How to Setup and Use Mobile Alipay (Zhifubao) in China

Nowadays, mobile payment has turned to be the most popular payment method in China. If you are walking on the street, you may find nearly every stores, markets, restaurants, taxis……even some beggars accept mobile payment as a method of payment. Right now, over 90% of mobile payment market in China is occupied by Alipay and WeChat Pay. More and more merchants in China are starting to accept mobile payment.

What Is Alipay?

Alipay is a third-party mobile and online payment platform which belongs to Alibaba Group. At first, it is only an online payment method which can be used on Taobao.com (similar to Amazon.com) to do online shopping. Right now, it turned to be a large platform which provides not only payment services, but also movie tickets, Didi taxi (similar to Uber), Air & Train tickets, Phone top-up and crowd-sourced reviews about local restaurants services (similar to Yelp.com).

Therefore, it is not exaggerated to walk on the street without your wallet, for what you need is only a smartphone. So what are you waiting for? Let’s start to enjoy it!

What Shall I Prepare to Begin with?

What you really need are the following three things:

1. A fully charged smartphone

Until now, Alipay App is only available on smartphones with iOS, Android or Windows phone system. You can search “Alipay” or “支付宝” in your App store, Google Play Store or Microsoft Store to download the App. (Attention: We do not recommend Windows Phone users to use the App as it was not updated since July, 2012 until June, 2018 in Microsoft Store.)

2. A phone number which you can receive SMS in Mainland China

When doing registration or paying a large amount of money, the App may send you confirmation code by SMS. Therefore, you need to make sure that your number is available in Mainland China and the number has been linked with your bank card when you were applying it in Chinese Mainland banks.

3. A debit or credit card issued by banks in Mainland China

You need to link your bank card with the App before using it to go shopping. Right now we recommend the debit card with UnionPay brand, as it would be the most convenient and popular brand used in Mainland China.

After preparing these things, we can start to open an account on Alipay. The following tutorial will be mainly based on iOS system.

How Can I Open An Alipay Account on My Phone?

Step 1: After installing Alipay, tap the App and you can see the welcome page. If the language appearing is not the one you are familiar with, please tap “语言” on the top right corner to change the language that you prefer. Right now, Alipay is only available in 3 languages: Simplified Chinese, Traditional Chinese (Hong Kong and Taiwan) and English. Then select languages and tap “保存” to save it.

Step 1: After installing Alipay, tap the App and you can see the welcome page. If the language appearing is not the one you are familiar with, please tap “语言” on the top right corner to change the language that you prefer. Right now, Alipay is only available in 3 languages: Simplified Chinese, Traditional Chinese (Hong Kong and Taiwan) and English. Then select languages and tap “保存” to save it.

Step 2: Tap “Sign up” to start your registration.

Step 3: Please tap “Agree” when you see the Terms & Privacy Policy.

Step 4: Please choose the region of your phone number. Then enter your phone number which is able to receive SMS in Mainland China.

Step 5: enter the 4-digit verification code you received from SMS.

Step 6: Set your login password, which must be between 8-20 characters. (Attention: There will be 2 passwords for your Alipay. one for login and another for payment. Please remember both 2 passwords.)

Awesome! Now you have an Alipay account. However, before using it, you need to link at least one bank card with it.

How Can I Link A Bank Card?

Step 1: Open Alipay App, Tap “Me” at the bottom right corner of the page.

Step 2: Tap “Bank Cards” to link a card.

Step 3: Add a debit card or credit card issued by Chinese Mainland banks.

Step 4: Enter your Chinese bank card number. Then, tap “next”.

Step 5: Fill in your name shown on your Chinese bank card, select your ID type, enter your ID Number and type in your mobile number which has been recorded by the bank. In the end, tap “Agree and Bind Card”. Alipay right now only accept the following types of ID:

  • Passport
  • Home Visit Permit (For Hong Kong people who travel to Mainland China)
  • Tai Bao Zheng (Mainland Travel Permit for Taiwan Residents)
  • Mainland Identity Card

Step 6: Enter the confirmation code received from SMS. Then tap “Next”.

Step 7: Set a 6-digit payment password and reenter it. This password is only used to do the payment and it is different from the login password. (Attention: We do not recommend our clients to use your bank card password the same as Alipay payment password, for it is risky.)

Then, you will see the following page saying “添加成功” (added card successfully) and the bank card information will appear on your “My Bank Cards” page.

Now you are fully prepared. Why not start to use Alipay to do your first payment?

How to Do the Payment by Alipay?

Generally speaking, there are 2 methods to do your payment: either scan others’ QR code, or let others scan your QR code.

I. Scan Others’ QR Code

It is a common payment method in some small stores, small restaurants, Taxis and personal business. Usually, you can see a sign with Alipay’s logo (left image below) and a QR code sign for Alipay (middle image below) or a QR Code which combines several mobile payment services (right image below).

So when you are going to have the check, you can take out your smartphone, scanning the QR code in the following 3 steps:
Step 1: Open Alipay App, tap “Scan” on the top left corner.

Step 2: Put the QR code into the frame and it will automatically jump to the merchant’s payment page. (If the QR code is on a picture in your phone, you can tap “Album” on the top right corner to scan it.)

Step 3: On the merchant’s payment page, you need to enter the number of payment. Then tap “确认付款” (confirm the payment). The style or structure of this page may be different from the following one according to the third party service that merchants use (like the following right image).

Step 4: Then, it will jump to Alipay’s payment page. You can check the amount of payment here and you can choose your payment method, including balance, Yu’E Bao, debit cards and credit cards, etc. After that, tap “Pay now”.

Step 5: Type in your payment password (not your login password). Then, tap “pay”.

When it jumps to the page shown like the image below, it means the payment finished successfully.

II. Let Others Scan Your QR Code

It is also a common method which you can use in large restaurants, boutiques, supermarkets or convenience stores. It is easier and more efficient as you do not have to enter the number of payment and password.
Step 1: Open Alipay App, tap “Pay” on the top left corner.

Step 2: Firstly, select your payment method (left image below) and then let cashiers scan your QR code (middle image below) or put your phone face to the sensor (right image below). (Attention: This QR code is only used to pay instead of receiving money. Do not let others scan it except cashiers. Do not do screenshot and send it to others.)

Awesome! The payment is finished! Now you can use mobile Alipay as your electronic wallet.

How Can I Transfer Money to Strangers or My Friends?

I. To Strangers or The Guys You Won’t Transfer Money A Second Time:

Step 1: Open Alipay App, tap “Collect” on the top right corner.

Step 2: Now you got your QR code. Either tap “Save image” or do a screenshot to save it. Then, send it to the one who need to pay you and ask them to scan this QR code. The money has been transferred to you will automatically be added to your balance.

II. To Friends:

Step 1: Open Alipay App, tap “Friends” on the bottom right corner.

Step 2: Tap the “+” button on the top right corner. Then tap “Add Contacts” to add a friend.

Step 3: Enter your friends’ Alipay Account/Mobile Number/Taobao Account to search. Then, tap “Search” on your keyboard.

Step 4: Tap “Add” to add your friends and then send him/her friend request to verify yourself.

Step 5: Wait for your friend to accept your friend request. After receiving his/her message, tap the “+” at bottom right corner and then tap “Transfer”.

Step 6: Enter the amount of money (required) that you want to transfer to your friend and add your remark (optional) to continue. Then, tap “Confirm”.

Step 7: Similar to Step 4&5 of “Scan others’ QR code” part, please select the payment method and enter your payment password to finish your transfer.

Bravo, now you are the master of mobile Alipay! Still have any questions? Why not check the following Q&A part to find the answer?

Q&A

Q: Can I Turn My Alipay App into English Version?

A: Of course you can. If it is your first time to use Alipay, you can change your language at top right corner of Sign up/Login page.

If you passed Sign up/Login page, don’t be panic! You can still tap “Me-Settings-General-Multiple languages” to select your preferred language.

Q: How Can I Login/Logout Alipay?

A: Open Alipay App, tap “Me-Settings-Log Out”. Then you can select to either login with another account or logout.

Q: Is Alipay Safe?

A: Generally speaking, Alipay is safe, as long as we can be careful with protecting our personal information. Please always remember and follow these instructions below:

  • Never tell or show either your payment password or login password to others.
  • Pay attention to your surroundings when you are typing your password.
  • Do not setup any easy password, such as “123456”, “111111”, “password” or your birthday.
  • Never show or let others photograph your payment QR code.
  • Never download any suspect software on your phone and never click any suspect URL link on your email.

Q: Can I Use Alipay in the USA/Globally?

A: Yes, but it may be a little difficult for you to find a merchant in other countries. Right now, Alipay is trying to spread its influence throughout the world. However, its localization seems not so active. The following 2 pictures were photographed in New York. It is interesting to find out that Alipay’s advertisement in New York only contains Chinese characters instead of English ones. (As far as we know, the condition in Tokyo is similar to New York as well.)

Therefore, perhaps Alipay is still targeting at Chinese visitors or Chinese students instead of local people in other countries. Because of it, you may not have a brilliant using experience out of China.

Q: Alipay vs Paypal. Which One Is Better in China?

A: It depends. If you would like to trade with local Chinese merchants or just visit or live in Mainland China, we recommend our clients to use Alipay as it would be very convenient for you.
However, if you want to trade with international merchants or enterprises in China, they may prefer Paypal to Alipay.
Overall, few Chinese people know or use Paypal in Mainland China.

Q: How Can I Contact Alipay Customer Service?

A: Alipay customer service hotline: 95188 (China), +86 571 95188 (Overseas)
Alipay official website: https://www.alipay.com/
Mobile Alipay official website: https://mobile.alipay.com/index.htm (Chinese)
https://render.alipay.com/p/s/download?form=chinese (English)

This post is originally found here: https://www.globalfromasia.com/alipay-guide/

Neat HK: A Solution for the Hong Kong Banking Nightmare?

Looking for a Hong Kong online business bank account that you can connect your Paypal and Stripe / Braintree merchant account to? Wouldn’t that be amazing, without the utter nightmare Hong Kong business owners are going through now begging these archaic banks to allow them to deposit their money.

Here at Global From Asia – we know the pain our entrepreneur and hard-working global business owners have been going through. As digital nomads and e-commerce sellers and FBA business owners, we feel the pain ourselves. This is why our clients for our corporate services enjoy working with us – we understand you.

And we know the biggest pain point for almost 2 years now has been – such a basic need – a business bank account solution in Hong Kong.

One with credit cards – for you and your staff. One that can link to your Paypal and Stripe.

We’ve been testing so many and talking to so many – and today we’re talking about one we’ve been following for years.

Neat.HK Business Banking for Online Business Owners

So I am focusing today on their business banking product – Neat Business Account. I know exactly what you guys are looking for – and here is a list of their features:

* Unique Account / IBAN number – you will have your own dedicated account number with Standard Chartered. This isn’t like some other solutions where you have a sub-account and need to put in your TT (telegraphic transfer) banking notes your sub-account number. This is a dedicated account number ONLY FOR YOU And your business. I’m not sure the technical way they got this – but this is the amazing part – that allows you to do the following

* Connect /Verify your Paypal Hong Kong – we have a Paypal Hong Kong guide that gets a lot of attention on how to verify your Paypal. You need a “unique” or dedicated IBAN number. This Neat Hong Kong business solution give you that – unlike other online / virtual banking solutions I have come across.

* Connect / Verify your Stripe HK or Braintree merchant account – similar to Paypal, you need a unique bank account in your company name in order to get Stripe and any other merchant account setup. Don’t worry – this will work here too. We have a full list of merchant account comparison here that is popular as well.

* Issue Company credit cards – You can order credit cards! Yes – finally – you can see a company credit card in your company name here in HK without having to sign your life away and deposit your life savings! Seriously, readers know it is hard to get a Hong Kong credit card.

* Deposit paper checks – many ask how to deposit checks (yes, Hong Kong does still use quite a bit of paper checks). This works too. You need to go to Standard Chartered Bank – in person – and deposit. Can’t do it at the ATM.

* English, Online Banking – and of course, it has online banking. Well, that is actually something we need to write as a bullet point, as some banks we are forced to work with in our partner corporate services agency, don’t have online banking. Or it takes forever to get issued. And the banking is in English.

I think this has huge potential, and I may finally be able to rest well at night when we get new clients for a Hong Kong company (read our Hong Kong registration guide here) setup and – yes – their request to get a local HK bank.

Big Plus – Don’t Need To Come To Hong Kong To Apply

Here is the big – big one – that I know our readers at Global From Asia will love – you can apply and get approved online. So now, once we get this moving smoother – we can help clients open a HK company and HK bank account without needing to fly here.

Can you say…

Game changer!?!

Wow, Hong Kong may be back open for business. It’s been a rocky road since March 2016 but we may be out of the ice age and entering normal business climate.

How I Came Across Neat

I met David Rosa, the founder of Neat.hk a couple years ago when they were in their early stages. He visited me in my TST office and we chatted about the struggles of banking in Hong Kong and Asia in general. I had been doing my podcast already for a couple years then and was helping clients open up companies and banking. I explained the utter nightmare it was to beg a bank like HSBC to please let us deposit money with them.

At that time Neat was focused on the consumer banking side (individual accounts) but he said once that was going he’d work on their business banking solution and let me know.

I also have gotten to know others on his team, and he had been merging with other local Hong Kong fintech startups I had been following.

It’s true – Global From Asia is a great blog and media source for Fintech in Hong Kong and Asia. So I am always getting startups trying to solve this nightmare banking issue find me and send me their new products and solutions.

It is my biggest pleasure to be able to blog about this and give everyone hope. There is light at the end of the tunnel and I really hope this disrupts these archaic banks who destroy small business owners livelihood.

Let’s give power back to the SME and let’s leverage online banking – who needs to visit a corporate banking branch anyway?

Can You Trust This New Fintech Startup?

As I have been telling clients about this new banking solution – some are still a bit nervous. A startup holding your funds is a big ask, not as simple as a social media app where you share what you ate for dinner.

True, I always have to disclose you need to use any financial solution at your own risk. But they are recognized in Hong Kong as an accredited Fintech company and work inside Cyberport. I should get him on the podcast as well.

Ready to go and get this new Hong Kong Business Banking solution? How To Signup?

So I probably have you on the edge of your seat (I hope!) and I have you excited to apply.

If you are starving and about to die of starvation as you have a HK company already and just need a freaking bank account – you can browse over to Neat Business Account and get on their waiting list. I do have a special code that can help you get expedited but am not allowing to link it publicly so if you’re a client of our corporate services division (Unipro) then talk to our client services department to get that going.

Don’t have a HK company yet and now feel more confident you can get a HK company and bank account together – then let’s work together. Check out our HKVIP package and let’s do some business together.

This may have just re-opened the doors to doing business in Hong Kong for online business owners. That plus the corporate tax rate has been dropped to 8.25% (from 16.5%) for SMEs with less than 2 million HKD in revenue. Ice age in HK may be past us, let’s hope and we will keep you updated as this progresses.

Ears On The Ground

Here are some messages we have been hearing on the web that we believe is helpful

have you succeeded with HSBC ? [Surprise] A lot of variables will come into play, especially fiscal residency and company’s “establishment” location. Generally speaking, will be harder for countries like me France to apply in today’s banking conditions. Anyways, NEAT business is good although they are launching and still developping. However pay attention -> they have merchant limits as they are NOT a bank, they can only hold funds under a 2million HKD limit. This means, if you generate large amounts of revenue, you won’t be able to store all of your funds with NEAT, you will need like a traditional bank account for savings for example. I currently work it out this way : 1/ I use sendwyre to do as much as I can with supplier payments and other online payments then send the remaining to NEAT 2/ I use NEAT for other purposes like the mastercard to purchase stuff online, also will do HK based transactions or other operational stuff I may need on a week to week basis. 3/ I have a traditional bank account I was able to open after almost a year of issues and 3 banks denied. This one is not being used right now and I unfortunately pay fees to keep it opened. However the aim is to keep this bank account in order to have a back up plan in case NEAT goes bad + it allows me to grow my business where when I will cross the 2million HKD in balance on NEAT, I start sending over to my bank. Remember -> you may have sometimes over 2million HKD for just couple weeks , in that case NEAT won’t accept your funds. So long term wise, you need a traditional bank too and play around those limits.mobile online forum

Input from Neat, March 2018

Here’s an update from Andre in our GFA Community Wechat group who has this update on the Neat bank situation for HK:

“Ok guys so answers from neat: still no multi currency accounts, cannot currently deposit cash, to withdraw cash standard neat charge of 2.5% is charged, the main partner bank is standard chartered. So currently it’s best just for users purely doing online business.”Andre

Can I wire in USD or other foreign currencies?

Yes, you can wire incoming currencies no problem.

Can we transfer money to EU banks?

For wiring out, you can only send money within HK. But you can use a cross border payment company such as Aurelia Pay.

Check our blog on cross border payment companies.

What’s the account limits?

2,000,000 HKD (a bit over $250,000 US dollar) as of March 2018.

A question from a Client

“I have a question, we set up the neat account and everything went smoothly and the account is open and active now.however, it shows the account only accepts incoming wire.

Is there anyway you can help us with that? I tried looking for information on how to contact the bank directly but they only have a q & a with 15 questions.

the main reason we wanted an account was to pay our supplier in China to expedite the process of importing our product to USA. Can you please give me some information and also if you can let me know how we can open account with a better bank.”

We suggest using a cross-border payment service provider in the middle.

Information You’ll Need to Apply

Here is a copy/paste of their latest application form

This form collects information about your company so that we can complete the application without the need to travel and visit our office.

We will gather information about:

  • Your company
  • Directors
  • Shareholders
  • Ultimate Beneficial Owners (natural persons who ultimately own or control the company)

In order to complete the application you will need the following documents:

  • Valid Business Registration Certificate – example – (or equivalent for companies not incorporated in Hong Kong)” – example
  • Photo ID of Directors and Ultimate Beneficial Owners

Neat HK will also help you to generate a Board Resolution that authorise you or one of the directors to open an account with us on behalf of your company.  The form is pre-filled and requires just a signature.

NOTE: Please be as accurate as possible – this will speed up the review process and increase the chances of your application being successful.

P.S. You can save your application work at any time and come back to it later on. Just click on the “Save” button and input your email.


Input from Neat, March 2018

Here’s an update from Andre in our GFA Community Wechat group who has this update on the Neat bank situation for HK:

Ok guys so answers from neat: still no multi currency accounts, cannot currently deposit cash, to withdraw cash standard neat charge of 2.5% is charged, the main partner bank is standard chartered. So currently it’s best just for users purely doing online business.Andre

What is Neat HK?

Neat is a mobile current account that makes everything accessible and at ease. It only takes 10 minutes of your time to have a Neat account. You do not have to worry with your local and international purchase, with over 50 currencies available with Neat, they got you covered!

With Neat, you can manage your money anywhere, receive salary and make payments, and send money to your friends.

There is also an available Neat Card for free. It is a prepaid MasterCard issued by ePaylinks. Browse the following incurring fee before you avail a Neat card.

What are the fees needed to acquire Neat HK?

There are no reflected monthly or annual fees and for acquiring a Neat Prepaid Mastercard. However, a lost or stolen card of Neat HK will cost HK $50 for a card replacement.

Each ATM withdrawal with a minimum fee of HK $25 will have an incurring fee of $25. Transaction refund is for HK$4. Those merchants in Hong Kong who are under an international brand is included with 1.5% fee in HKD Transaction Foreign Merchant. When you inquire for your balance on an ATM, there is a fee of HK $4.

Also, a consecutive six months of inactivity will be charged HK$12.5 a month. Unless, the balance is zero.

How to get the Neat HK application?

Neat application is available for both iOS and Android devices. You can just download the app at their respective app stores.

How to get a Neat HK Card?

To have a Neat HK Card, complete the registration process on the Neat Application. The only requirement you need is a passport or a Hong Kong Identity Card.

Is there a Business Account offered by Neat HK?

Yes, there is a current business account offered. There are number of benefits for your business when you use Neat HK for your business!

  • An increase in productivity will be achieved with Neat Business HK. They offer you tools that can help you operate your business efficiently. The dashboard can give you the insight and control of the progress of your business finances.
  • Just like the personal subscription, business account is a quick setup. You have the access of your bank account anywhere and anytime.
  • The offered business account is timely. There are integrated features that automatically organize admin tasks. This feature will help you focus more on your business.
  • You will be assigned with a dedicated Hong Kong bank account number. Neat supports many e-commerce platforms. This allows you to receive payments and manage disbursements.
  • More so, business accounts offers a feature that can easily pay invoices and employees.
  • There is an expense card available to enable your employees make purchase online and offline, and withdraw cash at ATMs.
  • Now, lost receipts are not a problem anymore. Its feature has an ability to add pictures of receipt.

This business account is still developing. There are two features to be added on its update: powerful reporting and automated accounting.

How to apply for Business Account?

Neat Business Application

You have to fill out the Neat Business Application, information about your company are collected. The catch is, you do not have to travel to Hong Kong to apply for a business account. Filling out this application will only take you 10 to 15 minutes. If you have some things to do, you can save the application any time and finish it later.

Informations regarding the company, the ultimate beneficial owners, shareholders, and directors. The said ultimate beneficial owners are those who naturally owns or controls the company.

The following documents are needed to complete the business application:

  • Valid Business Registration Certificate (see example)
  • Passport of Directors and Ultimate Beneficial Owners

Neat also helps you produce a Board Resolution that will authorize you or one of the company directors to open a business account in behalf of the company. The form will be pre-filled and it will only require a signature.

Before you plan to fill up a business account application with Neat HK, please check whether your company meets the compliance requirements.

List of Restricted Nationalities

  • Afghanistan
  • Bosnia and Herzegovina
  • Central African Republic
  • Democratic People’s Republic of Korea
  • Democratic Republic of the Congo
  • Eritrea
  • Guyana
  • Iran
  • Iraq
  • Lao People’s Democratic Republic (Laos)
  • Lebanon
  • Libya
  • Somalia
  • Sudan
  • Syria
  • Uganda
  • Vanuatu
  • Yemen

List of Restricted Industries

  • Adult related
  • Antique Dealers
  • Arms Dealers
  • Auctioneers
  • Cryptocurrency Dealers
  • Defence System
  • Foreign Exchange Dealers
  • Gambling and Casino
  • Jewel, Gems, and Precious Metals Dealers
  • Nuclear Power
  • Pawn Shops
  • Plane Dealers
  • Products and Services Illegal under Hong Kong Law
  • Pyramid Selling Schemes
  • Stock Securities Companies

If you think you meet the compliance requirements, start filling out the application.

What are the features of Neat Business?

Neat Business is yet only dedicated to Hong Kong dollars current account and a local bank account number. However, the company plans to offer a multi-currency account wherein it will support a multi-currency account.

Payments made from anywhere around the world will be received to the business account. Any outgoing payments from local third-party banks in Hong Kong are also supported. However, the outgoing payments to international banks is still about to be offered.

It is also planned that Neat HK and Xero Cloud accounting should be integrated. This is to enhance online banking through seamless accounting and account reconciliation.

Why choose Neat?

Neat is a highly secured mobile currency account that you can fully trust, either you will use it for your business or for your personal use.

You can manage, operate, and send your money anywhere in the world.

Neat may be developed at Hong Kong, but you do not have to go to their office to acquire an account and a card. More so, there are no requirements needed for personal use. Receive payments and send money to your friends

Neat HK is a revolutionized and patented account opening process. .

Get your mobile app at the Apple Store or Google Play!

Features to Look For In Your Hong Kong Bank

This article is originally found here: https://www.globalfromasia.com/hkbankfeatures/

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.

Multi-Currency Account

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.

But having a multi-currency bank account in Hong Kong is a feature you need to request when applying.

And there are a few small differences:

  • Multi-currency savings
  • Multi-currency checking

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.

Online Banking

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

Custom Headline

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!

Apply now for the banking application service.

Staying Motivated in Our International Business Endeavors

This article is originally found here: https://www.globalfromasia.com/businessendeavorsmotivation/

It happens to us all.

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.

Thanks Josh!

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!

Using a Hong Kong Company for Your Chinese Factory

This article is originally found here: https://www.globalfromasia.com/hkcompanyforchina/

Tired of sourcing from factories and want to setup your own manufacturing operation? Searching for the best corporate structure for a new Chinese factory?

Look no further, today we will dig into Hong Kong being a great place to open your factory under.

How To Open A Factory?

I remember when I first visited a factory in China. I became shocked to think it isn’t as complicated as I had thought. There are three main factors:

  •  Big Open Space

    Need a big building with lots of open space to set up the operations.

  •  Machines

    You’ll need the equipment to prepare the materials. This can be all sorts of machines but let’s stick to the most common: plastic injection machine. These are the most common in a Chinese factory. They will take the manufacturing mould, and then inject the plastic inside and pop out a bunch of the plastic parts. Significant size and definitely a big upfront investment.

  •  Labor

    You’ll need people to put together the plastic parts once they came out of the machines. Debur, check for any defects, assemble. Check the quality. Package. You get the idea.

Of course there is a lot more skill and magic to the process, but these are the main pieces of the puzzle you’ll be dealing with.

Is Hong Kong A Good Place For Your Factory Business?

A lot of people ask me when they’re searching on Alibaba should they pick companies that are in Mainland China or Hong Kong. Yet I don’t know any factories still located in Hong Kong – they are all in China. What is in Hong Kong is the sales office, or even just a virtual office for the parent company.

That’s not to say having your factory established in Hong Kong as a business entity isn’t viable. It is something common. It can be with anyone, Americans, Europeans, Local Hong Kong people, or Mainland Chinese who open the HK limited company. It will not be too easy for the general public to know the nationality of the owners (though there are ways to do company research in Hong Kong). Once you’re a Hong Kong company, you can then open a Mainland Chinese WFOE (Wholly Foreign Owned Entity) that will be where the factory operates from.

You can have a local Chinese partner in the factory with you, and you can both own the shares in Hong Kong. Once that is setup, you will then be “foreign” to the Chinese government even if half the company is Mainland Chinese owned. So you’ll open a Chinese subsidiary that is the fully owned by Hong Kong company. Have the IP owned by the HK parent company, and now you have the benefits of HK’s English legal system while able to operate inside China.

While any company could be the foreign owner of a WFOE in China, Hong Kong is a good choice as it is so close and so common. Hong Kong banks, and other banks and legal entities will be familiar with how to file the documentation. Thus the WFOE won’t have as much of a headache as having it owned by a company elsewhere.

Make sense?

What Things You’ll Need For a Hong Kong Parent of a Chinese Factory

So what are you going to need for this Chinese factory owned by an HK limited company?

It depends, will you have a physical office in Hong Kong? To do sales, meeting clients, trade shows, etc? Or will you work close with a serviced office in HK that will help with the mail from the governments and banks.

I’m going to assume you’ll be living and working in the Chinese factory, and that will be your base. You won’t need the overhead of a Hong Kong office and will instead invest in Mainland China operations.

Thus, you won’t need many things in the Hong Kong company, most operations will happen in Mainland China.

But you’ll definitely need:

  • Hong Kong Bank – Goes without saying. Any company operating needs to have a bank account. You’ll use this to receive money from customers, and send in money to Mainland China for the production and the rent and staff costs.
  • Hong Kong Credit Card – To keep your life a bit more simple, you’ll need a credit card to put the expenses on. You’ll be traveling to trade shows, clients, and having certain online software packages.
  • Paypal. If you’re selling B2B (manufacturing orders) then I don’t recommend having clients paying you by Paypal. But you may like to have this to buy things online and for small sales. This could also come in handy buying things online if you don’t get a credit card.
  • RMB (Chinese Yuan) Currency Option – Make sure you tell the bank you’ll need a RMB currency account. This will come in handy for managing the risk in currency fluctuations. Plus you can save time at the Chinese bank when you send over Chinese Yuan instead of USD or other foreign currency. It’s much easier to convert to RMB in Hong Kong than it is in Mainland Chinese banks. You can test for yourself, and you can thank me later 🙂

So Here’s How Operations Will Go

So now you did it, you setup a Hong Kong company and then a Chinese WFOE subsidiary. Good job! That took at least 4 months, but more likely 6 months. You may have done some operations already, but now you’re fully legal to do it.

You’ll rent a big space in the outskirts of Shenzhen or in Dongguan. You have your sales team there – and the internet speeds are reasonable for dealing with foreign clients. You have orders coming in. Once the money is in Hong Kong, you can either wire the money on demand to China. A lot of companies work out a monthly invoice for costs of operations and production.

Once you send the money to your Chinese bank from your Hong Kong bank, you order the raw materials and get the factory workers trained up to handle the production. You may need to hire more staff or scale down when production is low. I hope you have a core manufacturing team in place with good experienced factory management.

You process the order. You finish mass production and then send remaining funds to your Hong Kong parent company’s bank from the client. You need to get more cash over to China to finish the deal and get it to the port, FOB Shenzhen.

You will keep some money in China, but you hold your money and IP in the parent company in Hong Kong.

This is the basic idea. Sure the factory can be over in Shanghai, or deeper into Mainland China as well. Where you choose the factory location should base on the type of product and industry you’re in. There are cities who specialize in certain areas.

So What Do You Think? Hong Kong Perfect For Your Factory?

Hope this guide was helpful for you! Where are you opening up your own factory. Often the order of events is a USA import and export company grows bigger and bigger. Getting more clients and specializing more, they want to go even more direct. Since they know their product so well and their customers too, they can invest in a factory themselves.

Sure, this will have more fixed costs and more risky, but you’ll have full control. The trickiest part is to managing the staff and the quality control. All that complaining you did to those factories you bought from before will now be your headache! Its not always the factory owner who does the bad quality on purpose. It takes good management skills to keep things in order and deliver top quality.

So I’d love to hear your experiences and tips about Chinese factories from a Hong Kong company. Please leave comments and questions below!

Can You Get a Job from a Hong Kong Company Overseas?

This article is originally found here: https://www.globalfromasia.com/workingoverseas/

Do you have a job from a Hong Kong company full time? But living in America most of the time?

When did this insanity start?

Life used to be so simple. We would all stay in our own countries, have our address in the same town as the company we worked in, and pay taxes to that city / state / country.

Nowadays it seems so complex.

But it is awesome. And I get to hear great questions from readers like today’s post.

Let’s share the question here:

(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)

Today’s Question

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.

In Hong Kong, to get a job from a Hong Kong company, you’d need to get a proper employment contract as well as a HKID card.

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.

Hong Kong employment tax rates.

How Will The Hong Kong Company Pay You? HK Bank?

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.

Feedback, comments, and hate mail is welcome!

Amazon + Hong Kong – Match Made in Heaven

This article is originally found here: https://www.globalfromasia.com/hongkongamazon/

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.

Any questions or concerns, please leave a comment below! And if you like this article and want to setup in Hong Kong, I’d love to work with you.

Can You Apply For A HK Bank Account Online?

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

Setting Up Your Bookkeeping in Hong Kong

This article is originally found here: https://www.globalfromasia.com/hongkongbookkeeping/

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:

Income

Services
Parts / products sold
Sales write offs

Cost of Goods Sold

Materials
Labor
Outside services/Subcontractors
Supplies
Small tools

Expenses

Advertising
Marketing costs
Inventory used for promotion
Automobile Expense
Bank Service Charges
Cleaning
Contributions
Depreciation Expense
Discounts Taken
Dues and Subscriptions
Insurance
Subaccounts:
Auto Insurance
Business Liab & Contents
Disability Insurance
Life
Medical

Interest Expense
Licenses and Permits
Maintenance & repairs
Meals & Entertainment
Merchant credit card fees
Office Expenses

Subaccounts
Computer expenses
Postage and Delivery
Office Supplies

Other Office Expenses
Payroll Taxes
Professional Fees
Rent
Salaries -Office
Salaries – Officers
Telephone
Travel
Utilities

Other Income

Interest Income

Other Expenses

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.

  •  Balance Sheet

    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.

  •  Aged Receivables

    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!

  •  Expense Reports

    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.

10 Things You Need To Know About China Sourcing

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?

Be prepared!

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.

Be Patient

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.

Between:

* Finding the supplier
* Shipping samples back and forth
* Negotiations
* 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.

Location Matters

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.

Conclusion

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.

This article is originally found here: https://www.globalfromasia.com/sourcinginchina/