Planning for setting up an e-commerce company, but don’t know where to start? BBCIncorp is here to help you. Our recommended option is to bring your business to a financial hub of Asia – Hong Kong.
The blog provides you with major reasons why Hong Kong is a worth-considering place for an e-commerce business. Follow along with us!
Why choosing Hong Kong for e-commerce business?
Gone are the days when people took several kilometers across to buy items and goods needed. A booming trend has been witnessed in recent decades. And ever-growing escalation in this bustling sector is still on the way. All we are mentioning is the presence of e-commerce business.
Interestingly, acknowledging the e-commerce value, a range of conventional companies have also decided to jump online. Online businesses have turned up everywhere, bringing the utmost convenience for people in traveling, communication, and especially trading.
E-commerce business is an emerging trend in Asian countries. Positioned as the world’s freest economy, Hong Kong is the top choice in the consideration list for setting up e-commerce businesses.
Let’s delve into how entrepreneurs reap benefits from starting their e-commerce platforms in Hong Kong!
1. Potential growth in online business
It may be a ‘nightmare’ to some sectors linked with travel and leisure in recent months due to COVID-19. But, to a range of technology-related industries, including e-commerce sector, they probably are ‘strong winners’. Despite the huge challenge of COVID-19 outbreak that has brought about the world’s economic crisis and the downward trend in most walks of life, it would be no exaggeration to say that it has been a record-breaking year for online-store and e-commerce businesses.
Proportional to this upward trend, the prevalence of e-commerce companies in prospective markets is also witnessed. Hong Kong, as a typical example of financial hubs in Asia, is an ideal destination for offshore seekers in question.
Hong Kong is a thriving online market. Statista demonstrates some key highlights of the Hong Kong e-commerce industry:
- Est. revenue for e-commerce business in Hong Kong is expected to earn US$6,409m in 2020
- Annual growth rate for e-commerce business revenue in the year course of 2020 -2025: 12%
- Est. market volume for HK e-commerce business: US$11,308m by 2025
2. Vivid online market and digitally savvy shoppers
Reviewed by WorldPay FIS 2020 Global Payments Report, Hong Kongers are more likely to make payments via credit card. Remarkably, there are around 40% of online purchases, a quite similar percentage when compared to that of in-store sales. Habits of using alternatives like bank transfers or digital wallets are now making a major contribution to the growth of Hong Kong e-commerce market.
An increasing number of traditional high-end brands in Hong Kong has quickly kept up with the trend. Online business platforms and presences from many brands have widely popped up internationally. Additionally, merchants who are sensitive to the changing habits of buyers are also day-by-day strengthening their capacity to adapt to the growing competitive market, i.e., getting buyers involved in better online experiences. As a result, e-commerce business becomes among the most welcomed business sectors in this financial hub of Asia.
Online shopping markets also turned more dynamic due to the widespread pandemic between 2019 and 2020. The more highly the safety is prioritized, the higher value e-commerce solutions can achieve. Hong Kong’s sophisticated infrastructure for e-commerce growth is a big plus for up-and-running online merchants or those investing in e-commerce. Particularly, Hong Kong took the 12th rank in the global ranking of logistics capabilities and quality by the World Bank.
The potential for e-commerce in Hong Kong is crystal clear. Another striking reason why entrepreneurs should pick Hong Kong to set up an e-commerce business is this city’s digitally-savvy shopping population. This, fortunately, is a strong driving force to open many doors of opportunities for those wishing to set up an e-commerce business in Hong Kong.
3. Business-friendly tax regime
Like most offshore businesses usually do, people have a tendency to look for business-friendly jurisdictions where they can relieve a large financial burden in terms of taxation.
Ease of tax burden used to a huge advantage in many traditional offshore landscapes, but there are recent extensive changes to offshore company regulations. Changes are still on the rise for enhanced transparency and adaptability with global standards. For this regard, reputed low-tax jurisdictions, including Hong Kong, are gaining more in popularity, especially for e-commerce company setups.
Hong Kong follows a territorial system of taxation. The tax rate which is very low is a striking driving force behind why there are many Amazon sellers and e-commerce players who opt for Hong Kong to start businesses. To specify, company formation in Hong Kong can bring you:
- Corporate income tax rate: 8.25% (for the first HKD 2 million) and 16.5% (remainder)
- Capital gains tax rate: 0%
- Tax on dividends: 0%
- Withholding tax on dividends and interests: 0%
- Sales tax or value-added tax: 0%
- Tax rate on foreign-sourced income (profits derived from outside Hong Kong territory): 0%
Need a Hong Kong tax guide in great detail? You can get it here: Tax in Hong Kong: A General Guide For Entrepreneurs
4. Modern and effective banking system
Hong Kong financial capacity is another worth-considering reason.
Well-known as a financial hub of Asia, how strong Hong Kong’s financial sector is can be clearly seen in its sound banking system. Evidentially, over 70 of the world’s 100 biggest international banks are present in Hong Kong. This is not to mention the perk for offshore renminbi business to access Mainland China from Hong Kong.
Are you selling on Amazon USA or other similar businesses? You may now find out the right place for your business. For foreign entrepreneurs longing for opening an overseas bank account for e-commerce business, Hong Kong banks usually appear on the top list of considerations.
In fact, Hong Kong banks can still approve applications connected to online business models. Things to keep in mind are to get your Amazon sales records well prepared, provide bankers with proof of your product listings, sales volume and revenue of your business, and so on.
Still, many sellers may wonder about the difficulty in opening a local bank account (due to the strict due diligence process, in-person visit, et cetera) in Hong Kong. Good news for never-lose-hope applicants is that fintech platforms in Hong Kong like Neat account will be the highly-recommended alternatives for their online businesses. The opening process is even more free-hassle and simplified, explore to know more: Alternatives to traditional bank accounts in Hong Kong
Transparent regulations, a friendly tax system coupled with a sophisticated banking system have undoubtedly built up a good reputation and favorable conditions for e-commerce investors to pick Hong Kong.
5. Advanced Information and Technology Infrastructure
Next, state-of-the-art infrastructure is another benefit of choosing Hong Kong for online business setups.
As matter of fact, e-commerce businesses put heavy reliance on information and technology. Apparently, if an e-commerce business has the right technological infrastructure in place, it is more likely to guarantee its network stability, as well as the transaction security for customers. There is a high possibility that online users will send your brand out of the game if they find that their credit card information may NOT be kept secure while making online purchases with your online store.
To successfully run your online business, important factors must comprise quality servers, internet facilities data processing center, and many others. Therefore, a modern and well-developed infrastructure in terms of information and technology like in Hong Kong is a big advantage when choosing where to set up your e-commerce business. To give an example, Hong Kong imposes a stringent law of data privacy from which only persons with permission are granted access to the data center.
6. Easy company formation and affordable setup costs
Last but not least, easy and affordable company setup may be of your interest!
Procedure for a Hong Kong company formation is very simple and straightforward. To save time and money, seeking a reliable incorporation service provider like BBCIncorp is a wise choice, as these providers will get everything ready for you. With proper documents provided, they can register your company within 24 hours.
Equally important, there is no need to visit Hong Kong for your company formation. This is undeniably a great plus as the pandemic has raised mounting concerns about people’s safety. Without forgetting to mention is the competitive price for setting up a company in Hong Kong. BBCIncorp forms your Hong Kong company only from 799 USD, with a full set of basic corporate secretary services, one-year legal stuff guaranteed, and especially free support to get Neat account (as mentioned in previous part) – one can’t-miss thing to any small businesses eyeing Hong Kong e-commerce company.
Want to learn more about this service? Please read here.