Using Hong Kong For Your Import/Export Company

Looking for the right place to establish your import and export company? Hong Kong definitely should be one of your top choices! Let’s dig into why, what you’ll need, and how to put in place your business.

What Actions You Do For An Import and Export Company

First, what do you do with a trading company, or an import and export company. Breaking it down today into functions so that you can best find where to establish the corporation.

You will be:

  • Buying (Sourcing) products

    Sourcing is the common word here. You’ll be hunting through B2B directories like Alibaba and Global Sources. You will be going to trade shows and visiting factories. Building up a network of relationships with quality suppliers for you to buy in volume from. This will be for mass production. They will be doing production in at least 1,000 pieces (MOQ, minimum order quantity). You will order and pay an initial deposit so that they can get the materials and start the process. Most likely the countries you will be buying from are Mainland China and Southeast Asia. Maybe some India in there too.

  • Selling These Sourced Products

    Most likely you won’t be the one taking the end shipment. Instead you will immediately sell these products you sourced and then made your commission or your cut. You will be in charge of finding the quality suppliers. The big key is ensuring the manufacturing goes smooth and the products are of acceptable quality. Arrange the shipment to port and you’re paid. Most of the time your buyers are in the West like USA and Europe.

  • Office and sourcing staff

    You will employ, full-time or part time staff to help you manage the business. They could be in your customer’s market such as USA or Europe. They also could be on the ground in China working with the suppliers and logistics. If you are just starting out you may have freelancers helping out here plug holes. Soon you will get your volumes up big enough to have your own in-house team.

  • Travel and conference expenses

    You will be investing a lot of money in traveling and trade shows. You will need to often visit suppliers in China, and buyers in your target market. It is key to keeping your business stable and the main selling point and differentiator is your relationships.

Am I missing something?

Benefits of Hong Kong

A trading company and hong Kong are like 2 peas in a pod. With the rise of China, so has Hong Kong risen. And many companies, both in China and around the world, establish trading companies here to bridge China to the world.

Why?

  • It has English on all corporate and banking documentation. It leverages the British influence it learned as a British settlement.
  •  Foreign currencies – no problem! Having a multi currency bank account is normal. No need to have to force exchanges of all your incoming remittances to USD or Chinese Yuan. You’re free to operate in the currency(ies) that make you comfortable.
  • Chinese suppliers also have hong Kong companies and banks. A big one here is that a lot of times you can save big headaches by just transferring from your HSBC Hong Kong bank to their HSBC HK bank account. Same day, no fee, almost instantaneous. (See related post on Chinese suppliers also like HK companies)
  • Can operate in Chinese Yuan (RMB). Only Mainland china and Hong Kong have permission to hold this restricted currency. Pay your factories direct in the currency the operate in and hedge the foreign currency risk of USD/CNY

There are plenty more, but I’m sure you’re aware. These are the specific benefits for an import and export company.

Main Features You’ll Use

So what do you need to operate an import and export company via Hong Kong? Here we go:

  •  Bank Account

    Yup, you don’t have a business without a bank account. Unfortunately it has been getting harder to get a bank account (read related post). But once you have it, this is where you’ll be doing you’re buying and selling from. Most likely you’ll use HSBC – and most of your factories will have it too.

  •  Paypal

    I don’t recommend using Paypal to buy and sell from factories. Yet you may use it for purchasing small things online and paying freelancers. See our related post on Paypal Hong Kong guide.

  •  Accounting Software

    Well every business needs it. I’m a Quickbooks Pro Advisor in HK, and I do feel it stands out here as it integrated with HSBC online banking – see full post . You should also use this software to create purchase orders for suppliers and invoices for buyers. Keep track of all income and outcome here to manage your P & L (profit and loss).

  •  Credit Card

    You’ll want a business credit card to separate your business purchases from your personal. While it may be hard to get a “true” credit card, you’ll need to put up a security deposit. You’ll use this to book your travel expenses and other online tools and systems.

I think that is it! A trading company is pretty straight forward. You find your suppliers, line up your buyers, make sure the production goes good. Then the magic of getting paid, and keeping the profit and paying out to the supplier. Some Paypal too, but try not to get paid in Paypal as you’ll lose a lot of money on the exchange rate.

Keep Your Books Simple & Up To Date

Keep all your invoices together. Use a system. And then when your audit comes up, things will be straightforward. A B2B (business to business) trading company won’t have a ton of transactions. So the auditor shouldn’t charge too much.

Also, run monthly reports to check your profits. Many times when I did sourcing I wasn’t watching my expenses and only looking at my profit margins. Things creep up and by staying on top of your expenses and other fixed costs, you will know your monthly break even.

Hong Kong is your Top Choice For Trading Businesses

This to me is a no brainer. If you’re buying and selling between China and the world – Hong Kong is your number one choice. Check with your suppliers, and see what banks they are using. Then you have a company with a bank account doing your deals. You may still keep a company open in your home country for local operations there (staff, office, local salary). Keep a trading company over in HK for the B2B deal flow and quicker wire transfer turnaround time.

What do you think ? I’d love to hear your comments and feedback in the comment section below!

Why You Need a Hong Kong Company Credit Card

This article is originally found at here.

Company or thinking about registering one? Do you buy things online too? For your company, not personal. Right.

Then you’ll need to get a business credit card.

First, There Aren’t Debit Cards, Just EPS/ATM Cards

In Hong Kong, they don’t have what we know of as “debit cards”. It would make life a whole lot easier for us though, and I may not even need to make today’s guide post.

A debit card is a card that has the Visa / Mastercard logo on it, and you can buy things online just like a credit card. The difference is it takes that cash out of your bank account that the debit card associated with it.

Nope, not available in Hong Kong, for what reason, I’m not sure.

So you will get a “card” when you get your bank account, but it won’t have a Visa / Mastercard logo on it. Instead it will have no “credit card” logo on the front.

What logos are on it? If you flip it over, you’ll see:

  • EPS
  • Unionpay

Now, EPS is electronic payment system. This you can use to buy things at merchants who accept EPS. This I have only found at shops inside of Hong Kong borders. You then swipe this card and enter your ATM PIN code and they directly debit the cash from your bank account.

UnionPay, this one is a Chinese version of Visa / MasterCard. But in the case of the bank account card you get with the new account, you can’t use this as a “credit card”. Instead, this means you have to find an ATM network that has the UnionPay logo. There is where you can use the ATM to withdraw cash from your bank.

Unionpay network is expanding everywhere, but please keep this in mind and look for ATMs that have it. Also, make sure you turn on the overseas ATM limit, so you can withdraw cash when outside HK. And also make sure you have HKD (Hong Kong dollars) in the checking or savings account. This is because you can’t take cash out of other currencies at the ATM, anywhere in the world. It will always take out from the HKD account (yes, even if you’re in Thailand and have Thai Baht in the account).

OK, well we’re getting in a bit deeper than I planned for the “default” card explanation. Just remember you get this when you open your bank account in Hong Kong, but you can’t use it to buy things online.

Get a Credit Card So You Can Buy Things Online

Yes, so if you open a Hong Kong company and live overseas, you’ll notice later that you can’t buy things online with your bank card. As we just covered, it will not have the Visa / MasterCard logo on it.

Next you will then apply for the credit card, so you can buy things online – in your business name. I’ve met many blog readers and podcast listeners who get the bank account opened, fly back to Thailand, get approved. Which is great. But then they realize a couple weeks later they can’t use the card to do online business.

So if you’re doing business around the world, you’ll need to find a Hong Kong based credit card for our business – as 99.9% likely you’ll need to buy things online.

Related – we have a podcast about getting credit cards for your HK company with Chris Gormley.

The other option. If you have a company overseas for your operations there, you can keep your expenses in that company and on that company credit card. Then keep the Hong Kong company as a trading company, only for bank transfers.

Try To Keep Your Business Expenses Separate From Personal

Another reason you’ll want a Hong Kong credit card is that you have a personal credit card for your own life. Yes, you have a life and aren’t a walking company. That would be weird.

Bookkeepers and accountants hate it when you mix up your personal and business expenses. Governments hate it even more. If you do ever get an inquiry from the Hong Kong IRD (Internal Revenue Department), let’s just hope you don’t. If talking about your business expenses and start whipping out personal credit card statements – watch out. That can be the beginning of a long, long back and forth discussion.

This is another reason why you should get a business credit card. At least, have a separate credit card for your personal expenses and another credit card dedicated only for your business expenses.

The Credit Card Will be in Hong Kong Dollars (HKD)

Whether you like it or not, Hong Kong works in Hong Kong Dollar currency. Sure, the government locks the HKD to USD at about 7.78 HKD/ 1 USD. But when you buy something, you’ll see it on your credit card statement as a HKD amount. Well it will show the USD amount (or whichever foreign currency) on the left column, and on the right it will show the HKD amount.

So yes, you’ll pay in HKD, and then if you have USD in your bank, you’ll need to convert that to HKD to pay the bill. That means you can do 2 foreign exchanges for 1 transaction, the first for buying the goods in USD, and the other for converting to HKD to pay the HKD denominated bill.

While this sounds like a lot of FX exchanges (and spreads to pay banks), this will still help you keep all your income and expenses in 1 company account. Will make accounting and bookkeeping much easier, and keep all business activity in one company.

The other option is, have a credit card in another country and wire money over to pay it. Or have multiple companies in multiple countries and pay the bills from one company to another, etc etc. You get what I mean, that is another overhead and expense.

There Is An Annual Fee, But Can Get It Waived

There is an annual fee for the HSBC card. It’s about 125 USD. Yes, you can get a refund if you call and ask. Just put a reminder to do so!

Points and Benefits

There are points added to the account but nothing like US credit cards. I got like a wallet one time or something. The big benefit I use is the free airport lounge pass at HK airport – take a shower, get buffet, grab a nap. Not sure how often you come through HK international airport?

Main Benefit

What’s the benefit of picking up the card? I’m assuming I’ll get a debit card with the bank, do you use the CC for expenditures to make it easy on accounting? or rack up some nice points for anything?

The benefit of the card is to keep your company expenses in the company accounts. The points aren’t as good as in USA and other countries, but you do get to go to the HK airport lounge free when traveling. There are points but not so great.

Need a Security Deposit

The credit card we recommend is a secured credit card. That means that you need to put a deposit of the matching amount the balance is. The lowest amount if 10,000 HKD (about $1,200 USD). If you want to have a higher balance, you need to have a higher security deposit.

If accepted, they will mail it to your correspondence address 3 weeks after they approve your bank account.

the credit card security deposit: Is that locked into the credit card and I only get it back when / if we close the account? Or does this deposit somehow become ‘available funds’?

The security deposit cannot be for operations. You can get the deposit back by closing the card. After requesting to close the credit card, it will take 60 days to release the security deposit. Which will then post to your HSBC HK HKD account. So keep that bank account open!

The “security deposit” on the credit card itself… I’m not familiar with the mechanics of this. Does this mean it’s a card that you “load up” with cash and have access to the cash you’ve “loaded”? I.E. You put 10k on the card, and can spend that 10k. Or, is the security deposit permanently “held”?

The security deposit will not be able to be used for operations. It is essentially locked in a time security deposit account accruing something like 0.0001% interest. You can get the deposit back by closing the card. After requesting to close the credit card, it will take 60 days to release the security deposit, which will then be posted to your HSBC HK HKD account.

Unsecured Credit Card Is Possible

Don’t want to lock up your cash in a time security deposit? Yea, we understand.

The banks do offer unsecured credit cards – but that application process is a bit more stringent.

First, what’s an unsecured credit card? It is a credit card that most people are familiar with! Its where you apply, and then get a credit line for X amount of money. Say its only $1,000USD. This means that the client can spend a thousand bucks and not pay it back. Sure, it will hurt their credit score and they won’t get approved for another card – but it is possible the bank could not get that money back.

So its unsecured, they don’t have your house, or cash, or other assets to claim (take) if you don’t pay it back.

So in Hong Kong, this is riskier – it’s not USA and they don’t look at your American credit score. They don’t know who you are and if you don’t pay it back, maybe you’ll just never come back to Hong Kong and they’ll have no way to even “mark your account” in a credit system.

This is why it’s more difficult, in general, to get credit in Asia. There aren’t these credit bureaus with established systems like in America.

So you can try to get an unsecured card in Hong Kong – but you should have some kind of track record in Hong Kong. And almost 100% sure you will need a Hong Kong residential address. They just feel safer if you live in the Hong Kong boundaries.

Cancelling Your Secured Credit Card

So, it’s always good to think ahead, to think with the end in mind. So what happens when you want to close the account? I hope you’re not starving and waiting for this security deposit to come back.

It will take 60 days to credit back to your account. Yup – 2 months. So there are ways to speed it up a bit, pay some fines and get it in a month. But still a long time. So you’ll need some patience.

Best to just not expect to be able to use this security deposit for quite some time.

Hope This Helped! Consider Letting Us Help You?

We hope this guide helped you out today. These are questions our banking clients always ask us, so why not share it with everyone.

If you want us to work alongside you through this credit card application process, we have a service just for you! Check it out.

Also, have you applied yet for a credit card? Any issues or questions, we’d love to hear from you in the comments. Let others learn from some of the issues you’ve had!

Tap & Go Prepaid Credit Card in Hong Kong

This is the site:
http://tapngo.com.hk/chi/index.html

In terms of shopping or paying, there is no greater thing than a cashless transaction – it is fast, easy, and accurate in terms of paying the exact amount; it has made online shopping easier, and it is safer. Since Hong Kong banks do not offer debit cards, and you may find credit cards a little too complicated, there’s another option called Tap & Go.

Tap & Go is basically an e-wallet / prepaid mobile MasterCard that can be accessed at your fingertips through your smartphone.

Application for Tap & Go offers 3 plans with different eligibility requirements and features

TYPE A B C
Age All ages 11 years old or above 18 years old or above
Supporting Documentation & Information None valid Hong Kong/Macau identity card or Macau/PRC passport or Exit-entry Permit for Travelling to and from Hong Kong and Macau (a) A copy of your valid Hong Kong/Macau identity card or Macau/PRC passport or Exit-entry Permit for Travelling to and from Hong Kong and Macau; and (b) A copy of your permanent residential address
Account Balance Limit HK$3,000 HK$38,000 (HK$3,000 if aged between 11 and 17) HK$38,000
Daily Aggregated Total Deposit HK$25,000 HK$38,000 (HK$25,000 if aged between 11 and 17) HK$38,000
Annual Aggregated Total Deposit HK$25,000 HK$100,000 (HK$25,000 if aged between 11 and 17) Unlimited
Maximum Account Opening One (1) per Hong Kong/ Macau/ PRC mobile number 1 5

(Source)

How to Use Tap & Go

To use Tap & Go with your mobile phone, your operating system must be iOS 7 / Android 4.2 or higher for you to be able to download the app either from Google Play or App Store.

Once you have downloaded the app, you have to purchase a Tap & Go Card through a designated branch or retailer. The easiest way to acquire a card is at 7-Eleven, which is basically available on almost every corner in Hong Kong.

To activate your account, you will have to link the card with your mobile app. In this step, you will have to submit/upload an identification card using your phone’s camera.

Here are links to more detailed tutorials on how to use Tap & Go:

1. Pay with Tap & Go
2. Top Up / Bank Transfer
3. Withdrawal
4. Paybuddy (Peer-to-Peer transfer)

Tap & Go Advantages

  1. No annual fee
  2. Can be used in 7-Eleven, 1010, csl, etc.
  3. The card is customizeable; they have a limited promo called Selfie-a-Card wherein you can choose any photo to use as the design of your card — it could be a selfie. Cool, right?
  4. Peer-to-peer fund transfer
  5. Discounts at selected stores
  6. It enables you to settle payment anywhere worldwide or online via MasterCard® contactless technology embedded in the SIM or Tap & Go Card

Tap & Go Disadvantages

  1. Fees – $300 cancellation fee if you wish to close your account within 1 year from date of activation, and the refund for the remaining balance takes a maximum of 3 months to arrive. Moreover, if you do not use the card within 6 consecutive months, your account becomes dormant; hence, you will be charged a HK$10 maintenance fee every month.
  2. Unlike a debit card, there is no interest payable on the account
  3. Not many rewards

Tap & Go for Foreigners?

Based on their website, it says that as long as you are aged 11 and above and possess a Hong Kong/Macau identity card, you may be able to open and activate a Tap & Go card. Unfortunately, as per Tap & Go’s terms and conditions, a US citizen may not be qualified to open an account. See below for reference:

1. WHO CAN APPLY FOR TAP & GO

1.1 By activating for Tap & Go, you confirm and declare that you are not a US Person as defined in US Tax legislation or a U.S. taxpayer for any other reason, in particular, (i) you are not a U.S. citizen, U.S. resident or U.S. green card holder; (ii) you do not fulfill the “substantial presence test” in the U.S.; (iii) you are not born in the U.S.; and (iv) you do not have a mailing address or contact details in the U.S

If Tap & Go does not allow Americans to open an account, then that’s another addition to its disadvantages. Overall, it’s far less complicated than applying for a credit card in Hong Kong, so to me, Tap & Go could be a great alternative for cashless and online transactions.

Did you know you can withdraw RMB from Hong Kong ATMs?

Certain Hong Kong Automated Teller Machines allow you to withdraw Chinese Money from the machine. It is great if you are taking a short trip to Shenzhen to be able to top up on some RMB. I always keep some RMB in my HSBC multi currency account and then run to the HSBC ATM on my lunch hour to grab some Chinese money. This makes it much easier to head up to China for that relaxing massage or spa for a day. 

RMB cash withdrawl in Hong Kong
Look in Hong Kong for ATMs that support RMB withdrawl

What to do if you lose your ATM card in Shenzhen

Today I looked in my wallet and found that I was missing my ATM card from my wallet. 

After looking all over my Shenzhen Apartment I was not able to find the stupid bank card and after racking my brain I could not think of where I might have lost the card. This happened once before to me and I got very lucky as I had left it at the ATM machine in the China Maechants bank  ATM machine that I always use. When I want to inquire about the card they had it sitting there ready for me. 

 

China ATM Bank Card
Remember to take your ATM card after withdrawing money
 
What  to do if you have lost an ATM card in Shenzhen?

In this case I didn’t think I would be as lucky this time as the last. Before canceling the ATM card I wanted to trace back my recent transactions. Luckily China Merchant’s Bank has petty good mobile banking software for the iPhone and so I logged into my account and found the transaction history. Most of the software is in Chinese so it helps to be able to read Chinese characters.

Once I found my transaction history I was able to track down the last time I used my ATM card which was at a nearby bank but not my normal bank. Probably I forgot it there when I withdrew 500 RMB. Unfortunately this bank was closed on a Saturday. 

Over to China Merchants and they are open on Saturday mornings and not very busy so I just had to tell the greeter I lost my ATM card and walk up to the bank teller.  With my passport in hand he was able to look up my account number. After confirming my phone number and signing a paper the process was completed and for only a few of 10RMB.

You can’t just walk away with a new card the same day I will have to wait until 7 business days later to pick it up. Luckily I have two bank accounts in China and can use the second ATM card until my new card arrives.  

Couriosly the bank account number on my account will change with this new card I am not completely sure why this is the case but that bank account was issued to me like 15 years ago when I first arrived so it is possible that this is not the normal case. I was assured that my desktop and mobile banking software would automatically update.