Which Hong Kong Bank Features To Look For When Selecting a Bank Account
As the global banking system has gotten more selective and difficult, more and more people are contacting me when they got rejection letters. A lot of times this is HSBC HK as everyone goes there first.
Are you one of these people getting the rejection letters? Or maybe your account closed?
You have a Hong Kong company setup, but without a bank account, how can someone do business? Crazy right.
So the scramble for bank account alternatives to HSBC comes up.
Today I’m going to go through the various features you want in a bank account, and give some other banks to look at.
Because we are global business people, we need to handle multiple currencies. The thing people love about Hong Kong is the ability to hold so many currencies. Many countries force clients to convert into their home country currency such as US dollars or Chinese Yuan.
The line between savings and checking accounts have blurred over the years. But the main difference is a checking (also called “current”) is that you can access it from an ATM account. Sure, there are some ATMs that let you choose between checking or savings. But when you’re traveling internationally or not at your home bank, you don’t have that choice always.
But multi-currency is a key feature in a bank account, and let’s use this as top criteria in selecting top bank accounts to apply for here.
Yes, I’m typing this in in the year 2015 and still there are many banks with none or limited online banking. I hate to say it, I have to say a decent amount of Hong Kong banks that leave a lot of room for improvement for online banking. HSBC has the best for online banking, and that is still nowhere near as convenient as international and American banks.
But besides HSBC, which banks have good online banking?
First, let’s define good online banking.
Able to view your account balance and activity
Able to send payments and international bank transfers (wires)
Email alerts on various types of account activity (incoming deposit, outgoing wire, bill payment)
Multiple user login, with various account level access to allow your bookkeeper access and not able to send outbound transfers.
Download / Export transactions as a CSV file or Excel.
Think these are the core functions of online banking. Other things I would classify as “nice to have”, but these you need to use online banking.
Visa / Mastercard Debit Card
Have you seen bank cards that you are not able to use when buying things online or at shops?
Yes, those exist.
They are only valid at the banking ATMs inside Hong Kong, either in their network or other Hong Kong banks. They will not work outside of China, even in Mainland China.
This is a big problem for global business people like us right?
We need a bank account that gives us a Visa or MasterCard “backed” debit card. So we can use them at ATMs around the world. But not just the basic function as getting cash from an ATM, but also the ability to make simple daily business purchases when out and about.
While this may seem like a basic function, we may need to ask for this feature when applying to a bank. And they may not have the option! Or, they will charge a one time, or monthly fee to have this functional debit card.
Reasonable Monthly Fees
No one is a fan of bank fees.
Yet around the world, bank fees have been creeping up more and more. I predict it is due to low interest rates. As higher overhead costs the banks need to follow with international regulations.
So these costs get passed down to the user, us, in the form of monthly fees or all kinds of crazy transaction fees.
So our alternative Hong Kong bank account needs to have reasonable bank fees.
What is reasonable? Well, let’s baseline it to HSBC HK, which is 50 HKD (approximately $6.50 USD) per month. The bank can waive this fee if you maintain a monthly average balance of 50,000 HKD ($6,500 USD) as of writing today’s guide.
I’ve seen monthly fees as high as 300 HKD ($40 USD) from certain HK banks. You can avoid it by having a minimum balance of 200,000 HKD (approximately $25,500 USD).
So we need to be cautious of bank fees when selecting a bank account.
Custom HeadlineLow / No Application Fee
In all my years with Hong Kong business, I have not seen application fees for banks. But lately I have seen them pop up more and more.
The banks require you to pay the fee upfront and non-refundable even if you get rejected. The justification for these fees is that nowadays there is more and more “red tape” or paperwork due to FATCA regulations for all clients. This is a lot more paper that you need to fill out, mailed around, and warehoused for years.
Who is going to pay for that?
Banks seem to want to pass this down to clients.
So let’s be weary of these new application fees for Hong Kong banks. These are popping up all the time, so keep your ears open when going to your bank account opening interview.
Also, I may miss some of these over the years and months, so if you can leave a comment to help me and others out, that would be amazing!
Decent Customer Service
Customer service, that is decent.
I’m not going to get into cultural differences and customer service in today’s article. But I will just say, that we want to have basic and polite service when dealing with our banking needs.
I’ve been in bank account application interviews and the account representative is…not engaged with the client. They say that this is the way things are, and that if they don’t like it they can apply somewhere else. This comes out a bit rougher when typed out today, they say it in a more soft tone.
But because bank accounts have gotten more “exclusive” to get, the bankers feel that we should be happy they are talking to us and considering our applications.
Let’s vet out banks who have poor customer service. I’m hoping today’s guide can keep up to date with other people’s experiences.
What Is Your Hong Kong Banking Plan?
Hope this helped you out. Hong Kong is a great place to do business. Once you get the bank account! While the banking solutions on the market today may have some things left to be desired, it is much better compared to other options in Asia.
What is your next step?
The team at Global From Asia is offering a full service banking application service. We understand your current business and banking requirements and work alongside you. As the banks around the globe get more challenging to apply for and get approved for, it is more of a headache than ever! We have worked with many clients to get the banking application and approval process streamlined and would love to work with you!
We hit a breaking point in our business endeavors. As a business owner, many don’t see the downs in the roller coaster ride. And often it is our emotions more than anything else.
What do we do when we hit a bit downturn in our global business?
This is a big challenge, and there are tons of answers depending on your specific situation. Today I hope to give you some tips and inspiration that have helped me in the down times.
Downtimes Can Happen in your Business Endeavors & Don’t Blame Yourself
Businesses go up and down. There are bad days where the stars weren’t aligned, potential customers were angry at the rain or snow, things happen. Try your best to remember that with good times, there will also be bad times.
Here is one of my favorite quotes for dealing with a bad day:
999 Dolly Parton Quote – to get the sunshine we need to deal with the rain.
So when you’re in a bad state of mind and business is down, remember that the bad times you get through will only make you stronger. And if every day is a good day, then by definition they would be an average day! We need to get through the bad to appreciate the good.
So, don’t be too hard on yourself. The trick is to get through the tough times, as most people fail – or choose to fail – at those times.
Don’t Freeze Up – Keep on Truckin’
There have been some days where business systems were down. In a previous SEO tool company I was a partner in, the system was down for a day! The customer service was blowing up!
Those times, especially in a small business where a lot of work is already overloading the few people in the organization, you want to just freeze up and take a walk.
But this is what separates the good from the bad. The winners from the losers. Face the problem head on. Be honest with your clients, your team, and yourself.
When I lose money in a business decision, I try to remember – this is a one time expense. You can’t predict the one time bad expenses that come up. That is part of business. But you can control that you deal with them, and that you learn from them. And you improve your business systems for the long term.
On the other hand, if this business issue keeps coming up, it is NOT a one time expense and you need to address it immediately. That is your job as a business owner – to look at the big picture, step back and see the workflow of the company, and plug holes.
Look At Your Costs, Budget For The Tough Times
We should all be budgeting. Planning our recurring costs, and looking to growth.
It is our job to leave room for errors. For unexpected mistakes. If we don’t have some kind of safety net in the form of cash, then we’re in trouble.
Bill Gates saved a ton of cash on the books. 999 He did this so that he had enough money to pay for the staff for a full year without any income. That is extremely safe. But by having this safety, it allows us to think more long term, and handle the hiccups that come in our business.
Maybe you can’t afford to have a year’s savings to cover your costs without sales, but try to give yourself a few months. That way when you have these bad days, or probably longer… you can rest a bit more at ease.
Believe me, I have been at times where I was close to running out of money every week. It is so hard to focus when that is the case. Try your best to give yourself some runway.
Be Zen – Step Back While It’s Happening & Reflect
Controlling my emotions is something I learned while doing business in China. Heck, maybe I would have learned it if I had stayed in America. But in China when I got frustrated at business, most of my Chinese associates would tell me to work on controlling my emotions.
This has been a key difference in business practice I have noticed between East and West.
Westerners, we are much more open and straightforward about our emotions.
In the East, it is about not showing your emotions. Being calm and cool on the inside.
While which one is better is up for debate, I do like the idea of reflecting on how you are feeling. Look at yourself in the third person. Be a fly on the wall in the room, looking down at yourself. Why are you feeling the way you’re feeling?
I love to take walks when I’m stressed and overwhelmed. It kind of resets my mind. While walking, I try to analyze the situation and what I am thinking. Why am I upset. If the worst outcome happens, what is the worst result?
Normally when you think in this way, you can be more confident and cool when “getting back in the action”.
Cut Back On Things – Simplify
Here is where I have been weak most of my life. I love to do so many things. I love to learn. To be involved.
But this is like being a pack rat.
And your mind gets cluttered.
You need to write down all the things you’re doing and cross some of them out. Whether this is your personal life, your education, or your professional careers.
I always think of a story back in my college days.
I was in a fraternity, well I was rushing at the time. I was the stressed out “Mikey” with my backpack full to its seams and rushing from class to meeting to class. Josh, one of the older brothers, called me into his room at the fraternity. He saw I was so overwhelmed so he asked me:
“Write down all the things you’re currently involved in”.
I wrote down tons of things, like student government, investing club, and yacht club. He looked at Yacht club and asked me “do you know how to yacht”. I said no, but I was on the boat a couple times, I was the secretary so my role was not to run the boat, but to take notes and keep the meetings in order. He laughed that I was secretary of the Yacht club and had never sailed a boat.
So after looking at the rather long list, he took a thick black magic marker and ran lines through over half of the list. I cringed when he crossed off some of them.
After he finished crossing off a lot of them, he gave me the sheet back and said.
“I want you to come back next week and report back that you have quit all the groups I have crossed off on the list. Ok?”
I was so afraid to quit something I had joined. But I followed the instructions. I went into the groups and clubs he crossed off and told them I was too busy to help anymore and had to cut back on extracurricular activities. They accepted.
Within just a couple weeks, I noticed I had more free time! I was able to de-stress a bit. And the funny thing is, I didn’t feel like I was missing out on anything.
Hopefully you reading this can list out all the things you are doing. Ask someone like Josh to review it and cross out for ya. Or if you are mentally strong enough, cross them off yourself.
Simplify Your Multiple Corporate Structures Around the World.
Now we’re getting a bit more relevant for this Global From Asia blog! We all are so excited to have an international business. The sexiness of having companies and operations in China, America, Brazil, London.
Yes, having global corporate structures and teams around the world is sexy! So exotic. James Bond style.
But when times get tough, upping all these company structures is exhausting. Both on your time, your brain, and your wallet.
I have had to bite the bullet a few times and close some companies within a year or two of setting them up. A UK company was one of them. It took us about four months to get it setup, between the company and the bank account. Mailing documents over the Atlantic Ocean a few times.
But we weren’t really leveraging it enough. A eBay account and warehouse weren’t enough reasons to justify the costs to maintain it all.
We went through the process of closing the operation down. Think some of the stock is still in a buddy’s garage in Ireland (this event happened back in 2008!). Or maybe I told him to give away some of those home bar goods as Christmas grab bags at his company.
It was a tough thing to go through. But once things happened and it was “back to being simple” the business went a lot smoother.
Like many things in life, simple is usually better.
Therefore, when business gets overwhelming – write down – or re-write from scratch – your business processes.
Keep Your Eye On The Ball
So many distractions in our life and our business. Ironically, just as I was writing the last paragraph my wife came in making a lot of noise and totally got me off point.
The trick is to keep your “eye on the ball”, or think about the goal. I have been writing more and more, and now I am documenting how many words I write, at which time, and what makes me more effective. I have found that writing blog posts like today’s helps reach people, help many people out, and also get new clients.
What is helping you get things done? I am quite sure there are a lot of things that get in the way.
Normally it should be about getting sales and additional revenue to your business. Making more money is always a good goal for any capitalist. So write down those activities that get to that goal.
Too many ways to make money, that means too many channels. Pick the ones that have the most ROI – return on investment – meaning either in your time or your money put in, the most benefit comes back.
Focus On The Business – Not Complete Business Structures
So many people talk to me about having an offshore company here, and a operating company there. All too often, they are talking to me about this when they are pre-revenue.
So, they are making things complicated before they even have any money coming in!
Did Google and Apple worry about their offshore structures when starting out? They never worried about it, as once they got big enough they hired smart MBAs and CPAs to take care of all that.
Stick to your core business – making sales of the product or service you are offering. And get to the point where you can hire an expert to take care of all the global corporate structure formations later on, when you’re on your yacht in Tahiti.
Think Long Term Over Short Term
You’re a business owner, and most likely, you’re a major shareholder as well as a major director of the company at the same time. That means you will get the biggest payoff later on.
The beginning is always the hardest. You need to outlast all the competition. You need to fight when everyone else is crying mercy.
Losing money in the short term may be hard, and sleeping on a folding cot in your office is not comfortable, but you’re a warrior. These sacrifices now will pile up and become an unstoppable machine in the market to take over your industry.
You may get in situations with staff where you need to pay out some damages due to cost cutting. You may have a bad client that doesn’t pay a big bill. You may get a lawsuit from a competitor.
These times suck for an entrepreneur and business owner. The world feels like it is upside down. I’ve been there, and you’ve probably been there too.
For me, the best way to get through it is to think long term. That these are one time events, that I can get past, learn from, and prevent in the future. It toughens you up, and you just got to get through them to enjoy the long term benefits of business ownership.
If you’re always stuck in the day to day of your operations, it will be hard to think long term and some of these events feel like the end of the world. Its tough, but we need to step back, look at our business as a whole, and make it happen. If it was easy everyone would do it. Its these tough times that define the winners from the losers. And if you can stick to your guns and get through this, you’ll be better in the long term.
How About You, What Are Your Tips?
I’d love to hear your tips for getting through those tough business days. Especially for those running a global business, trying to keep things in order can feel like plugging holes. A lot of these things haven’t been put in the text books, and that is what gives us the opportunity to get ahead in business and in life.
So I hope you enjoyed this guide. I’d appreciate you leaving a comment below with your feedback and ideas. Let’s make this a source where people can come to when they are overwhelmed in their international business endeavors!
(Disclosure: we are not tax professionals, just making a conversation and thought process for your own situation and to ask your own tax professional before making decisions)
The last two years or so I have been consulting for an American pump manufacturer. Helping them with supply chain and other issues in China, Hong Kong and even Vietnam and India (haven’t been to India physically though).They are now talking about hiring me full-time. It seems that for budget bucket reasons, they want to hire me via their 100%-owned Hong Kong trading company. I would be the first employee there. I really just have one big question set:
How much time would I need to spend in Hong Kong physically to be counted as an employee? And, of course, pay Hong Kong’s beautifully lower income tax rates. My wife and kid are now in California and I would want to spend time with them but if I could do that AND spend time in HK (for the lower taxes) that would be ideal. I am going to be going much more often too — so might as well place me as an employee over there.
Mike – I would really appreciate your time and thoughts on this. Let me know
(Reader’s name removed upon request)
Factors To Consider
As almost all advice, please do you own due diligence. I’m not a lawyer, and am sharing as best to my knowledge and research can provide. Disclaimer, don’t blame me if I am wrong!
Are You American?
I think first question is, are you a US citizen? Believe this will make things more complicated.
Especially if you are living and residing in California, the most expensive state in the United States. They will want your tax income. I believe you are still seen as a California resident, and have to declare this income to the state and pay taxes on it.
Tricky one, as it’s not a US based company.
Where Do You Spend Your Time? Where Do You Deliver The Work / Value?
So, where are you going to be most of the time? Still in California? If you are in USA more than 330 days a year, you fail the exemption status for foreign earned income.
If you are to be outside of America, especially California, for more than 330 days, as an American, this foreign earned income could be exempt from taxes.
But I can’t imagine the US tax department liking you getting paid offshore and sitting at your home office in California most of the time. Make sense?
The Hong Kong Company is Giving Your Proper Employment Contract
They intend to hire you full time, right? So then I would assume you would get an employment contract from them, in Hong Kong.
As an employee in Hong Kong, you would need to then get a Hong Kong ID card. That isn’t a bad thing, it has a lot of perks and advantages. But HK immigration will want the company to see if the company can hire someone in Hong Kong locally first. That is just normal immigration things, Hong Kong is seriously overcrowded and they are getting strict on who they allow to come into the region.
Then, of course as an employee, you and the Hong Kong company hiring you would need to pay the associated taxes in Hong Kong. Which, you mentioned are much lower than in USA and most other parts of the world.
How will this company be paying your salary? I would assume you have to have, or setup, a personal bank account in Hong Kong. Then they would setup payroll and have the funds deposited to your bank account either every couple weeks or monthly.
Will you need to access these funds right away? Will you use these funds to pay for your cost of living in California, USA? If so, I would then imagine you’d have to wire transfer the money from Hong Kong into your American bank account.
That money would then be treated as income in America? You will put those transactions in your personal bank statement. At the end of the tax year you’d have to figure out how to classify that to your tax accountant.
But, to stress, you can’t hide your money in Hong Kong from the US tax authorities anyway. You were never supposed to, but nowadays it is impossible. So you’ll have to declare this income to the IRS and explain that it comes from Hong Kong and that you’re hired by a Hong Kong company.
If you are doing it this way, you’ll be paying monthly bank wiring fee, and then declaring taxes in America as, a sole proprietor? Not sure to be honest.
How Big Is This Company?
The next point to look at, how big is this company? And when I say company, I mean the entity registered in Hong Kong. Doesn’t matter if this company is a massive conglomerate registered in the UK. What matters is how big the company is in Hong Kong.
That means, how much revenue. How big is the “real office” (not a serviced address or virtual office). How many full time staff, located in Hong Kong, and a legal hiring with employment contracts are there. Also, there is a difference between how many local Hong Kong people have jobs as a percentage of how many foreigners have jobs.
Any company that has a lot of locals hired, and is doing a lot of payroll tax is contributing to the local economy. Governments love job creations – for their people.
So these kinds of figures will help in your case as a foreigner in a Hong Kong company.
This is a Local Hong Kong Limited Company (Not Offshore Elect)
I am assuming that this Hong Kong domestic company (as opposed to offshore elect) and paying the 16.5% corporate tax rate on earnings. If you think you can get the 0% offshore election option and you can still get a local job in the company, you’re a bit mistaken.
You can’t have your cake and eat it too.
If you’re an offshore company, that means you have no local Hong Kong operations. One of those factors being a Hong Kong employee – which you are trying to become.
What’s Your Salary? Above or Below Market Value?
Another thing the Hong Kong government looks at, as well as any government, is it is a fair salary? That means is your salary what a local Hong Kong person would be in this same position? If you’re the director of the company trying to give yourself a lower salary to avoid taxes, may not work.
Other cases are if you give a lower salary to yourself or your foreign staff in exchange for support on the employment visa. Some people are willing to take a lower salary just to be able to stay legally in Hong Kong. But this will also raise flags and be problems.
You need to pay what the market will bear for someone in your exact position, in Hong Kong.
Has The Company Tried To Hire a Local?
Are you trying to use this salary and income as a way to immigrate to Hong Kong? There may be instances where the immigration department wants to see if the company has put out a job advertisement to place this position in the job market. That means, give a chance to the local Hong Kong market to get this job if they are capable and willing to accept that salary level.
You may say, why does that matter, the owner and director of the company picked me! Again, this depends on the case of how hard it would be for the company to find a local person to do the same role as you. Maybe you’re so special that no one else in Hong Kong can do this job? There are of course cases where that is true, especially in computer programming and technical roles. There is a big shortage of supply in the job market for this job speciality.
So if you’re working in a position that is in short supply in the Hong Kong job market, you’ll have a better chance of this Hong kong salary scheme you’re working on.
What’s Your Long Term Goal with this Job?
So you need to ask yourself, you’re living in California, you’re American. Your family is there too, you’ll be flying back and forth between the 2 continents. Where do you want to spend your time?
Do you want to immigrate to Hong Kong? Bring your wife and kids here, go through the education system here? Or is this just a temporary income stream at the current employer. You want to use it to get more cash, save some taxes, and build some international experience on your resume.
Nothing wrong with either case. But of course, if your long term plan is to relocate to Hong Kong, going through these hurdles will be more logical. If it is a short term play, you may re-consider all the paperwork and hassles your employer and you will have to go through.
Do You Need / Care About a Hong Kong ID?
Another thing, from the email I got – it seems there is no interest in getting a Hong Kong ID (HKID).
A HKID is a pretty valuable thing to have, wherever you are in the world.
As a local resident in Hong Kong, you will get access to the medical system. Sure, public hospitals are not as good as private – but if you’re in a bind, you can always rely on public hospitals taking care of you.
Related: We talk about Hong kong medical options and insurance plans here.
You’ll also be able to cross into Mainland China much easier. Take it from me, as someone without a HKID, my friends who have it zip past me on the borders. If you’re an international business person going between USA, Hong Kong, and Mainland China – you’ll like to get this ID card if you can.
What Do you Think? Get The Job contract in Hong Kong?
So that covers my points. What do you think?
There are other options for how you’re compensated. You can always be an independent contractor and get paid in cash / wire transfer. You’ll file with your US taxes as an independent contractor and your US tax accountant will be able to classify this.
Disclosure, I am not a tax specialist, and this article is a general guideline and free help for those curious on the topic.
Are you an e-commerce expert, or maybe just getting started out? You should get serious and check into leveraging the power of Hong Kong. For your global business, and Amazon USA sales and supplier center’s headquarters.
Today we’ll dig into why Hong Kong is such a great place to base your Amazon business.
Notice – This Is for Everyone Except US Citizens
This article is only applicable for those who are non US citizens. If you’re a USA citizen, Amazon will enforce that you use your US personal tax ID or a US company.
The rest of the world, you can choose where to establish your company and have your Amazon sales go. Just keep that in mind. When you are setting up your Amazon seller central account, it will ask if you, or anyone in the organization is American. If it is 10% or more owned by a US citizen, Amazon will tell you that you must have misunderstood the form. You’ll get sent back to the beginning of the setup process and open a US-based Amazon account.
Benefit 1 – Corporate Tax is 16.5%, And Can Also Apply For Offshore Status
So, as a global business owner, you can choose where you setup your business. In Hong Kong, even the “normal” corporate tax is at a global-low of 16.5%. There is an offshore elect option that you can file. (Plug- we can help you with offshore status) If you qualify you can get a 0% exemption.
So ya, Amazon sellers can enjoy this lower tax.
Benefit 2 – Still The Same as a USA Based Amazon Seller
If you’re selling on Amazon USA marketplace, they don’t make the sellers look any different, based in America or not. So you don’t have to worry at all about your sales and marketing being at a disadvantage because you’re not registered in US.
Many people don’t understand this and think they need to be American or they need a USA based company to sell on Amazon USA. Nope.
If you’re interested in digging in more, we have a good podcast with Wilson Blues on selling in Amazon USA from Mainland China. This applies to not just Mainland China, but Hong Kong and other places as well.
So if you’re European, you could just sell from your European company in Amazon USA. But the trend I see is a lot of European entrepreneurs re-structuring their businesses over to Hong Kong. For their Amazon businesses, as well as many business types in general. So why not just start fresh with your new Amazon business? 🙂
Amazon handles the payments to Hong Kong by Payoneer and will deposit it to your Hong Kong bank account.
Enjoy USD Accounts and Multi Currency Accounts
Here’s another big benefit- multi currency bank accounts. A ton of people. The Australian dollar currency volatility is crushing Australia business owners. They don’t have a choice to get a multi-currency account. (Not sure if that is true for all Australians, there must be some multi-currency banking somewhere in the country, no?) So they are getting destroyed when Amazon USA sends them their sales proceeds.
When they register in Hong Kong and get the bank account all setup, they can then get the payouts in USD. This means no more currency risk, and they can convert to any currency they so desire, when they are good and ready. Maybe you can pay in Chinese Yuan to your Chinese factory, or keep that in USD too.
Tons of entrepreneurs I work with are so happy they don’t need to deal with the currency of their home country. They are international business people, traveling the world. They don’t want to worry about the risks in the country they were born in having currency fluctuations.
In today’s world, we are free to do business anywhere we like, and Hong Kong allows us to choose the currencies we hold our cash in. Should be like that everywhere, by default. But until that day, Hong Kong is a good place for you to set up!
Easy to Buy from Chinese Factories
For decades business owners from around the world have benefited from Hong Kong when doing business in Mainland China. Counterintuitive I know, many of us think we should just go direct to Mainland China. But Hong Kong is where it’s at, and even Chinese factories have HK businesses with bank accounts.
So rather than wiring the money from your home country of Europe, Australia, etc, you can save money! Just doing a HSBC Hong Kong bank transfer to your supplier’s HSBC HK account. Free transfer, settles there in an instant.
Easier Legal Contracts
Like buying from Chinese factories, it is also easier to make business deals with them. Because they may have a HK company, a contract such as a sales contract, NDA, or even an invoice is easier to arbitrate if both companies are in the same country!
And even if the factory is only set up in Mainland China, there is a special relationship and understanding between HK and CN. It’s just closer, and the factory will respect you more. Plus they will see you are more serious and long term committed to Asia, China, and business on this side of the world.
As most buyers are still just using their home country’s business structure, you will stand out from the rest! Take this extra time and do it right – factory owners will take your business more serious!
Banks Are Fine With E-Commerce Business Models
We all worry these days about banks approving our accounts and keeping them in good standing. Don’t worry about the banks flagging you as a high risk business if you’re selling on Amazon USA. Banks in Hong Kong know this is a gold mine, because it is!
Come to your bank account interview and application day with your Amazon sales records. Show them the volume you have been generating and the revenue you have. Show the screenshots of the product listings and that you have your own brand.
I’ve helped a lot of Amazon seller clients who have set up their bank account with HSBC and not had a problem. Just be confident and transparent about your business model, Hong Kong is the right place for you to set up your global Amazon business.
It makes sense to do it here – buying from China, selling in USA. This is the trading business of the past, just now re-built for the new technology age.
What Do You Think? Will You Establish Your Amazon Empire in Hong Kong?
There you have it, brain dump of why Hong Kong is the right place for your Amazon USA sales business. As I meet these sellers on at least a weekly basis. I am confident to say that this is the right destination for your long term e-commerce business.
What are you thinking, do you have a company setup yet? A lot of clients started selling on Amazon through their personal accounts and it is getting bigger and bigger. Take that big step and make it formal. It will feel a lot better and REAL.
Or you already have a company setup in your home country for this Amazon business? Restructuring is a bit of a hassle, but you can get through it. Start the HK company and re-work everything around Hong Kong, step by step. The Amazon sales, the supplier orders, a new Paypal HK account.
Today we sit down with Stephen Barnes from Hong Kong Visa Centre and discuss how business owners should consider the visa and immigration process in Hong Kong. Is it right for them? Will they be registering a HK Limited and planning to remain in Hong Kong, or working “offshore”?
Its a rather complex topic, and we’re lucky to have the “Hong Kong Visa Geezer” break it down piece by piece to help get our heads around it and deal with it properly!
Topics Covered in this Episode
Brief introduction of Stephen Barnes and his Hong Kong Visa Service company
Entrepreneurs in Hong Kong and out of Hong Kong, thought process of considering a Hong Kong visa
Investment Visa, what it is and who its for.
Comparing an Investment visa to an Employment visa to a Student visa, and a Tourist visa. Putting it all together, which one is for who, and why.
Those Hong Kong companies in Mainland China (Like me) or in Southeast Asia or other countries, how they are treated
Diving Deeper into the Investment visa for entrepreneurs and small to medium sized businesses
Newbie tip for a Foreigner in USA or Europe looking to make the move to Hong Kong to startup.
Below we had this podcast converted to text, as it is a top listened episode, enjoy!
Introduction: Welcome to the Global From Asia podcast, where the daunting process of running an international business from Hong Kong is broken down into straight up actionable advice and now your host, Michael Michelini.
Mike: Okay. Thank you everyone for tuning in to Global from Asia episode 4. I’m here with Steve Barnes from Hong Kong visa center. Thank you for coming, Steve.
Steve: Mike, it’s my pleasure entirely.
Mike: Okay. Great! So let’s just jump right in. Maybe you could introduce yourself and your company to our listeners today.
Steve: Steve Barnes, been in Hong Kong for 27 years, started immigration practice in Hong Kong 20 yrs ago. I’ve been practicing ever since.
Mike: Okay, great! Yeah, I met you actually at a seminar where you were sharing your knowledge and appreciate you being on podcast for everybody today. It’s a hot topic, visa and immigration…
Mike: For expats here in Hong Kong. So I think a lot of our listeners are sometimes in Asia where they are coming through Hong Kong, doing their either startup or their entrepreneurial endeavors as a small business or medium sized business. What do you kinda advice them for immigration or visas in Asia or in Hong Kong specifically?
Steve: Well, I’m just telling that my expertise is Hong Kong. I’m gonna limit my comments to Honey Kong, it is an immigration opportunity for anybody who want to established a joint business here but effectively, if you’re a foreign national and you want to reside in Hong Kong to promote, pursue your business activity, you need to make an application for an investment visa, which is an employment visa a credit cases on you undertaking an active investment in Hong Kong and probability test. Together this institution show that you are in a position to make a substantial contribution to the economy of Hong Kong. Now, in many ways, everyone asking how long is visa strings, right? But there are certain things that run a bit advice around every investment visa application that goes on to get approved. The things that you need to show through your planning and through your, through early months of your operation that you are in a position to create local employment opportunities. Don’t get any local jobs on day 1. If you have a business plan that you put into immigration department for investment visa application and there is no opportunity to locally create a local employment, then you’re going to travel together and the second thing that the immigration department are looking for, a suitable business premises and there is a premises that kind of vibe for who you are and implementation direct going to time of your plan. You can kick off with a mere virtual office, which you borrow to cheap place, but the expectation is, then your course, sooner or later, once your business plan arrived at point where you’re hiring your first employee. That first employee will have some more sensible to report, to work to each day, because you can’t expect this person to going that, fulfill their employment duties where employee from your kitchen table or a spare bedroom so no matter how economically to have any kind of bring some quality time, place for your employees to work, you need time to spare and prepare the pre-requisite for a proper engine course. The 3rd leg of approvability still is actually divided into two parts, the first is cash and the second is resources. Cash million dollar question everybody asked me is literally how much cash you need. It all depends on the circumstances. in my experience, if you have less, less than 500,000 Hong Kong dollars, you may find that your application could be compromised, so deem to be weak especially with the other aspect than your plan is a little bit marginal but if you got a half a million or more, it’s reasonable to achieve that you can go on, to expect the consideration of the immigration positively approved rather than negatively think if you haven’t enough cash. So half a million can do it but I’ve seen in application they approved less cash as well but it’s not hard and fast. The trick is to understand that you shouldn’t be really thinking that the immigration department gonna buy into your startup laying type activity which is fine without at least having some cash because you know, laying doesn’t mean cashless, laying means having a money and spending the right kind of money so that’s an important consideration. The max and the more have the issue, it is swiping very smartly got to eye level funding so that’s always good. So that deals with cash and the other element is resources, Now resources are usually all the kind of things that are driving you to make a decision to pursue investment will come in the first place. So if you got a bit of code and you already developed, you wanna use new investment in Hong Kong to be able to build on that. The fact you’ve got a basic version of your product written already. It’s a resource for first of your application if you’re coming to Hong Kong and youre general trading, and you’ve got some kind of clientele that are already in place, that’s all good. Any other resource will allow the immigration department to objectively conclude that your business, if you use those resources together with the cash that you’ve got will eventually go on to results in a solidly and commercial enterprise, that’s the challenge.
Mike: Okay, got it. Thank you so much, Steve. So I just like to recap. He mentioned 3 points. That you’re going to employ local Hong Kong residence or Hong Kong people in the business.
Steve: Anybody in Hong Kong includes lawful employable but without further promiscuous of the immigration department
Mike: Lawfully employable.
Steve: Those people are account as well for persons for the purposes of local employment
Mike: Okay, got it. And that was not to be immediate but yeah to have convincible, clear playing that you will do that. I mean what time of year, 1 year?
Steve: That’s what your plans is, right? I always say to clients, “dont think about structuring your business around immigration, think about structuring your business and ask yourself actually what does this business works for immigration purposes and you will find that there is a quite close-call relation doing business that you will expect to be successful`and those businesses which immigration department approved.”
Mike: Got it. Okay. And then second point is the office, for when you’re employing the workers that is suitable location.
Steve: Suitable environment for them to work. That’s correct, yes.
Mike: And the 3rd is the cash and the resources. I think I just like to kinda some like convert to dollars when we talk, so he’s saying, of course it is always hard, I knew everyone asking how much money.
Steve: Let’s say $75000 – $80000 US dollars into Hong Kong business bank account. Interesting there is you don’t actually need to have all the money in the business bank account. You can have enough money in the Hong Kong business bank account to finance first 6 months of cash flow, and the rest of the funds is you can attest in your personal account anywhere in the world. So you can show you’ve got the money ready to deployment into the business. You need loan those funds by the way then efficiently through at least 2 years it means before you make out a purchase so the best part would good confident proof that you are not just borrowed money and shot fine it back which is always just the perks of visa application. They all know the tricks. They’ve done it.
Mike: Yeah, I can imagine. Okay. So those are the 3 main points. I kinda a lil bit follow up the resources, so code, I mean your degree, or like education…
Steve: Yeah, your service, yourself is also a resource, your background, what you bring into, you got to have a good track record and business in the past, if it becomes successful, they come through all those types of businesses. All that stuff.
Mike: Okay. So then I think some people used a trick of employment visa even though maybe they are not familiar or for a small business. I know you don’t that more greyer.
Steve: This is an old guess not. People think that you can somehow separate ownership from your business vehicle and become a third party and also an employee, You can’t. So during the currency of the application if its a new business situation, you’ve come to this interaction, that the existing composed interaction they’ll going to look to say who the owners and director of the channel is are. i would say that you putting yourself as an employee but you’re actually own the company and director of the company. You expected on how you dresses up. They are going to comply the investment visa probability test here. that’s the hard to test of substantial contribution to the economy rather than the lesser test which is do you personally possess special skills and and expected knowledge that are not already available in hong kong . So your personal skills in the contacts of business that your shares it will be seeing merely as a resource and they will apply an investment visa approval test on you but if you’re making the application for an employment visa, and you don’t have an interest in the business and then address you will just apply special skills and obviously, experience to anyone move so much to the ability of the business to substantial contributions to the economy of Hong Kong.
Mike: Got it. So there’s a 3rd option I heard of, student visa?
Steve: Well, student visa will get you on ground of Hong Kong but you not lawfully employable, you can’t join a business of your own based on Hong Kong, you can only study and thats it.
Mike: Okay, okay. Thank you for that. Lets, so we talked about, this is kinda recap, I think there’s a three even four I mean, technically there’s a tourist visa, to make on your passport. I am on my US passport holder. I have 90 days stay.
Mike: So I actually never legally work in Hong Kong. I’m an offshore Hong Kong company.
Mike: So, I sometimes visit Hong Kong, sometimes working up a coworking space, gather some meetings. I’m okay, right?
Steve: Well, they say, it’s all about residing. So if you, as I know you are living in China but you spent most of your time in Hong Kong and pursue some business you establish here and your status is visitor, if your intentions to reside, it’s crystallize, then visiting days are just actually suitable in various before, because you’re effectively directing, controlling, employees of your company and visiting is not what it intend to do. the visitation is supposedly to come, interaction with Hong kong as a regular visitor and you gonna depart again. So, when you end up spending a great deal of time in your visiting days status instead in reality your intention is to reside is crystallized then you need to change your status from visitor to investment that you’re running in Hong Kong.
Mike: I understand. So, yeah. I mean, it’s actually complicated for me, so we talked about it, i think the correct way is, I, as entrepreneur and I wanna reside in Hong Kong as an investment visa.
Steve: Absolutely. You need to incorporate a company, get a business registration, you need to have a really good business plan which doesn’t actually need to be reflective in form of document cause in many ways immigration department normal one want to register their business plan that you might have write to an ipad. So if you’re self funding your business, there’s no formal need of business plan that might be a good practice to crystallize your thoughts and the immigration department will look at your stories as whole. They need to see that you got all the resources that you just discussed. They need to be satisfied that there is no security objection to you being granted decision to reside in Hong Kong to employ your business plan. When you have a good story, you carry can the arguments, you can tickle the bosses and you got the right level of money and there’s no security reason for you not being granted a permission you’re looking for, there’s no reason to expect, the immigration department will give you what you need.
Mike: Okay ,time frame normally?
Steve: 6 – 8 months.
Mike: 6 – 8.
Steve: 4 – 6 months, I’m sorry.
Mike: 4 -6 months.
Steve: If you’re not a resident in Hong Kong, you live somewhere else like, you do, when you want to make an application it’s going to take 4 – 6 months. If you presently reside in Hong Kong and you’re actually working for another employer and you want to stop working for another employer and start up for yourself, you still need to pass in investment visa probability test. Thus an existing residents that application dealt with different section of immigration department. It applies the same criteria but it’s a different team that handles the work. And because you’re an existing residents, that thing will finalize your application 6-8 weeks not 4 -6 months.
Mike: Okay, got it.
Steve: Make sense?
Mike: Yes. Thank you so much. So yeah, to kinda recap. Even if, so if you are working for a company in Hong Kong and you’re a resident of Hong Kong, when you wanna start your own business, apply for an investment visa, it’s a little bit shorter a month, two month and a half, still have to the money in your control.
Mike: Either a company account or personal accounts.
Mike: But if you’re doing it offshore or like me on China or others in Southeast Asia or West or as a visitor, so then if I came on 90 days stay and i’m staying in a hotel.
Steve: You can apply for guest status while you’re here but the immigration department dont allow the fact that you have a pending investment visa application to somehow advantages you in relation to 90 days of your stay. You have to leave before the 90 days are up and make a re-entrance some station if you want to comeback as a visitor before the immigration department approve your investment visa application.
Mike: Got it and really, really viable information, Steve. So again, I like to always ask on this talks. One kind of tip for newbie listener. I think a lot maybe don’t have the 500,000 Hong Kong Dollar but they are educated hustler entrepreneur. What kind of information would you give them?
Steve: Well, bear in mind that the visa class by definition called for active investment. So the fact that you may be a viable entrepreneur and you can you know, duck, dive and wave above by the best of it, that’s all well and good but you gotta understand that immigration department applies to the security of you that are mandate to make sure that they don’t approve foreigners who set up business here that have access to red label broker credit terms that you can find in Hong Kong and basically you know spend your way to disaster, trail of Hong Kong creditors on your way so even though you may have,maybe you made a license peripheral stuff to crack on with it, with very little capital using all year, argument and natural skills the immigration department don’t actually do not place a great deal creations on that. You still have to have a body of cash behind you to support yourself while doing this.
Mike: Got it. It kinda gives me a followup question. So if I answer investment visa issued, do I have more advantages on business?
Steve: Well, once you get investment visa, the immigration will approve you initially for 12 months to undertake the work you’re planning to do to promote that business as reflected in your business planning that you’ve told the immigration department is going to do on how you gonna spending your time in the context of that company and that company so you can get approval but just to do that business nothing else. Now, if opportunity put the things developed that perhaps you need to private half way through you often do something else because 1st activity is not working, that’s okay. Bear in mind that some point you even have to report that to the immigration but you won’t have to report that, the point where you privative but if, as they usually do this type of start up scenario, they grant you an approval subject to business reviews at the end of the first 12 months, so then the first 12 months immigration department will going to lift up the full and everything you’re doing in the business so if you privative in the meantime you have to explain to them. The more importantly they’re looking to see that through the lackluster performance that you have in fact been engaged in the activities that they can objectively conclude, willing to you to make a substantial contribution to the economy of Hong Kong. So you get the approval to performance, saying ok, we like your story, we believe you, see to it at 12 months mark, 80% of new business situations do not very well capitalized, tend to get approve subject to business reviews 12 months will lift up. If they do not subject to business reviews, if they really like your story from get go, then you will get what I call a freeing clear approval which means that the 12 months mark, the process to get your first extension is really just manage to get bags and you can expect that you’ll can go on to get 3 limits of stays and then you go and get numbers 1- 2, 2 -3 years pass which gives you a potential full 8 years in Hong Kong, to managing, directing, control that business. At the seventh or most people do taking constant history in temporary residents here, they want to application for permanent residency and up there absorbs same responsibility to have keep working in that business because this is a permanent residency and actually you can employ or engage your own business without further reference in the immigration department.
Mike: Got it. Wow! That’s a lot of information. So just to recap, after you get an investment visa, even if you passed, another 12 months later you’re gonna have to fly, go back,
Steve: There’s an 80% chance that they will subject your initial approval to business review.
Mike: Okay and then if you passed that usually, you have 2 years.
Steve: And if marginally, strike through that 12 months then you’d expect to business review, if you have created local jobs if you don’t have much cash in the tank. If you have been able to meet your revenue projection whatever it is, you know, just be in reasonable milestone in the first 12 months. If you have achieved that, you may find immigration department really extends you up to 2 years but then they can give you 12 months and that is subject to business approval again at the end first 12 months. But if you have a good story and slippy on the text phase and halfway supply of cash there’s no reason to expect that they respond and they will say no based in my experience.
Mike: Great! Okay. Lastly, there’s a lot of listeners that wanted to contact you. We’ll put your website upon the website too but what’s your…
Steve: Oh! We have a number of websites. We have a website which is called the HongKongVisahandbook.com and that’s basically our foundation content. It’s a DIY definitive guide to Hong Kong process. No singing, No Dancing completely free of charge, no registration required and textbook if you will, although it got videos, screencast, podcast, templates, the whole shooting match, all completely free of charge, hongkongvisahandbook.com. Tthen I do daily immigration content of the site blog called hongkongvisageeza.com and I post on that 4, 5 actually on my mind 7 times a week i don’t usually plan this so that feeds you sorts of updates of information, all completely free charge.
Mike: Great! Yes, it’s really great and we will linked that on golbalfromasia.com/episode4.
Steve: I have a, I’m gonna be Shenzhen, a week on Friday, you might put on your show notes at the boathouse. I think.
Mike: Oh, yeah.
Steve: I’m giving a talk. Oh! Not Friday, Thursday it is.
Steve:At the boathouse, yeah.
Steve: So perhaps if you put the link in your show, the people listening to me, I’ll talk about my favorite subject live.
Mike: Okay. You’re very passionate and you’re also good Internet Marketer. Your blog and your content and your handbooks, you also know a lot of listeners are Internet Marketers too. So we like the, you are also up in the game.
Steve: Our marketing was built in by design and our product is driven from marketing of inspector.
Mike: Great! That’s definitely the right way to do it. So alright. I guess if there is any last points right before we end here.
Steve: Right. I wanna, just so basically, carries anyone that is thinking about Hong Kong to understand that Hong Kong is very open. W are set and very welcoming and what might have been your early experience from the immigration agency if been to either Thailand or China, don’t expect that you’ll have that kind of experience in Hong Kong. We have very rule of law, incorruptible public service at the immigration department. We have a customer service mandate, very open, accessible and friendly but there’s a lot of stuffs that you can have access to because the immigration department play the role of gamekeeper and coucher at the same time at their website is designed to inform and not give you advice and the immigration department shows to inform and decide not to advice. So a lot of people look at Hong Kong immigration department website, they look at investment visa category and they say “Oh just get to put these document, fill this forms and i’m home and hopes.” It doesn’t work like that. There’s a 4 -6 months interrogative process where you have to show that you can make that substantial contribution to the economy of Hong Kong and if you can do it, clean and honest enough, you got the money, you got the will, you made a right entrepreneurial stuff, you have 95% chance of getting what you’re looking for and that’s how it works.
Mike: Great! Okay. Thank you so much. I’m sure we, I enjoyed you talk a lot. Thanks, thanks a lot.
To get more info about running a business via Hong Kong please visit our website at www.globalfromasia.com that’s www.globalfromasia.com. Also be sure to subscribe to our iTunes feed. Thanks for tuning in.
Want to open up your bank account remotely for your Hong Kong company?
Today, let’s go through this. It’s such a hot debate going on, let’s use this post to make a difference!
You Can’t Open Your Bank Account Without Being in Hong Kong
The quick answer is, you need to be in Hong Kong to open your bank account. They want to meet all the directors and significant shareholders of the company to know who the client is.
I’ve talked to almost every bank in Hong Kong over a 2 day full time effort, and all needed the directors to come in person.
But there are some ways around it, I’ll dig in a bit today.
HSBC in Mainland China Works
So for those entrepreneurs in Mainland China with Hong Kong companies, you’re in luck. They will allow you to apply for a Hong Kong business account from a HSBC in Mainland China.
There are fees, and in 2016 these fees are going up. From what people have told me who did it, it’s about 2,000 Chinese Yuan range. They choose to come to Hong Kong instead, as that is about the same fee as an airline ticket.
So maybe you need to come to Hong Kong anyway. Let’s say your passport visa is running low on time. So make a visa run and then also apply for the bank account.
Don’t have a reason to come to Hong Kong and you’re in North China? It may make sense to pay this extra fee to do a remote bank account opening. I’d love to hear people’s experiences in the comments of today’s post (thanks in advance!)
HSBC Premier Customers
So, I’m putting this in here because this is one I hear over and over. As far as my research and network of people tell me, it is not possible in today’s environment, (yes, we’re in 2016 now), to open a Hong Kong business bank account from non-HK or non-Mainland China HSBC branches.
In the past years, people told me that premiere level (minimum deposit of 1,000,000 USD) could open bank accounts in other countries. Maybe that was for personal and not business, and maybe that is still active up into today. But I have asked bankers, who have become somewhat of my friends, and they assure me you cannot open a business bank account for HSBC HK outside of Hong Kong or China.
Again, please prove me wrong! You can leave a comment below or send us an email.
DBS Hong Kong Has a 20% “Application”
Few have mentioned that you can apply for DBS bank online. So I was like, heck let me try this. They call it an application, but in my opinion it’s more like a lead capture form.
They asked me a few questions about me and my business, and once I did that, the site said they would email me later for more details about applying.
Not sure if my case was that horrible, but I never got a response back! Still seems to me I need to go there in person. And now their new SME bank application fee (upfront, no refunds) is 10,000 HKD! Insane right?
Anyway, so that is what DBS calls applying online.
Why Is It Not Possible To Open An Account Online or Remote?
So you may be wondering why it’s not possible to apply online.
There are 2 possible reasons:
They are afraid of fraud
The financial industry has been getting tougher and tighter lately. Government regulators are slamming banks with fines. If they feel the bank didn’t do a good enough job in verifying the banking client (KYC – Know your Customer). It’s the job of the bank to ensure the client isn’t a terrorist or a money launderer.
The banks need to make sure they don’t “slip up”. If they let a “bad egg” who says they’re a trading company for t-shirts get by but in reality is doing drug trades, slip through the cracks. Uh-oh, bank is in a big problem.
So what’s happening is the government regulators are pushing the job of being a policeman to the banks. Seems kind of smart for the government. They don’t need to hire more people to dig into the banks and can instead put the responsibility and overhead onto the banks.
They don’t want to invest / embrace technology
Another reason is, I’m interested in opening a bank in Hong Kong. I talk to tons of people frustrated with the current banking options there and lack of customer service.
In a normal business industry, a new tech company could come along and disrupt the old players. But banking, in Hong Kong at least, is so sealed – when has a new bank opened here? I’ve heard it was in the 1970s!
So what is the incentive for the banks to innovate? They’d need to spend a lot of time and money. Plus they’re not good at the internet, they’re better at crunching excel formulas and clearing cash trades.
As far as I understand, the Hong Kong banking association allows digital signatures for online banking. That means that at the least, for account maintenance items such as updating details on your bank, you are legally able to do online. But most banks still want you to come in person or mail a hand signed document to do that.
Some Have Opened Banks Outside of HK (Offshore)
So one thing I have been learning is that some who don’t get a HK bank end up using their HK company to open a bank account in Europe or in an offshore island. Seems a bit strange to me, but it is a business account and not a personal account, so the owners limit their liability in the business. Would need to dig more into this, some use it to receive money from customers in those regions / countries.
A Tip – Add New Owners / Directors Later On
So what some do, to avoid having to have all the owners come to Hong Kong to open the bank account, is keep it simple to start. Maybe one or two directors when filing the new company and applying the bank account.
Later on, once things are operating and stable, then you can update your company documents and add the new shareholders and directors.
This is one tip that has saved a lot of travel time and headaches for many clients.
Sure, those owners not on the original company documents are taking a risk. But they also need to be aware if they can’t all fly to Hong Kong together, this is the most reasonable option. You can have a personal contract between the owners that can help ensure you will get your shares in a future date. You should trust your business partners that much anyway.
This Is What We’re Working On – To Make It Easier
As Global From Asia has converted from a podcast and blog into a full service agency, we have picked up more and more cases like this. We are building one big strong case and talking to the Hong Kong government about it.
In order for Hong Kong to stay ahead of the game in the global business space, they need to work on being more online friendly.
If you want to get involved, please let us know! Hopefully this blog post can spawn some new ideas and get some change to happen!
Why Do you Think It’s So Hard To Apply For Banks in HK Online?
So I’d love to hear from you! Please leave your comments and thoughts in the comments section below. Let’s help each other to figure this puzzle out.
I’m curious if you have had any problems applying for a new HK bank account. What happened, why did you get declined? Let’s help each other and see if we can fix this for the long term.
Best of luck on your global business domination! Original: here
Many entrepreneurs cringe when they hear the word bookkeeping and accounting in Hong Kong. To be frank, I used to, and in some ways still do. But rather than running away from it and hoping it will go away – it’s best to suck it up and take charge.
Today we’ll go through the thought process of organizing your bookkeeping for your HK Limited company.
Get a cup of coffee, jot down some notes, and get inspired. Now let’s go!
What Your Business Type Matters For Bookkeeping
Not all bookkeeping is the same. There are a few different criteria to consider:
Products Business, Service Business, or Mix of Both? Are you a business that earns money by selling products (hard goods), or are you making money by providing a service. You can sell online or offline, as in bookkeeping terms it doesn’t matter (of course the technical method for online and offline is a bit different).
B2B or B2C? Buzz words you probably hear quite a bit. B2B means you are selling from your business to another business (business to business). This means that your customers (oftentimes I call them clients when they are a business account) are companies, not an individual. B2C is the opposite, you’re selling to end consumers, often called retail customers. These people are individuals making decisions for their own benefit and use, or as a gift for a special someone. You might say “well, I do both B2B and B2C”, so don’t get stressed out, but be aware that you are doing both.
What Is Your Industry? Various industries have a lot of different ways to have their businesses operate. Normally when you do accounting, it will only really let you put in 1 or 2 different industries in the system.
Create a Chart of Accounts
Cringe. Yes, this is overwhelming for newbies. But this is the center of your business. Here is how your accounting and business will flow. Many accounting software packages will help auto-generate them based on your industry and other questions you answered above. Yet I would still recommend working with your bookkeeper to ensure nothing is missing.
Here are typical accounts that you would list on a chart of accounts:
Parts / products sold
Sales write offs
Cost of Goods Sold
Inventory used for promotion
Bank Service Charges
Dues and Subscriptions
Business Liab & Contents
Licenses and Permits
Maintenance & repairs
Meals & Entertainment
Merchant credit card fees
Postage and Delivery
Other Office Expenses
Salaries – Officers
Don’t stress too much if you miss something or want to remove something later. Of course it’s ideal to have it all set from the get-go, but you can go back to this as your business develops.
Add Your Products & Services
Once you have the chart of accounts setup, now it is time to add in the data you’ll be working with to buy and sell. This is a strategic event and you should do it before you start to enter all your transactions.
You can use the template spreadsheet in Quickbooks and download it to your desktop. There you can match up the products in your shopping cart or your service offering page. The more details you put in here the better, as it will save you time from entering it one by one each time you put in a new transaction.
List Out Client and Supplier Accounts
Next you will want to write out your customer accounts and supplier accounts.
Now this is when B2B or B2C comes into play. If you’re doing B2C, yes it’s a lot of transactions! You will not manually type in each individual’s name, address, and contact details in your accounting system. That is insane! So you can call them “Retail customer” as a general journal entry. Another way is you will integrate your ecommerce or POS system to your accounting software.
If you’re doing B2B, you may want to spend time putting in your bigger clients company name, contact person, address, email, and phone number. This way when you create an invoice to charge them for a product or large product order, it will auto-fill. And you can also run reports to see who your top clients are, as well as those who are late on paying you.
Do the same thing for supplier side. This is again up to you how detailed you want to get and how many suppliers you want to input. If you are buying from a supplier on a regular business and the monthly or yearly amount is significant, take care. I would recommend to invest the time to put their full company contact details there.
You can also use an Excel spreadsheet and then if you have software bulk import it to save time.
Start Entering Transactions
Now that you have the charts setup and the client/supplier information prepared, next you should start to put in some transactions.
This is where the magic happens! There are a few ways to get you transactions into the system:
Manually Create Invoices and Purchase Orders
This is the traditional way, and if you’re a B2B business, might be the main way you will enter your business transaction flow.
When you want to receive money, you will create an invoice. You can then export it as a PDF and email it to the client. Many times accounting software has the ability to send the email right inside the system. As you have the customer information already entered in it’s easy! The invoice will auto-complete their contact details in the invoice.
If you have products or services already created, you can then choose them from the dropdown menu. Either it will auto-fill the price and description, or you can manually type in what you need.
On the supplier side, for the most part it’s the same thing, except you make a PO (purchase order). If you have their contact details and what you’re buying pre-defined this is fast as well.
Once you make the payment, or the client pays the invoice, you can mark it as paid, and it will balance in the accounting system.
Import via CSV (Excel Spreadsheets)
Most online banks now allow you to export your transactions. Normally they let you do as a PDF, as a Excel, or as a CSV (comma separated values) file.
Most accounting software systems work with CSV format. Let’s hope your online banking system supports it.
You’ll then download the file from the online account and the import it to your accounting system.
You may need to make sure the “mapping” is correct. This is where the “First Name” field in the excel spreadsheet connects to Fname in the other system (it’s what the database calls first name, for example).
It is nerve-racking at first, and normally it will ask you for your confirmation before doing the import. I’ve had some messy times trying to undo imports when the mapping was wrong – so be a bit alert, especially the first couple times you do this.
Automatically Pull From Online Banking & Merchant Accounts
Are you a B2C business, selling on Amazon, eBay, or other e-commerce shopping carts? There is no way you can have the time to have a team member entering in all these transactions. That’s because you’re doing high volume (you and I both hope!) and making tons of money selling lower priced items.
This is where the magic of technology comes into play!
You’ll look into integrating your business with an accounting software solution. Check if it works with Paypal, eBay, and whatever e-commerce provider you have. The more the better, so that you can avoid having to deal with
Make Sure It’s In Sync
Once you do link up the various third party integrations, you’ll need to check on a regular basis to make sure they stay connected.
Why do they disconnect? This is for your security, and different systems have different lengths of times. The better ones will let you set the length depending on which service you integrate with – for example 30 days, 90 days, 1 year, or indefinitely.
But alas, all these systems integrating together each one has their own preference. Just be ready to get an alert that you need to re-authorize the connection. Your bookkeeper may help check it for you, but it is still best you as the owner and director check it on a monthly basis, or even more often.
Pick Reports You Want To Read
Now, time to reap the rewards of keeping your books in order – reports! Quickbooks and any accounting software loves to take the data you’ve been entering it and give you a bunch of summary reports to see.
Some of the more popular reports you may access:
P&L (Profit and Loss)
This is the most important one in my opinion. This will take the total amount of each transaction classification and then take a total for the time period you are running the report for. Looking at this report will see if you have made or lost money during that period.
It’s hard to hide a loss here, if you’re sales are less than your expenses, it will be an ugly and scary red loss or a negative number.
But this is why having books will help! Double click on one of the numbers and it will run a report of all the transactions there. See where you’re spending your hard earned dollars. Knowing where your inflow and outflows go is essential in the success of your business. Don’t delegate this to anyone, this is the key role of a business owner.
Tip – I like to run this report for the past 12 months, and to have it divided up by month. That way I can quickly see which months the business is making money, losing money, or has high / low margin times.
Another critical report, this shows you how much cash you have in the bank. How much debt do you owe? Who owes you money. This report will show you how much money you would walk away with if you closed up shop today. That is, paid off your debt holders and took out all the money from your bank. There is also Shareholder’s Equity, which you consider as intrinsic value of the business. It is taking A-L (assets minus liabilities) and becomes the third part of the balance sheet.
This report will show you how “strong” your business is if things start to get difficult going forward.
Do you let your clients pay you later? Such as Net 30 terms, which means they pay you a month after they receive the goods. Then you should keep a report like this bookmarked. Here it will show you which of your customers are late paying you and maybe get you off your butt and making calls to remind them to send the money in! The longer it waits, normally the lower the chances are of you getting it. Business moves fast, and maybe they will shut down – the more old receivables on this report, the more nervous you should be!
Here is where you should look at the monthly breakdown. Check which vendors are getting a lot of your money. Also look at the report by type of transaction, such as office expenses. Maybe don’t be such a detail freak that you count how many reams of paper you bought, but at least be aware what your average cost is on those accounts. And question some people sometimes, keep them in check. Make sure your team knows you are running these reports and analyzing the numbers. Also shows them you are being responsible and care!
Budget vs Actual
A cool feature of accounting software is you can put in your monthly budgets. If you have an expected amount of money you’ll be spending each month, or a target for your sales team, put it in here. In this report, you can get a better idea if your company is staying on track of what it said at the beginning of the year. Way off track? Schedule an executive meeting scheduled ASAP! Decide do you lower your forecasts going forward or is the team able to bring things back up to where they predicted?
I’m sure you’ll have more reports you’ll want to run. Each business is different. The main idea is you should have a good grasp of what money is coming in, what’s going out, who owes you money. Check on a regular basis and ensure you are on track from what you predicted at the beginning of the fiscal year.
Keeping Things In Order For a Smooth Auditor’s Report
Another benefit of keeping on top of your books throughout the year is when you get your Profit Tax Return from the HK IRD, you’ll be ready. Just run the latest reports from the software and submit to your HK CPA auditor.
Not many people enjoy digging into the numbers, but we need to take responsibility as business owners. Hope today motivated you.
Any Questions or Need Help?
So that’s all we have for today. Get to it, and start entering those transactions into your favorite accounting software. Need help? We offer full bookkeeping services and you can check out our plans and pricing.
If you enjoyed this article, feel free to leave a comment below. Let us know how you are keeping on top of your books.
Looking to make your first order from a Chinese factory?
Or maybe you’re currently doing it and still crossing your fingers that it is going along well.
We know how nerve racking it is, and hope to help you today.
Here are some 10 tips we have learned over the years from our own experiences and talking to experts in the field.
Make Clear Specifications
If you want to avoid problems with a Chinese factory, then look professional from the beginning. If you come to them looking like an amateur, then they will underestimate you.
What can you do?
So do as much upfront research and work on your product as possible before approaching a factory. Is it a pre-existing product, an enhancement, or a brand new innovative product? Each one of them requires different level of specifications, but the more homework you do the better. And the ideal is to have a sample of the product in your hands and sending it to the factory, they can look at it and give a full and complete estimate.
But please be careful and make sure this factory is trustworthy before sending over your hard work.
Don’t Focus on Price Alone
If a factory can tell you are looking at price and price alone, then in my experience the good factories will step away and the lower quality, more desperate factories will step forward. I’m sure you want the best quality product with a top supplier, so don’t show them that you are a cheap buyer.
If you want a cheaper price, they can go as low as you want to go.
But don’t expect a nice and shiny new toy…
I can speak from firsthand experience, in my early days in China I kept pushing down the price of a wine corkscrew, and the factory finally “broke” and agreed to my price. Unfortunately for me, the metal was a cheaper one that would rust quicker and I had many returns on my e-commerce website for the next year or so.
If it’s your first time to buy from China, don’t rush it. And this article isn’t going to make you an expert, sorry to say. Give it at least six months I’d say to do your first order.
Think about it.
* Finding the supplier
* Shipping samples back and forth
* Making a sales contract
* Sending a deposit payment
* Quality inspection
* Shipment to your facility
Just listing these out I’m thinking this is longer than six months!
Always Get a Sample – Production Sample!
This is where people get impatient and rush. They get one sample that is “kind of close” to what they want. They are based in USA and Europe and tired of spending the 80 US dollars for UPS to ship the samples back and forth each time, so the factory convinces them this is a “basic idea and they will change X, Y, and Z” to make it the way you want.
So then get them to make that sample and send it back!
Yes, it is exhausting but if you cut corners at the beginning, it will cause bigger headaches later on.
Do a Test Order
Buy from a couple factories a lower quantity.
The best time to get to know a factory (or anyone in life or in business) is to do a practice run with them. This is when their true colors come out, as often during the sales process all the promises in the world are made, now is the time to see if they can execute.
It’s Sometimes OK to Use a Trading Company
Many people always talk about going “factory direct” and “cutting out the middleman”, and yes, while you may keep more of the money yourself, there are sometimes extra value add services they can do.
Another reason to use a trading company, they have a network of factories, so you can do a lower quantity across multiple product categories, while a factory has higher minimum order requirements and then you’d need to coordinate with all of the factories yourself.
Use Third Party Services
Similar to potentially using trading company, there are a wide range of third party service providers out there. From quality control, CAD design, sourcing, to logistics, the more of these you use yourself the better control of the entire process you will have. Normally the factory will tell you not to worry about these things – as they have their own partners they work with or they don’t do these services at all! But of course if you pick your own third party vendors you can rest assured they will help you more ensure the factory is doing things in your best interest.
I remember when I was first searching for a factory while home in USA. I had no idea where these factories were located and I thought they were all in the same vicinity. Yup, I didn’t comprehend at the time China is a massive place, and various “clusters” of factories form in certain cities – for example Ningbo is where a lot of gifts and home decor is made, Shantou for toys, Shenzhen for electronics. Learn where these clusters are, and then determine if you can source all your various products and components in that area. Why? This will reduce headaches long term when consolidating shipments and doing just in time (JIT) scrambles for unexpected situations.
It’s Better To Lose / Waste Money At The Beginning Than At The End
Many people look at R&D and they think, yes, this is a worthwhile cost to design a new product. But I think they don’t classify things correctly – I put a ton of various costs as R&D – flying to the factory, sample shipments, buying samples from various potential factories. We can’t cut corners on these upfront investments, and we need to look at them like this – investments – not expenses. As like any investment, the value increases over time, and the knowledge, awareness, and correct suppliers you find at the beginning will save you countless hours and dollars in the long term.
Sadly, when we make the right decisions it isn’t as easy to see as when we make the wrong ones. But if you’re not having headaches in the years ahead, count your blessing and thank yourself for making the right investments and decisions at the early stages
Make a Contract in English and Chinese
This one I wish I knew when I first started buying from Chinese factories. And you can’t just find one on a Google search and tweak it, this is something that will be with you for years to come. Find a qualified lawyer, on my podcast we have Mike Bellamy sharing some of his legal contacts there to use. Or go through recommendations in your own network. While if you’re a smaller buyer, a contract may be hard to enforce, at the minimum it sets the rules of engagement from the beginning and reduces miscommunication later.
So I hope today’s rather brief article helped and got your brain flowing here. It’s a daunting task, sourcing from China, but we need to stay motivated and do it step by step. If you’re currently buying from wholesalers in your home country (like I was) take it one product at a time until you’re confident and comfortable to expand.
This was a guest post I wrote originally on JumpStart Magazine.
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.
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:
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.
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.
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).
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!
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:
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.
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?
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!
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
11 years old or above
18 years old or above
Supporting Documentation & Information
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
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:
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?
Peer-to-peer fund transfer
Discounts at selected stores
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
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.
Unlike a debit card, there is no interest payable on the account
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.