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Pros and Cons of Starting a Tech Business in Hong Kong

7 minute read

Starting a business in Hong Kong has always been one of the best ways to gain access into the rich market of Asia. One crucial segment of this growth is the tech industry, which is one of the leading segments of Hong Kong’s ever growing startups. The Hong Kong government has put extensive networks and financial programs in place to encourage the growth of tech businesses as well. Many companies can scale and quickly establish themselves with the numerous opportunities available here.

Pros and Cons of Launching a Tech Startup in Hong Kong

Already, you’re thinking about the benefits of launching a tech startup in Hong Kong. But as with everything in life, your decision must consider the disadvantages as well. Let’s examine some pros and cons. You can use the information in this article to make an informed decision on your next move.


Pro 1 – Easy Access to China

Hong Kong has the strategic advantage of being close to China’s southeastern coast. This gives companies, especially startups, the advantage of reaching large Asian markets including the Greater China market itself. And on top of that, merchandise from Hong Kong can travel to China duty-free. If you travel from Hong Kong with high speed trains, you can reach most of the major cities in China in less than a day. As a startup, you can take advantage of this convenient access to make international connections and grow your business.

Pro 2 – Low tax rates

As one of the most business friendly jurisdictions, the ease of doing business in Hong Kong can be compared to none. In Hong Kong, it’s possible to run your business for much less than you would in other Asian countries and even the United States. And if you establish an offshore company, there is no capital gains tax, no value added tax, no interest tax and no withholding profit tax. In the two-tier profit tax system, corporations are charged at a low company income tax rate of 8.25% on the first HKD 2 million profit, and 16.5% on remaining profit. This rate stands favorable when compared to the potential 28% in the U.S.A.

Pro 3 – Relaxed Monetary Policy

You have a lot of freedom to trade in any legal industry, and as a tech business, this means you have easy access to essential forex services. The trade freedoms, monetary freedoms coupled with minimal government interference are all things that would make your startup thrive easily. There are also no limits on investments; trade can smoothly flow inwards and outwards. And if you’re a business with international dealings, Hong Kong has no control over such exchanges, you can exchange currencies without fuss.

Pro 4 – Talented Workforce

Workforce in Hong Kong is generally highly skilled and educated. One reason is the free and compulsory attendance till secondary level. Also, 75% of the labor market has gone through advanced training and education. Your business will also benefit from the multilingual abilities of Hong Kong citizens, as they are taught Mandarin, Cantonese and English in school. With this ability, you won’t find it difficult trading with neighboring settlements like China. Moreover, you are also free to hire foreign talents, so far they’ve been legally cleared by the Hong Kong government.

Pro 5 – Easy Immigration

In case you’re worried about immigration, you should know there are easy and relatively stress free options for that. Hong Kong permits visa-free visits ranging from 7-180 days for citizens of more than 170 different countries. Provided you have an entry permit or a relevant visa, you are allowed to conduct business activities. Here are some visas you can get depending on the mission in Hong Kong:

  • Investment Visa – This is needed for business owners and foreign professionals trying to build a business in Hong Kong.
  • Employment Visa – This is needed if you’re trying to hire and relocate foreign employees in Hong Kong.
  • Permanent resident Visa – This is for those who want to be citizens of Hong Kong. However, you’ll have to continuously be in Hong Kong for a minimum of 7 years to get it.
  • Dependent Visa – This is applicable to you if you’re hiring staff in Hong Kong. People with Dependent Visas do not need an additional visa in order to be employed in most cases.

You can find out more about visa options that are suitable and you’re eligible for here.

Pro 6 – Strong Intellectual Property Laws

As a tech startup, it’s only natural you worry about protection and safety of your business. Hong Kong has a stable protection for IP. There are also strict anti-corruption measures put in place. As such your business is exposed to little risk of crime and foul play.

In addition to its strong economy, Hong Kong has a strong and stable banking system. International companies can entrust funds to local banks and be sure of their security. Bilingual IP docs are also made available at low cost to give protection home and abroad.

Con 1 – Bank Accounts

To carry out business in Hong Kong, you will need a bank account. Even though Hong Kong is business friendly, the account opening process might be stressful. A lot of the traditional banks have exhausting procedures to open bank accounts and your account application might be rejected. Also, it is required by law that all directors, shareholders, and signatories of the bank account be physically interviewed by the bank. One way to go about this is to consider digital banking options for your business instead of traditional banks.

Con 2 – Geopolitical issues

Due to China’s complicated relationship with Hong Kong and the “1 country, 2 systems” policy, the political stability of Hong Kong is uncertain. This may affect business in unexpected ways from now until Hong Kong fully integrates into China in 2047. That being said, the value Hong Kong brings cannot be understated and even China recognizes this. For this reason, it’s more likely that businesses will continue to be protected because of the benefits brought by those setting up in Hong Kong. You could also carry out research on the best ways to set up your business so you don’t end up in a fix after incorporation.

Con 3 – High cost of living

Due to high demand and low space available, Hong Kong is recognized as one of the most expensive places to live in the world. What this means for your business is that your funds can get eaten up fast. Home ownership, office space and wages are all things that are quite expensive to keep up with. For instance a 500ft accommodation will cost about HKD 15,000 a month to rent. It’s up to you to research the best options for your business depending on your budget. A way to minimize this cost is through the flexible office market which provides flexible options across business districts and price ranges. So you can scale up or down according to your business needs.

Con 4 – Traditionalism often trumps modernism

Even though Hong Kong is an international and advanced business zone, many established businesses here are not yet comfortable enough to readily embrace the new digital era. The major reason for this slow acceptance is that the understanding of the digital aspect is still quite low. Hong Kong businesses are slowly making their way to digitalization unlike countries like China and India, known for their ever growing contribution to science and technology. For this reason, selling tech in Hong Kong can be quite difficult without a stellar sales team.

Wrap up

If you’ve made up your mind about starting up your tech business in Hong Kong, feel free to reach out to seasoned tech professionals here at Sleek. We’ve got all the expertise you need to ensure you overcome the challenges of starting your business! Make your startup journey an easy one, and get started today.

Start a business in less than 3 hours with us. Talk to our experts today.

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