrating tax substance, ESG reporting, serving as your company secretary, and executive functions like payroll management and accounting.