How Can Your US Business Expand to Asia?
In recent years, Asia has become an increasingly attractive destination for US companies seeking cost efficiency and skilled labor. Given the favorable tax structure and bustling trade environment, Hong Kong has emerged as one of the top Asian expansion destinations for US companies. Reflecting this trend, the number of US companies expanding to Hong Kong surged by 53% in 2024.
In this article, we will explore the opportunities created by Asia’s thriving economy, driven by strong trade partnerships within the region and with Australia and Oceania. Then, we shall discuss how you can capitalize on these opportunities by registering your business in Hong Kong, building strategic partnerships, and implementing certain key strategies.
How have Asian markets become increasingly favorable for US entrepreneurs?
Asia represents a significant opportunity for US entrepreneurs given its favorable trade agreements, incentives, growing consumer base, and technological advancements. For starters, the ASEAN trading bloc offers low tariffs ranging from 0% to 5%. Furthermore, Australia and New Zealand have joined hands with ASEAN countries to form a Free Trade Area, thus expanding the opportunities for companies based in ASEAN countries.
Other incentives for setting up a company in Asia include tax holidays, reduced tax rates, and special economic zones (SEZ) where tax breaks, infrastructure support, and investment incentives are on offer.
In various Asian economies, the middle-class population is expanding. This signifies a rise in disposable income, which is bound to bolster the consumption expenditure. Hong Kong can serve as a great platform for taking full advantage of this trend. The region has various favorable trade agreements with other Asian countries and maintains one of the world’s most competitive tax regimes.
Additionally, through initiatives such as easy visa approval processes and talent development schemes through partnerships with academic institutions, companies enjoy access to a highly skilled talent pool.
Why is Hong Kong a top choice for business expansion in Asia?
Some factors that make Hong Kong a conducive environment for US businesses and serve as a foothold for expansion into Asian markets are as follows:
Strategic location and market access
Hong Kong acts as a gateway to Mainland China through the Closer Economic Partnership Arrangement (CEPA). As a result, companies incorporated here can leverage Hong Kong’s financial, legal, and logistical infrastructure to effectively access Mainland China’s burgeoning market. Not only that, incorporation in Hong Kong can act as a springboard to entry into other Asian markets such as Japan, Korea and Singapore.
Business-friendly environment
Through the ‘One country, two systems’ framework, Hong Kong maintains a high degree of autonomy in the form of a separate legal and tax system while benefiting from strong economic ties with Mainland China. This unique arrangement allows businesses to operate with legal certainty and freedom.
Hong Kong’s IP laws align with international standards such as the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
As a result, businesses benefit from substantial economic opportunities and strong protections for both contracts and intellectual property rights.
Tax incentives
Companies in Hong Kong benefit from no sales tax, capital gains tax, and estate tax, and low taxes on profits. Incorporated businesses only need to pay profits tax of up to 16.5%, salaries tax of up to 15%, and property tax of 15%. In contrast, resident corporations in the US are taxed at 21%.
Government funding and subsidies
In Hong Kong, financial assistance is extended through the CreateSmart Initiative for creative industries, the Innovation and Technology Fund for technological upgrades, and the Patent Application Grant to support patent filings. The government also undertakes schemes that aim to bolster small and medium-sized enterprises (SMEs).
Innovation and technology focus
Tech and bio companies can enroll in incubation programmes that grant financial aid of up to HK$1.29 million and attractive benefits such as rent-free access to offices and labs. Through its Social Innovation and Entrepreneurship Development Fund (SIE Fund), the Hong Kong government also encourages social innovation to tackle poverty and other related issues from ideation to scale-up stages.
Infrastructure and professional services
Hong Kong, an important natural harbor, manages 4 million tons of air cargo and 24 million TEU of ocean freight annually. This level of trade is facilitated by world-class logistics infrastructure. The region is also home to various professional services companies that enhance operations across areas such as training, legal services, sustainability, and testing and certification.
One of these professional services companies is Startupr which offers support for incorporation, compliance, and secretarial functions.
How to register a US company in Hong Kong?
The Hong Kong Trade Development Council and other government bodies have undertaken various initiatives to empower international companies to do business in this region. Hence, incorporating a business takes just 3 to 5 days in Hong Kong, which is the third easiest place to do business according to the World Bank.
Startupr is a company that specializes in helping entrepreneurs register businesses in Hong Kong, including those from the United States. Here’s how they assist in registering a US company in Hong Kong:
- Find a unique name for your company by using Startupr’s Company Name Check Tool and place order with Startupr.
- Appoint at least one individual director who is over 18 years old, of any nationality, and does not have any criminal record or bankruptcy history.
- Declare your shareholders. A private limited company in Hong Kong can have at least one and up to 49 shareholders.
- When placing the order with Startupr that means to appoint Startupr as a company secretary and provides the FREE registered address for incorporation. Declare your share capital which can be represented in any currency and not just the Hong Kong dollar.
- Startupr provides FREE registered address as your company’s registered address. Startupr would prepare the documents for company incorporation after getting know more about your business and company structure. Your shareholders and directors may need to provide copies of residential address proofs and a Hong Kong identity card, or an international passport and overseas residential address proof.
- To maintain your status as a company incorporated in Hong Kong, you must comply with requirements such as the filing of taxes and renewing the company on time Overall, companies like Startupr simplify registering a US company in Hong Kong by providing a streamlined, efficient, and fully online service that covers all necessary legal and administrative steps.
Strategies to make your business stay long in Hong Kong
Some of the strategies that you can apply to establish your business in Asia are as follows.
Stay innovative to stay competitive
Given the numerous advantages of setting up a base in Hong Kong, it has become a highly competitive market. Customers are spoiled for choice and always looking for better quality and a better experience. Hence, to retain customers, it has become extremely necessary to invest in brand-building activities. This need is well reflected in the growth of volume and participation at trade shows and conventions in this region.
At the same time, businesses must note that brand power alone is not enough to survive in such a competitive market. You must constantly innovate and find ways to improve each step in a customer’s journey.
Leverage local partnerships to navigate diverse cultures and languages
Over 2,300 languages are spoken in the 48 countries in Asia. Introducing a new brand that would be recognizable in such a diverse continent is a significant challenge. Even well-established Asian multinational companies collaborate with local partners to leverage their brand value and market presence. A well-known example of this would be Suzuki, a Japanese corporation, collaborating with Maruti Udyog to enter the Indian market.
Local partnerships can be vital to gaining initial traction, building trust, and navigating the complexities of diverse consumer preferences across the continent.
Leverage government support
In Hong Kong, businesses benefit from a simple tax structure with corporate tax rates ranging from just 8.25% to 16.5%. Additionally, in this region, there is no sales tax, capital gains tax, or tax on dividends.
The region also boasts business-friendly immigration policies, offering various visa schemes for skilled professionals, entrepreneurs, and investors. The government has formed various trade partnerships globally that provide significant export opportunities.
Outsourcing and offshoring to maintain healthy operating margins
High cost of skilled labor is one of the key challenges for Hong Kong businesses. The city has consistently ranked high among the most expensive cities for international employees. As a result, businesses must pay high salaries. However, adopting a hybrid operational model can help mitigate this issue.
For instance, China offers a large pool of skilled local talent at a significantly lower cost, given the fact that its GDP per capita is roughly one-fourth that of Hong Kong.
Partner with Startupr for compliance with strict banking procedures
Hong Kong banks must adhere to strict Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, and participate in the Common Reporting Standards (CRS) framework. As a result, the banking procedures can be complex.
Startupr can be a valuable partner in navigating these challenges. In addition to assisting with incorporating your company, they also assist in setting up a Hong Kong bank account and provide a registered business address with mail forwarding. The firm also provides compliance support through company secretarial and bookkeeping services.
Accelerate your Hong Kong business expansion with Startupr!
Expanding into Asia presents immense opportunities for US businesses, especially through Hong Kong’s business-friendly environment that has a favorable tax structure and strategic trade partnerships. While such large-scale expansion is seldom without its set of challenges, businesses can leverage local expertise, strong partnerships and government support to overcome them. With prudent planning, your business can establish a fruitful, long-term presence in Asia’s dynamic markets.
With its comprehensive suite of services, starting from company incorporation to compliance support, Startupr makes business setup in Hong Kong a seamless process. As an all-in-one solution, they can help you to establish and maintain a strong presence in Hong Kong and thereby expand into other Asian markets. Contact their team now to know more!
