Acclime helps you set up, manage & advance your business in Hong Kong and beyond.
Hong Kong has increasingly become a destination where businesses want to establish their business in. Despite all the benefits it provides, business owners will still encounter some challenges when starting their business in Hong Kong.
In this list, we will go through the most common challenges and what you can do to overcome them.
In order for a foreigner to work in Hong Kong legally, foreign employees or investors must have a work permit or a proper visa to work and stay in Hong Kong. For a foreigner to obtain a Hong Kong visa, the person must possess the skills, knowledge or experience unavailable in Hong Kong or fulfil the requirements for investment. There are six types of employment and investment visas available to foreigners, which include:
- The general employment policy (GEP) for individuals who possess specialised skills, knowledge or experience unavailable in Hong Kong;
- The admission scheme for mainland talents and professionals (ASMTP) for mainland China residents who have special skills, knowledge or expertise not available in Hong Kong;
- Technology talent admission scheme (TechTas) for non-local talents to engage in research and development (R&D) roles in Hong Kong;
- Investment as entrepreneurs scheme for foreign investors who want to establish or join a business in Hong Kong;
- Imported workers scheme for foreigners to fulfil roles that Hong Kong companies have difficulties in finding local employees; and
- The training visa for foreigners who want to enter Hong Kong to receive training related to their current work field.
Opening a corporate bank account in Hong Kong
Opening a corporate bank account in Hong Kong for foreigners can sometimes be a hassle and take time. Since 2014, all banks in Hong Kong follow the anti-money laundering (AML) and counter-terrorist financing regime in order to filter any high-risk clients or high-risk transactions. Even though you have completed the paperwork and submit documents as required, you still may be rejected. Some of the possible reasons why your application is not accepted are:
- The products or services involved are of high-risk (eg commodities, gambling, remittance agent)
- The directors, shareholders, ultimate beneficial owners, clients or suppliers are from high-risk countries
- Multi-layered structure without business reasons
- The directors or shareholders have no track records of doing the business
- The directors, shareholders or ultimate beneficial owners failed the background check (eg on the sanction list, being (closely related to) politically exposed persons or has been convicted of an offence to a certain crime)
- Source of income of the shareholders or ultimate beneficial owners is in doubt
- There is no Hong Kong element in the business plan (ie no suppliers, customers, staff)
Hong Kong banks follow strict due diligence procedures, and most of the time, the account signatories, principal directors and shareholders are required to be physically present at the Hong Kong bank when opening a corporate account. Several documents are also required when opening a corporate bank account in Hong Kong:
- A certified true copy of:
- The company’s Business Registration Certificate, issued by the Inland Revenue Department
- The company’s Certificate of Incorporation, issued by the Companies Registry
- The company’s articles of association
- Filed copy of the incorporation form (Form NNC1) or last Annual Return (Form NAR1)
- Subsequent statutory returns and transfer documents, if applicable
- A director declaration that provides the personal particulars of directors and principal shareholders.
- Proof of identity for each of the directors, authorized signatories, principal shareholders and beneficial owners of corporate shareholder:
- Copy of the Hong Kong ID card or passport
- Residential proof, such as recent utility bills, bank statements and driving licenses
- Former name or alias proof (if any)
- Proof of business:
- Business plan of the Hong Kong company (estimated turnover, number of staff, number and volume of banking transactions)
- Audited financial statements of the Hong Kong company or related company overseas
- Sales/purchases contract of the Hong Kong company or related company overseas
- For corporate shareholders:
- A certified copy of an organization chart that shows the percentage of shareholdings held by each individual and the ultimate beneficial owners of the company.
- Details of ultimate beneficial owners for nominee shareholders of a company
- For ultimate beneficiaries who are trusts:
- A certified copy of the trust deed or declaration of trust with details of the trustees, settlers and beneficiaries
Hong Kong is a Special Administrative Region located on the southeast coast of China and has close business relationships with China. Because of its proximity to Mainland China, there is a large number of the Chinese population in Hong Kong. Hong Kong’s culture and customs are also similar to China, and Cantonese is the main language spoken language with 96%, followed by Mandarin at 48%, and 46% of the Hong Kong population can speak English. It may be necessary that non-Hong Kong residents and foreigners to familiarise themselves with the Chinese culture and language to carry on business smoothly.
Hong Kong is one of Asia’s most significant business hubs, and many entrepreneurs choose to invest in Hong Kong. As a result, the Hong Kong market is more or less saturated, meaning that there is already a high number of products or services in the market. Unless you are offering something new, it can possibly be difficult for new companies providing the same products or services as the already existing companies in Hong Kong to establish a business presence.
Hong Kong has one of the highest costs of living in Asia. If your business needs a physical shop or office, the rental fees for the building may possibly be very pricey. Apart from rental being expensive, transportation, utilities and private healthcare are also quite expensive. Therefore, before establishing a business in Hong Kong, you should be sure that you are able to afford rental offices and accommodation.
Lack of standard working hours
There are very limited laws in Hong Kong regarding employee’s work hours. Many Hong Kong employees work more than nine hours a day and its common that they leave after their superiors leave work. There is no law about the maximum work hours, except for children (13 to 15 years old) and young people (15 to 18 years old). Under the Employment Ordinance, the employment contract must state the number of hours the employee is required to work, but there is no regulation requiring employers to pay employees if they work overtime.
Starting a new business can always be a hassle, especially if you are starting one in a country you are not familiar with. To make sure you avoid any pitfalls when starting a business in Hong Kong, Acclime can professionally help you with the procedures to establish your company and comply with the necessary regulations.
We are a premier provider of professional formation, accounting, tax, HR & advisory services in Hong Kong, focusing on providing high-quality outsourcing and consulting services to our international clients in Hong Kong and throughout the region.