There are several reasons why companies are moving to Hong Kong. Hong Kong is a great place to go for anyone looking to start a business offshore. The list of successful Hong Kong companies is endless, with some of the most prominent ones being: Apple, Amazon, Starbucks or Samsung.
The city is growing at a very fast pace and Hong Kong seems to be Asia’s answer to western mega-cities like New York. Hong Kong has been growing very fast in the past decades, which is very visibly represented by its impressive skyline. While many European countries suffered from economic downfall, Hong Kong is still growing, although it’s not in an explosive way.
According to research done by Hong Kong’s government, the economy of the country has expanded by 2.3 percent in 2014. In 2015 the economy is forecasted to grow 1 to 3 percent. It’s not the kind of growth that you will find in some of the world’s most rapidly growing economies around the world but it is the kind of growth that belongs to a stable and predictable country. Definitely a good place to set up a profitable company.
Switching from service to knowledge
Because Hong Kong is located very strategically at the bottom of China, it has been able to grow into a major harbor city. It has always been a city with a service-based economy, like many cities in Asia, but it wants to evolve into a knowledge-based economy.
Knowledge seems to have the future, in terms of growth potential, and to be able to compete with cities around the world, Hong Kong wants to make this leap. This is good news for entrepreneurs from all around the world because, in order to achieve this goal, Hong Kong is making it easy for start-ups to be founded.
The economy is especially geared towards the finance, retail, tourism and real estate industry. Most of the Hong Kong companies can be grouped in one of these industries, or are supportive to one of those. Companies that are starting up in Hong Kong have to realize, that chances of success will be highest if it’s aimed towards one of these industries.
This is done to stimulate the economy and to possibly overtake New York’s status as the biggest business center in the world, one day. It’s always good to aim high and to have ambitious dreams.
Reasons companies are moving to Hong Kong
There are several reasons to start a Hong Kong company. First of all, the low tax is a good reason to move there. The government can keep taxes relatively low because they get a significant amount of their income from the land value.
Hong Kong’s land is owned by the government of The People’s Republic of China and they only give it out on a leasehold basis. The amount of money that leaseholders have to pay, goes up when the property value rises and this creates a stable flow of money for the government.
This is good news for persons who are liable to tax in Hong Kong as taxes can remain on the low side, but not so good news for people who want to Hong Kong and Singapore are the only countries in Asia that allow foreigners to fully own all of the shares. They are also the only 2 Asian countries in which no locals have to be on the board of directors. This saves a lot of time and effort and gives total control over the company.
There is a culture in Hong Kong of stimulating start-up companies. Hong Kong’s government sees this as a way of growing and expanding even further, so the process for start-ups is very easy and fast. Setting up an offshore business in Hong Kong can theoretically be done in 2 weeks.
Most companies in today’s world can’t go without fast internet. Start-up companies that need reliable broadband internet connections are at the right place in Hong Kong. Ookla’s download index, which is the most trusted internet speed index, has Hong Kong as the second country in the international household download index. With an average download speed of over 100 Mbps, they are just behind Singapore.
Costs of moving company to Hong Kong
Companies that want to set up their headquarters in Hong Kong, will have to pay significantly for this. According to research done by the Global Property Guide, Hong Kong is the third most expensive city in the world when it comes to buying or renting real estate.
The very high real estate prices in Hong Kong are only surpassed by Monaco and London. This wouldn’t have to be a problem though for start-up companies, because the internet has made it possible to do business without an.
It will only cost a couple of hundred dollars to get your business started in Hong Kong. The most expensive part of this would probably be the flights to Hong Kong. It would be necessary to go to Hong Kong in person at least once, to get everything sorted out.
The culture of Hong Kong is, in many ways, different from Western cultures. An important difference in the business world is the fact that there aren’t many female entrepreneurs in Hong Kong. This makes them stand out and people seem to be more willing to help them out.
Another difference is that Hong Kong citizens oftentimes seem to be less creative than people from ‘the west’. This has to do with education and the way people are raised. For this reason, expats can have an edge in their chances of succeeding as entrepreneurs, where it pays off to be able to handle unpredictable environments.