Hong Kong Startup Benefits

What are the benefits of startups in Hong Kong?
Hong Kong, a hub of development opportunities in Asia, attracts investors from all over the world to use Hong Kong as a business base. According to the data of Startmeuphk, the most entrepreneurs who choose to start a business in Hong Kong are from China, the United States and the United Kingdom. In a multicultural business environment, most people see Hong Kong as a bridge connecting startups to China and Asia. Fintech, e-commerce, supply chain management and logistics technology, as well as information, computing and technology are the most common industries for startups today. Also, startups in Hong Kong enjoy different treatment:

Freedom of Trade

Setting up a company and starting a business in Hong Kong is quick and easy. Hong Kong ranks among the top in the Fraser Institute’s Annual Report on World Economic Freedom 2020, and its competitiveness remains strong. Under the government’s “big market, small government” strategy, the degree of freedom of international trade is relatively high, and the loose trade policy allows entrepreneurs to focus on developing their business and conducting transactions in Hong Kong without interference.

Competitive Tax System

Hong Kong has low personal and corporate tax rates, no capital gains tax, no VAT or sales tax, no dividend and interest withholding tax or social welfare levy. The two-tier corporate tax system attracts global entrepreneurs to set up business in Hong Kong. The company’s first taxable profit does not exceed 2 million Hong Kong dollars, and the corporate tax rate is only 8.25%. The tax rate for taxable profits over HK$2 million is 16.5%, which is relatively lower than the rest of the world.

Mature Legal System

To avoid any conflict during online transactions, Hong Kong has a clear legal framework, the Electronic Transactions Ordinance (Cap. 553). With a reliable and mature legal system under the Basic Law, it is quite safe to operate an e-commerce business in Hong Kong compared to other countries.

Intellectual Property Protection

When startups invent any works, names, designs and creations, those works are protected by law to enable fair competition in the Hong Kong market. The following are some intellectual property rights (“IP”) protected:-

• Patent
  Inventors have the right to use their inventions and are protected by the Hong Kong Patents Ordinance. Inventors should register their work as soon as the design is completed, but such patents are only valid for registration in Hong Kong.

• Copyright
  Copyright is an automatically conferred right. After the creation is completed, the work is copyrighted. The difference between copyright and other types of intellectual property rights such as patents, trademarks and industrial designs is that copyright does not need to be registered in the Hong Kong SAR and can be protected by the laws of the Hong Kong SAR. A © logo should be added to the creator’s name to prevent copying the idea.

• Trademark
  Can be a brand, slogan or symbol to make it easier for customers to identify the company. Application for registration should be filed with the Hong Kong Intellectual Property Department to prevent others from using it.
• Domain name
  Usually a URL name ending in “.com” or “.hk”. The front part is determined by the name of the company, and the latter part is governed by Hong Kong Internet Registration Management Co., Ltd. Once registered, the company name is protected from unauthorized use by third parties.

Government Funding Support

Strong government support helps to boost the growth of start-ups. When some start-ups have some innovative ideas but lack resources, the Hong Kong Start-up Association helps start-ups connect with manufacturing bases in the Greater Bay Area and ASEAN countries. Consider manufacturing, where mass production can reduce costs and turn ideas into ready-made products.

Technology Industry Incubation Program

In addition to government funding, the Hong Kong Science Park also provides strong support to start-ups in the fields of technology applications, deep technology and biotechnology. Incubation programs, including short-term support for office space and facilities, technical and management, promotion and development assistance, business support and financial assistance, help minimize business operating costs. Over 1,000 start-up companies have joined the program or become partners of HKSTP, exposing these companies to a strong client base and building a vast ecosystem for entrepreneurs.