Protest in Hong Kong and US-China Trade War - Still OK to start a new business in Hong Kong?
Updated: Mar 19, 2020
Some Updates (Early 2020)
The political conflicts in Hong Kong remain unresolved, and such stress internalize becoming the hidden agenda of doing business in Hong Kong
Protests although less intense, small conflicts from time to time becoming the norm
It seems the Hong Kong local business environment highly affected in Hong Kong, the truth is shifting to more political selective - "Yellow Economy" and to online and upstairs shops, safe and cost cautious
Stock Market more volatile, yet, due to Alibaba proceeded the Hong Kong listing on Dec 2019, it released a strong signal that Hong Kong remains the investment hubs for Mainland China, rather than loss of the gateway status with an easy replacement
Results of Hong Kong's District Councilor and Taiwan President Election show the urge for democracy, where China might readopt a soft approach to avoid further resistance through economy-boosting policies, one is to fight against any trade war, also to protect China from a drastic cease of economic momentum and slow down of GPD growth, which means potential new business opportunities in 2020
Although local Hong Kong businesses are highly affected, company set up in Hong Kong still attractive, like the score originally at 9x, now lowered to 8x, still much better than many jurisdictions in comparison
Main Contnets of the Blog Post
This single blog is a summary of the useful resources, news links, and our latest reviews on the effects of the US-China Trade War and the prolonged Protest in Hong Kong affecting your decision on Doing Business in Hong Kong as a foreigner.
Also, this is an extended answer with an in-depth explanation of my quick Quora response in relation to “Would you be willing to open a new business in Hong Kong right now?”.
This blog mainly covering below three (3) topics:
Should I start my business in Hong Kong right now? Or should I wait?
How does the US-China Trade War affect Hong Kong?
How deep is the Hong Kong business affected by Protest? And Should I travel to Hong Kong right now?
Let's start with the first question, “Should I start my business in Hong Kong right now? Or should I wait?” and to answer that, below are the top six (6) questions that you should go through point by point for a fundamental idea about how much your potential business will be impacted during this period of time. Below the infographic, follow up with some in-depth insights on each question that you can further consider.
As you can tell, the quick answer is “It Depends”. Sorry that we cannot tell you whether or not this is the best timing, yet, in this article, you will have a better understanding on the impact of US-China Trade War and about the protest in Hong Kong, so that you can count these factors in to your business plan and evaluate the best arrangement for your start.
1) Does your business require Physical Presence in Hong Kong (Office, Shop, Warehouse … etc.)?
Office / Shop / Warehouse – be careful with the High Rental in Hong Kong that will eat you up the whole, especially for a business like Restaurant, CAFÉ, Retail Shop, Luxury Brand highly rely on tourists… etc.
Even you think it is okay to go ahead, always negotiate with your landlord to lower the rental burden
Hotel, Retail, Restaurant industries are getting hit severely, for the time being, we urge you to reanalyze the risk and even terminate the business plan to avoid potential loss
2) Is your business focusing on customers visit / in Hong Kong?
Tourist is highly affected, recent statistics show visitors approximate to 40% drop in August compare to last year (Source: https://partnernet.hktb.com/en/research_statistics/index.html)
The unrest environment without clear end ahead is impacting the overall local business atmosphere here in Hong Kong; even the situation has claimed, it requires a long period to resume with patience
Be prepared that customers will push you to take a side on political stands even you don’t want to involve
3) Is China Market and Connection important to your business?
China’s free-trade zones fail to shine as reported by South China Morning Post on 22 August 2019 article, which made Hong Kong remains its unique and critical position for foreigners to meet China’s partner at the midpoint, as soon as the infrastructures of Hong Kong still at top standard among the China regions
Legal System, Bilingual (Chinese and English) available in most of the statutory documents, East of Doing Business and Setting Up WFOE, Free and Unlimited RMB (CNY) exchange … etc. will not be affected by the Protest in Hong Kong making it remains the top choice for foreigners seeking China business opportunities
4) Is Singapore a valid alternative for you to start your business?
Most of the foreigners will compare Singapore with Hong Kong when considering the company set up options
Of course, the Local Director requirement for Singapore incorporation often an issue to the business owner making it not 100% foreign-owned in nature and respectively higher cost in maintenance, also taking longer time to proceed even just a simple resolution
If you prefer Hong Kong because you are doing E-commerce with trading operation with no VAT, GST, and other tax benefits, yet, you have high concerns with the Hong Kong situation, you may also consider commencing your business with Singapore company first, and when the business is mature, or Hong Kong has claimed down, shifting the business back to Hong Kong. Although the administration process is more complex, it is better than doing nothing and leaving the profitable business idle without any progress
5) Should I wait, suspend or postpone my business plan until a later time?
Yes, you can, especially if your business is an investment in nature, it would be better to wait as the volatility risk is too high to enter the market right now
And if you are thinking of retail or restaurant business, it is certainly better to engage when the situation has stabilized, and start to pick up, so that you can have a relatively low rental at the beginning stage
Remember, keep thinking of an alternative, and solution to allow you proceed with your business instead of keep waiting for the world to change for you unless creating your own business and pursuing your dream is not that important to you
6) So, any business that is NOT affected by the US-China Trade War or the Protest in Hong Kong at all?
Yes, International targeting online business, such as Digital Nomads, E-Commerce, Website Design, Copy Wri