Why Asia is an attractive region for business expansion?
The reasons that make Asia an attractive region to expand your Hong Kong business are:
The large population
The 4 billion or so great population number of Asia offers a ready consumer market for companies.
The availability of consumers who are willing and ready to embrace the changing technological trends offers the continual growth of technological innovations and investments.
Friendly business environment and Strategic Geographical Location
Asia has one of the lowest tax rates with Hong Kong and Singapore having almost similar tax rates and ease of company incorporation, hence, Hong Kong businessmen find expanding into Singapore an ideal choice. With one Singaporean dollar, you can register your business within a day and could expand into other Asian markets.
Most foreign investors prefer to start in Hong Kong and later expand their Hong Kong businesses into the other parts of Asian markets because of Hong Kong’s strategic position and proximity to these markets.
The Asian countries are taking a turn for the better in terms of their business policies and legislative laws which positions them as upcoming markets in the Asian region.
Excellent legal system
Singapore and Hong Kong have excellent legal systems that are against corruption, money laundering, and crime as well as Intellectual property protection theft.
Similar Culture and language
Asian countries, especially Singapore, share almost similar cultures which makes expanding from Hong Kong easier. This is because the two cultures are influenced by both the West and the East cultures. Even so, it is worth being familiar with the business culture of places like Singapore because these people value their business ‘pride’ so much. Always set out to maintain business professionalism.
A strong skilled talent pool
Because of the good educational system provided at the Asian educational centers, Asia’s talent pool consists of talented, highly educated, morally upright, skilled, and yet affordable labor force. . The population learns ethical behavior right from the initial stages of learning.
Opt to employ locals as opposed to moving employees and dealing with immigration. The locals will understand the culture, language, and customs and as such you will save on the time and resources that would otherwise have been put in educating the employees about the same.
Government Support Schemes and legal requirements
To encourage business expansion within Asia, the governments among the Asian countries have laid out support schemes and are relaxing some legal requirements.
Overview of major Asian markets
The common business areas in Malaysia are manufacturing, health services, high technology, and biotechnology. Malaysia’s investment and tax incentives are the main factors that drive investors into the region.
Thailand offers free trade policies to its foreign investors. It also offers other lucrative incentives like holidays and tax reduction to technological and innovative companies.
Singapore’s strength is in strong ecosystems. Singapore has strong infrastructure, good funding, and excellent accelerators. It is always one of the easiest places to set up a company on earth.
Countries under the Association of Southeast Asian Nations (ASEAN) are expanding their businesses into their respective neighboring countries most probably because of the digital technology advancement in most parts of the Asian region. The most common businesses that expand are those dealing with technology and others are like internet business, financial institutions, tourism, among others. As compared to its neighboring countries, Singapore is a popular choice for Hong Kong investors.
Singapore and Hong Kong are similar in many ways which make it the first choice when looking for an Asian region to expand into. First, location. Singapore and Hong Kong are both strategically located as an expansion point to other Asian regions. Also, they both have comparatively low corporate tax rates, and they are regions that promote innovations of global reckoning. They both have ease of doing business and low corruption rates.
Even so, there are some notable differences that one should be keen about when deciding to expand into Singapore. For example, to incorporate your company in Hong Kong, you will be furnished with an incorporation certificate from the Companies Registry to show successful incorporation process while in Singapore you will have to register with ACRA (Accounting and Corporate Registry Authority) before starting your business activities.
Also, in Singapore, your main director must be a resident as opposed to Hong Kong where he/she can be local or foreign. Also, in Singapore, the name must be approved before incorporation while that is not so in Hong Kong as long as the name is not existing or conflicting with the regulations.
Singapore offers various funding that those planning to expand its Hong Kong business can take advantage of. Set out to strengthen your relationship with stakeholders and be sure to comply with regulations on immigration, employment, and payroll so that you do not attract penalties that may limit your business activities. One important tip to successful expansion is to choose to concentrate your business in one target market and concentrate on building your brand into a strong competitive brand as opposed to expanding to various markets in short spans of periods.
Many investors choose to expand their Hong Kong businesses into Singapore because:
- Opportunity for qualified foreigners to work in Asia
- 100% ownership of foreign businesses
- Excellent protection laws for intellectual property.
- Competitive corporate tax rates
- The high-ranking banking system
- Membership of the Double Tax Treaty (DTT)
- Acceptance of share transfer
- Ready government support for startups in the form of funding, loans, and grants, as well as tax incentives.
Barriers to expansion into Singapore
Asian population tends to place more value on their locally produced products than foreign products and services.
Employee Application Process
The stringent employee application process is sometimes a barrier to foreign investors who want to outsource. This process can go for as long as 10 weeks (about 2 and a half months). This is so because they are scrutinized for the right qualification before entry is permitted.
The stable and accelerated economic growth rate of the Asian continent makes Asia a suitable region to expand one’s business. Hong Kong investors find it ideal to expand their business within Asia. Thus, countries like Singapore, Indonesia, Thailand, and Malaysia are always a good choice for Hong Kong investors to consider business expansion.
Singapore out beats the neighboring countries as the first choice of Hong Kong business for its expansion with its strategic location, attractive tax policies, and pro-business environment.
Expanding your Hong Kong Business into Asia: Singapore edition FAQs
To secure the right talented employees ensure you do proper research on the best available employee compensation packages as this will affect your business.
- There are differences in employee compensation, minimum wage, holidays, and notice periods.
- While Hong Kong has a mandatory contribution of 5% to the provident fund by each employee, in Singapore there is a 15% mandatory employer contribution to the central provident fund.
- Corporate tax rates are slightly different between Hong Kong and Singapore.
To determine which Asian market to expand your Hong Kong business into, you should look for the following metrics: population, technological advancement & acceptance, and Gross Domestic Product (GDP).
- The conducive environment supports technological growth and innovation.
- Asia has a potential for developing its markets and as such offers an exciting potential to grow your business.