Hong Kong is a highly attractive destination for business, but there are still certain factors that small and medium enterprises (SMEs) should consider before setting up shop in the city.
One of the biggest mistakes SMEs make is trying to behave like a large corporation. Hong Kong values all investors, regardless of the size of their business, and registration with government bodies is a swift and straightforward process.
However, property prices in Hong Kong are exorbitant and can pose a challenge for SMEs, as a considerable investment is required to rent or buy space. Other costs, such as food, local transportation, and legal assistance, are relatively low.
Getting a business visa can be challenging, as the conditions are stringent and require a significant investment that may be beyond the reach of SMEs. While it's possible to enter Hong Kong on a tourist visa and start a business, it's not always possible to become a resident as a small business owner.
Hong Kong has a large number of companies operating in various sectors and has a substantial consumer market. Shopping tourism is very popular in Hong Kong, and the city offers the largest number of daily online shopping transactions. Hong Kong also has manufacturing hubs nearby, such as Shenzhen, Guangzhou, Taiwan, South Korea, and Japan.
One side rule to be aware of in Hong Kong's retail business is supplier pricing. SMEs require a significant investment to order high-quality products at low prices and need a substantial sales opportunity to make the investment profitable. Storage space is another issue due to high rents. Moreover, products with an expiration date, such as skincare products, pose a significant challenge for small businesses to compete with large corporations.
Hong Kong is an excellent place for any retail business, and a strategic location for expanding into a larger business with the support of a robust banking system. However, SMEs need to have a solid business plan to succeed in the city.