Hong Kong is one of Asia’s financial hubs that has held the spotlight as one of the best places for e-commerce businesses. The country is known for having several favourable conditions that open doors of opportunity for online businesses. Thus, the e-commerce market in Hong Kong has steadily risen and expanded in the B2Cand B2B sectors, reaching a penetration rate of almost 60% by 2018.
Below is a list of steps to take to successfully set up an ecommerce business in Hong Kong.
1. Register the company
One of the most critical steps to take when embarking on the e-commerce industry in Hong Kong is registering the company. However, registering an e-commerce company in Hong Kong is very similar to incorporating a normal Hong-Kong based company. In fact, with the presence of a wide array of professional service firms within the region that offer dedicated support, the process of forming and registering a company can be achieved within a period of 24 hours.
To register your ecommerce business, however, you will go through the following 4 main steps:
- Choose the type of business that you will be dealing with
- Decide on the name of your company
- Decide on the kind of company structure that you are going to be using
- Then, fill in the application and hand in the required documents to the Companies Registry of Hong Kong
One of the most common business entities that are considered to be ideal for online businesses is that of a private limited company compared to partnerships or sole proprietorships. This is because it offers separate liability among shareholders, and therefore it is possible to secure your assets. Also, the tax rates that are imposed on private limited companies are relatively low. This structure also allows for flexibility of ownership.
2. Open a Bank Account
Suppose the kind of e-commerce business that you are planning on opening will require business-related transactions that will operate on digital platforms. In that case, you will have to open a bank-like account or a virtual account.
Usually, the process of opening a business bank account is complicated as it takes several months and requires minimum balances and large deposits. However, there are alternatives to these traditional bank accounts that are more suitable for most e-commerce businesses. These money service operators afford users quick registration, multi-currency accounts, and completely online processes that are designed with e-commerce businesses in mind.
Related Read: How to open a corporate bank account »
3. Apply for a License
In Hong Kong, not all businesses are required to apply for a business license. Therefore, you will need to ensure whether the kind of business you are starting up will require a license. If the business you are starting up requires a license, you must obtain a proper permit or license for your online businesses to be legally recognized.
For instance, if your e-commerce business will be that of selling alcoholic beverages online, then it will be compulsory for you to apply for a liquor license. If, on the other hand, your business deals with selling Chinese herbs, then you will have to take out a business license from the Hong Kong Department of Health.
4. Decide on your marketplace
Depending on the kind of business you want to start up, you will first have to carefully examine each online marketplace to determine whether it will offer you the right platform for your company.
For instance, you may be intending to penetrate the Chinese market. If so, you may consider options such as Taobao, Tmall, or HKTV mall. Or it may be that you intend to sell your products on Amazon or eBay.
Once you have decided on the kind of marketplace that will be most suitable for your ecommerce business, then the next step will be to send them your business registration number.
5. Maintain your Company’s Compliance
As it is with most other companies, you will need to ensure that your e-commerce company complies with the requirements of the competent authorities.
For instance, after a period of one and half years from the registration of your company, you will have to audit your business financial statements and then file to the Inland Revenue Department your Profits Tax Returns. Therefore, it would be highly advisable to keep and track records of your business-related transactions.
- What are the various types of e-commerce business models?
- In this digital age, there several e-commerce structures that afford your e-commerce business greater cost reduction and flexibility, such as:
- Dropshipping, where your suppliers are the ones tasked with shipping products to the end customer.
- White label, where your business will buy various products from suppliers, relabel and repackage these products and then selling them to customers
- Wholesale, where your e-commerce business will specialize in selling a large volume of products to retailers and small shops
- Subscription, where your customers will be encouraged to subscribe to the services you are offering for a specific period.
- Is it necessary to open a merchant account?
- If your e-commerce business involves selling products to your customers or operating on a selling platform, then it will be advisable to open a merchant account such as Alipay or Paypal. This is particularly so for e-commerce companies that are based in Hong Kong. However, the kind of merchant account you choose to open will depend on the kind of customer you are targeting and the kind of business you are running.
- Why set up your e-commerce business in Hong Kong?
- Hong Kong is renowned for having a high density of connectivity and internet users. Also, it has been observed that more and more internet users within Hong Kong are shifting to their smartphones for their various internet needs. The region also has in place business-friendly tax policies that encompass the e-commerce industry. Hong Kong is also known for its reliable information systems and technology infrastructure that make the running of online businesses smooth and easy.
Setting Up Your Business in Hong Kong Can Be Easy
Fast and efficient business incorporation to kickstart your venture smoothly.