Top 5 Mistakes to Avoid When Setting Up a Business in Hong Kong
10 minute read
Hong Kong is a well-known tax haven that attracts thousands of big thinkers and entrepreneurs each year. These individuals come to Hong Kong to seek their business success.
First of all, they enjoy lower taxes compared to most other parts of the world. Other reasons to set up a business in Hong Kong include a stable political situation, diverse environment, well-educated workforce, and special government and non-government incentives designed for aspiring businesses. All of these benefits stand on a great foundation made of a great legal system that is unbiased.
However, in spite of all of these benefits, some entrepreneurs still make serious mistakes when starting a business here. Luckily, this guide lists five major mistakes that you should avoid if you decide to come to Hong Kong and start your own business.
- Buying A Shelf Company
- Selecting The Wrong Company Secretary
- Failing To Throughly Study The Hong Kong Market
- Underestimating The Importance Of Your Business Plans
- Avoiding New Technologies
1. Buying A Shelf Company
A shelf company is a company that has already been set up by the original business owner who no longer needs the company. Some investors believe that buying this kind of company is better than setting up new ones since the whole process is accelerated.
Obviously, getting an already established company eliminates the setup procedure. In addition, some people simply do not have enough time to go through the setup process. Instead, they seek to buy an already established company.
Unfortunately, buying a shelf company looks easy but has its own shortcomings. Even though it is convenient and easy to just buy a company, you might face challenges when opening bank accounts.
It has happened to many people that they had trouble convincing different institutions (banks included) that the company goals are still valid.
2. Selecting The Wrong Company Secretary
Once you start learning about the requirements when setting up an HK business, you will see that having a resident company secretary is mandatory in the region. The secretarial role has to be considered properly since it bears much significance.
Your company secretary will be part of the board meetings and they will act as the custodian of the company’s statutory documents. Due to these specifics, some choose their friends or family members and assign them to be the company secretary. However, that practice may prove to be wrong.
Just because one thinks that a family member can be trusted, that is simply not enough for the role. Instead, since this position is very important, it would make more sense to hire a professional that has some experience in the given field.
An expert with years of experience will be committed to achieving your company goals every day. Luckily, this can be easily achieved through trusted corporate secretary services offered by Sleek.
3. Failing To Throughly Study The Hong Kong Market
Hong Kong is probably one of the perfect places for your business. However, you should study the market well and check if someone else has already set up a business similar to yours.
It is common knowledge that thorough market research is integral to your business’s success. Not knowing the market well can break your business in a matter of a few months.
Also, do not forget to study your competition in Hong Kong along with the targeted audience to make sure that you have the right product to sell. On the other hand, if the market is oversaturated with services similar to the ones you plan to offer, you might have found the wrong market for your business.
4. Underestimating The Importance Of Your Business Plans
Having a business plan is essential if you see your company as a serious organization with great ambitions. On top of that, if you want to take out a bank loan, you will not be able to do so without a business plan.
There is no doubt that banks will ask you for your business plan if you want to get a loan. They will want to have a look at it to see if the investment they are going to make will pay off or not. A business plan tells banks how you plan to make money and how much profit is projected.
However, that is not the only information that needs to be in your business plan. A great business plan sets out the whole process from starting with your management team all the way to your marketing strategy.
With a plan so comprehensive, it will be easy to see if you have the right strategy in place to make the money you have projected.
For example, you cannot inform your bank that you plan to make $100k in your first year of business without actual marketing and sales plans. Achieving this goal is not possible without these two strategies.
5. Avoiding New Technologies
Some people see new technologies as expensive and unnecessary in the world of business. But in reality, new technologies can provide new opportunities for your company. With the aid of new technologies, it is possible to do the whole work with more energy and this can also save you money.
For the not-so-tech-savvy individuals, new technology may seem vague and unnecessary. But always keep in mind that it takes some time to truly learn all the ins and outs of new technological concepts.
Each new software solution that you want to implement will take time to work fully and your employees will have to familiarize themselves with it first before they start making full use of it.
A few great tech solutions that have already helped many businesses include:
The bottom line is that unwillingness to adopt and adapt to the technological advances can hurt your business both in the short and long run.
Hong Kong is a truly unique place and your business ideas are likely to become a reality there. You will have all the conditions in your favor because the region simply loves innovators and hard workers that have the courage to try new things.
But in order to increase your chances of success, make sure that you properly learn what things you should never do when setting up a business in Hong Kong. Sleek and its services such as corporate secretary and incorporation can help you avoid quite a few mistakes that many have made during the setup phase.