Richard Craggs left a successful career to pursue his dream: to provide quality and healthy canteen food to factory workers and schoolchildren all over China. Shenzhen Party sat down with the British entrepreneur to discuss his company NomNom and his unlikely Chinese food revolution.
Richard Craggs, founder and CEO of NomNom, moved to China 12 years ago. Previously he had been a Managing Director of one of the world’s largest retail gift companies, which took him all over China sourcing and setting up new factories. It was during this time that he witnessed factory canteen meals first hand.
“I’ve visited hundreds of factories, many of them in remote locations where there was nowhere else to eat, and the food was lousy,” he said. “I love Chinese food, but the factory meals were terrible, and I was touched by the workers who constantly complained about their meals each day.
Walking away from a successful career of 20 years, Craggs pivoted 180 degrees and set about on a mission to revolutionize the food served to factory workers and schoolchildren in China. In the beginning, it was tough.
Proving The Concept Works
“I was on my own with my life savings dwindling, and now I had to prove to investors that his model could be successful in Asia. I set about purchasing two loss-making restaurants with the business model to utilize their kitchens to prepare meals for schools and factories.”
“Factory budgets can be as low as RMB6 per full meal and my supply chains at that time could never achieve that budget, so I started visiting farms and large wholesalers to bring prices down. In the meantime, I won a contract with ISNS, an international school based in Nanshan, and a small Emerson factory located in Bao’an. Although our revenue tripled, the factory canteen was losing money, and fast.”
Unwilling to compromise on quality, Craggs understood that it was possible to purchase the ingredients within budget. It did require an increase in purchasing volume by over ten times, however, and as vegetables are perishable, holding inventory was not an option.
Burning through his savings and unable to increase his factory customer base, Craggs thought outside the box. He contacted 13 other small caterers supplying factories nearby and offered to consolidate and distribute ingredients at cost so to achieve his own food cost target.
Low-budget canteen catering is one of the toughest food and beverage markets, but he had a proof of concept; RMB5.9 for a full meal that includes a meat dish, two meat & vegetable mix dishes, and vegetables with unlimited rice and soup. The meals were of restaurant quality and he was able to extract a fair margin.
Craggs then approached investors in Asia. He told them, “There are hundreds of thousands of factories in China, and they all have the same problem: lousy food and unhappy workers. If we can provide a solution for that, then this could be huge.”
The demands of the factory worker have evolved with rising wages, improving living conditions, more benefits, and further support from the government. This has trickled down into their expectations within their canteens.
Land reforms lifted production of grains like rice and wheat, and millions started to enjoy more vegetables and pork as well as want luxuries such as beef and milk. This presented challenges with production capacities in farming. As part of NomNom’s food revolution, however, they have tackled the complex supply chains and accelerated their volume requirements to drive down costs. These and other savings are added back into the meals.
Giving Back To Factory Workers
In the past, factory caterers usually served up a lousy buffet where the menu never changed. In a typical NomNom factory food court, however, they have created a variety of meal options from their Pick ‘n’ Mix Buffet, Hot Pot, Noodle Station, Steam Varieties, BBQ, Fusion Set Meals, Clay Pot Rice, and blended Japanese, Korean, and international fusion. The food courts take into account the wide range of palates given that the workers come from all over China.
“Factory workers work very hard, on minimum wages, and live away from their hometowns in isolated locations. The least we could do to support them was to provide them with a quality meal and an abundance of variety at each serving time. Let’s not forget that these workers are responsible for manufacturing almost everything we use each day. They are the unsung heroes of China’s industrial revolution, and we wish for them to enjoy our food revolution as a token of thanks,” explained Craggs.
The time and investment spent on NomNom’s supply chain bode well for their other customers as now there is additional investment that can be injected into recruiting quality chefs, training staff, introducing more automation, and other scales that help efficiencies that we can pass on to our customers in terms of quality and price.
Improving The Food Diet Of Schoolchildren
NomNom’s focus quickly migrated from factories to international schools, where parents had contacted Craggs to see if he could help with their children’s’ school meals. This led to the USD750,000 acquisition of McCawley’s Fine Foods, which was operating a number of schools in the area. It was a brave move for an early-stage catering startup, given additional funds were required to upgrade the personnel, equipment, central kitchen, and cold and hot chain delivery vehicles.
“What really burns my toast is that there are a lot of catering companies simply going through the motions without really listening to the customers. Be it the schools, the parents, or the children themselves. Listening and blending this into our expertise has helped design our recipe-managed menus that are constantly evolving. Variety had always been a core initiative to cater to the differing palates of our customers, and now we offer both an International and Chinese buffet, as well as Korean, Chinese, Vegetarian, Organic, and Premium set meals. We have recently rolled out salad bars, fruit stations, freshly baked bread for breakfast, and ensured that all our menus are handmade using only ingredients from government approved suppliers,” said Craggs.
What Does The Future Hold For NomNom?
When asked about the future, Craggs explained, “We wish to continue to support healthy and quality meals within existing budgets throughout China. The plan is to continue to expand our school, factory, and office customers in South China, and eventually further afield. We still have some exciting new projects to launch from food trucks to vending and our own delivery app for homes and offices.”
“One important part of our model is to be transparent to encourage and inspire others to join our food revolution. We strongly believe that the consumer deserves this and we wish to support the government drive to ensure food production is safe, so we can rebuild the trust the people have with food.”
“Not one caterer holds even 1% of the catering market share in China, so one must not be concerned with competition as the market is huge. The overall demand trend is there for quality for price meals. If you can put quality first and offer value, the market will come to you. We currently do not have a sales team as we have been fortunate to have the majority of our customers reach out to us directly.”
International Awards and Recognition
The NomNom food revolution has been well-received in the market with phenomenal progress over the past two years. NomNom serves high profile international and local office cafeterias, provides for multiple factory food courts, and has become the largest international school caterer in South China. All of which has resulted in being nominated for the prestigious British Business Awards in two categories; Company of The Year and Entrepreneur Of The Year for their founder, Richard Craggs.
With international recognition and with more and more businesses and schools signing up, NomNom’s food revolution is just getting started.
Check out the video below to see just how the food revolution is sweeping over the canteens of schools, offices, and factories all over South China.
Office workers queue eagerly at a canteen catered by NomNom
NomNom’s state of the art, High Tech Central Kitchen in Nanshan
NomNom’s Factory Food Court Concept designed to upgrade the lives of workers across China
What is the difference between an accountant and an auditor?
Drink so coffee (or tea) and don’t sleep on me here. Yes, this stuff can get dry – but the more we understand it, the better business owners we can be!
What is an accountant?
Think there are 2 cases.
Case one is the accountant as a bookkeeper. He or she will receive all your financial statements, either by paper or online access. They will setup your books and chart of accountants. You will then watch in awe as they classify your transactions in different income and expense accounts.
Bookkeeping should be upkept throughout the year. Ideally real time. Of course there are many of us with not tons of activity on a daily basis and we can’t afford to have a full time accountant. So I recommend weekly.
It’s not just for the work, but also for you as a business owner. To look at the numbers, the reports, the summary and see your business as a dashboard.
So this type of accountant is a bookkeeper.
The second option is the accountant as a tax form filing specialist. They specialize in a certain geography / government. Let’s say for here its Hong Kong. They know what all the different tax forms are, how to fill them out. Also, if they have experience, they will be able to tell you how to best keep the forms filled out. How to optimize your tax strategy.
This type of accountant is I believe what most of us think of when we hear a tax accountant. Having a good grasp of that government’s tax law and advising clients how to file for their personal and/or businesses.
Auditor, for many Americans (myself included) will cringe. We all hear about an IRS tax audit. The mental picture I get is a group of government officials in suits pounding on your office door to do a sudden check on your books. The business owner rushing to shred all the documents before they break the door down.
Do you get such a dramatic mental picture as that?
Well, that isn’t what we’re doing here – at least in the Global From Asia – Hong Kong tax sense. An audit here is one you pay a Hong Kong CPA (certified professional accountant) to check your books.
This auditor is the same as those who are rummaging through your shredded documents but this time you pay them to do it. Or at least you’re required by the Hong Kong Internal Revenue Department (IRD) to do so.
They will not enter your transactions into an accounting system or excel. That you should have done already. What they will do is check over your financial statements such as your profit and loss statement and balance sheet. They’ll see if it makes sense. Such things as your margins, your expense account sizes in comparison to your revenue numbers. Are you hiding something.
They are to snoop around in your financial statements, and your transaction history looking for things that may not add up.
This is their job. And they are using their expertise – AND LICENSE – to do it.
You may ask yourself, why would they dig into it if I’m the one paying them. Wouldn’t they want to keep me as the paying client happy?
You would think so – but the Hong Kong government gives them a license. Their job is on the line. If they don’t do their job and the IRD checks it later and feels the CPA was negligible, they jeopardize their license.
An Accountant Can Also Be An Auditor
You can use the same person to do both of these tasks. They will accept it, because it means more money for them!
It may make sense too. They will understand the books as they have been working with you on entering the transactions and speaking to you throughout the year on questions you have. You should have a good regular communication flow with your accountant. Alert them of new products, services, and other financial related changes in your business. Taking a new business loan? Might be a good time to alert your accountant, so they can add that as a new account in your bookkeeping system.
Will You Save Money If You Use An Accountant As Your Auditor?
I’m sure you’re wondering, will you save money if you combine your accountant and auditor? I would say yes. There are a few ways you can say it will save you money:
1) They can give you a lower bundle price than separating the services.
2) They can save time in the audit as they know the books already.
3) You will spend less of your own time re-explaining the situation 2 times.
But, you also need to remember, for a Hong Kong company audit, you need a Hong Kong local accredited CPA. Hong Kong, as we have found out from these blogs in the past, is not the cheapest. Check out cost of living in Hong Kong article for examples. So of course those costs will reflected in your pricing.
You can use an accountant anywhere in the world. you may save money on the accounting side if you outsource or have your own staff do it. Then you only use a local Hong Kong CPA to check over the books and submit the auditor’s report.
Doing that may save money as a total bundle price – but dollar for dollar – the coordination and back and forth of your own time may drag you down a bit.
It comes down to how well organized you can be.
What To Look For In An Accountant for your Hong Kong Books
So we discussed the differences, now what should you look for in an accountant. I’ve seen some people I have worked with who use an American based accountant to do it.
You can use an accountant based anywhere in the world.
While we can provide this service and would love to work with you on your case. Yet to be clear, your accountant can be someone you find on Upwork. You pay to have someone do your transactions entry in Xero or Quickbooks. Also we’re a Certified Quickbooks Advisor in Hong Kong, so look for that from others you may hire.
Some tips in looking for your accountant:
The beauty of Hong Kong for your global business is the multi-currency accounts. But for accountants, that is an added complexity. Ask your accountant if he or she has ever done bookkeeping for someone who has a wide range of currencies, and multi-currency bank accounts.
Do you have multiple entities in other countries?
Do you also have a USA company or mainland Chinese company? Maybe you have an outsourcing center in Philippines. Who is doing the accounting there? What is the relationship of those companies to this company? Will you have those books done by this same accountant, or will you have a separate bookkeeper for that country? This is something the accountant you are looking to hire will need to know.
Do you have a lot of transactions?
Are you an online based business with a lot of Paypal and merchant account transactions? Especially in B2C, you will have a lot of small purchases. Do you expect your accountant to have experience with these e-commerce payment systems? Many accountants are not familiar with this and you should keep on top of this before it gets out of hand.
Do you expect them to be “online” based or “offline” based?
As mentioned in point 3, many accountants still haven’t fully embraced the internet and computers. Don’t laugh! At least in Hong Kong, many still are getting a grasp of keeping on top of their email inbox! In your communication with the potential accountant, see what types of communication methods they prefer.
Can they work direct with your online banking systems?
When doing the transaction entry, can they work direct with your online banking systems? Again, technology. I imagine if you’re reading this blog post – then you are tech savvy. More than many of the accountants you may find out there! I am not trying to make a jab. Spoken from experience, do you expect the accountant to be able to login to your online banking with their own logins? Will you be OK with sending them a bunch of PDFs? Heck, maybe some will even want you to mail them the physical paper statements!
This is just a small list. Of course you have to trust them! And you have to agree with the way to communicate. Don’t get into the deal to only get frustrated with them later on when they are slow to respond to your emails. The only way I can reach a lot of accountants is to call them and schedule an appointment at their office in Hong Kong!
The Traditional Flow of Accountant And Auditor in HK
So let’s put this into context. You have a new Hong Kong limited company, and it’s B2B import export trading. You opened the company and then got approved for an HSBC Hong Kong bank account.
Your agency got you to sign up for their bookkeeping service, and you may send them your bank statements. You don’t have too many transactions, so you just send it to them monthly when you get the statements.
They enter the transactions into their accounting software. Many of them do not use online based accounting software and it will be locally stored on their computers in their office. A lot of times it isn’t even on a computer but instead written down on paper! Yes, this blog post is being written in the year 2016!
After about a year, you fly into Hong Kong to do some banking updates, maybe go to a trade show or 2, and check in with your accountant. You hand them a stack of receipts and your paper statements that the bank has been sending you. If you elect to pay the extra fee for the paper statements rather than e-statements, or you can print them out.
They prepare the books, and the accountant may have a few questions about some transactions in your business. You also want to make sure that your accountant understands all parts of your business, and also any kind of shareholder loans or special cash accounts, etc. If they are good, they will give you some ideas on how to better maximize your tax preparation, and other tips to optimize your company financials.
The first year you have a few extra months to file your audit, so let’s say you wait until the 18 months past. The accountant can also act as the auditor (If they are an accredited HK CPA) and they will prepare the auditor report and profit tax return. They will present it to you and show you your tax liability. You’ll then accept it by signing off, and then submitting everything to the Hong Kong IRD (Internal Revenue Department)
Then you go about your normal business life for the next 12 months, until you need to repeat the process above.
Moving to More Online Based Accounting Flow
So, we’re all lovers of the internet age. We are reading this guide online, off our mobile phone, listening to a podcast while in an airport in Dubai.
The internet is good.
So we work with an accountant who is more online based. We find one online, not based in Hong Kong, and work out a monthly payment plan. Maybe they offer packages. You signup, and get a renewing credit card transaction agreement going.
Talking to an account rep on email, they tell you to pick an online accounting software of your choice. Xero, Quickbooks, or the many others. You will also need to get a plan that works with multiple currencies, so they are normally a bit more than the basic software. You’ll get setup and link your online banking (HSBC HK supports Quickbooks), Paypal, and other systems. This can be tricky, and hopefully the accounting agency can work with you to make sure it all syncs up.
Once the initial setup is going, you have them enter the transactions manually that may not come from Paypal and online merchant accounts, such things as petty cash. You’ll also probably have times you need to explain certain transactions so they are classified correctly.
The year goes by, and you need to prepare for your HK audit.
Your Hong Kong company secretary will email you that you received a profit tax return from the HK IRD. You’ll have a few months to prepare your books and prepare the auditor’s report. This can be done with the referral of the company secretary, or you can use another accountant, CPA – auditor. Up to you.
The auditor will check the books, and ensure that you have properly accounted for revenues and outflows and he/she is willing to sign off that the books are legitimate. This is the risk of their certification and relationship with the HKICPA – Hong Kong Institute of Certified Public Accountants. If later the books seem “Cooked” – I’m sure the HK tax department will question the auditor on why they didn’t find this issue at the audit step.
Once you agree with all the books, the auditor report, you’ll need to sign and submit the profit and tax return. Write the check, and you’re done.
How Much Does This Cost? Comparison
So let’s think about how this all comes together. There are a few different things you need (recommended to get)
In today’s online world, and the fact that you’re reading this blog post off your computer monitor instead of a printed newspaper, you need software to balance things. Most choose Xero or Quickbooks. Maybe also better to ask your bookkeeper what they are familiar with. Cost – 20 to 40 US dollars a month. If you have an international business, you’ll need the more expensive multi-currency account options.
You can outsource this, with a HK accounting firm, with your own staff, or you can do it yourself! It is best to have someone on call in case there are questions or issues that arise later. Plus when there is a transaction you are not sure how to classify, the bookkeeper and accounting specialist is there to help out.Cost. Depends on how much activity you have. Let’s say from the $150 USD to $400 USD a month. Again, you can always opt to do your own bookkeeping, or have someone in your organization do it.
Yes, this is where people wonder how much will it cost. And online you won’t find anywhere that has a standard table of prices for a Hong Kong auditor’s report. Price depends on the amount of transactions, how many revenue streams, how good your books are kept, and how familiar the auditor is with your type of business.Cost – Depends on how many transactions, how active, etc etc. But I know you want a range. Low is 900 US dollars and high is up to $2,500 USD. The higher range is when you’re in the millions of dollars in revenue and it shouldn’t be as big of a cost as a percent of your profits. The lower range I have found is harder for the smaller businesses still finding their traction.
Signing and mailing the profit tax return
This will need to be filled out and signed by you, or one of the directors.Cost. The courier fees from Hong Kong and back. This needs to be mailed to your Hong Kong address, and if you’re living and working overseas, it will need to be signed by you. Or you can always take a trip to Hong Kong for this process. I always recommend meeting your company secretary, accountant and auditor yearly. Make sure you are comfortable with everything. Check in with the year in the past, talk about the future year.
Remember – Accountant Can Be Anywhere, CPA For Audit Must Be in Hong Kong
So we have drove this topic home for you. You can do your bookkeeping and accounting data entry from anywhere in the world. This person should have experience balancing company books, general ledgers, and online accounting software.
You, as the overachiever entrepreneur, may want to learn to do this yourself. I respect that. Heck, I remember learning it on Sunday afternoons back in 2004 with my first e-commerce business! Taking a Quickbooks training seminar in NYC and trying my best to classify everything. It is a good skill to have, to understand the inflows and outflows of your business.
Yet I can imagine it may not be your favorite task to do. Find someone in your company, or a trusted accounting firm to take care of it for you.
But, as skilled and knowledgeable about this as you are – you cannot do your own audit. A Hong Kong licensed CPA must do it. And, I know it is frustrating – the price is not black and white. Budget around $1,500 USD for it, a bit more if you’re in the multi-millions in US dollar revenue.
Have the books as “Clean” and prepared as possible for the auditor. The price will be lower than if it is just a big pile of financial statements.
How About Your Experience?
How has your experience been dealing with accountants and auditors? Of course I’m more focused on Hong Kong today, but even if its in America or other places- any tips for dealing with these consultants?
I’d love to hear it, as well as other readers – so please leave your comments below!
Have an idea for a new product, but still looking for that final push to take a leap of faith? Been working on a prototype, but need some input from a mechanical engineer or industrial designer? Perhaps you just need a space where you can be surrounded by like-minded individuals and have access to workshops? If so, then become part of something today. Become part of Trouble Maker.
What is Trouble Maker?
Trouble Maker is a product development community spread across multiple countries, with several locations here in Shenzhen. Headquartered in Huaqiangbei – the electronics market of the world -, it is home to a broad family including Industrial Designers, Mechanical Engineers, Electronic Engineers, Firmware Developers, Software Developers, Package Designers, Graphic Designers, to name just a few.
Why become a member?
Access to maker labs and co-working spaces
When you become a member of Trouble Maker, you gain 24/7 access to the community’s facilities. As well as shared community rooms, there are two maker space workshops plus a laser cutter room, which the team at Trouble Maker refer to as laboratories.
Connect with a team of specialists with all types of backgrounds
When you join Trouble Maker, you are connecting with an extensive network of specialists in a variety of different fields. Known around the maker space as Gurus, these experts are based in the same location and are on hand to help with projects.
Maybe you need a Project Manager to liaise with your engineers or the factory while you are away on a trip? Perhaps you are looking for a Packaging Designer to make your product stand out? At Trouble Maker, you can find a Guru with the right expertise and experience.
Wide-ranging support to develop your start-up
Setting up and running a start-up is hard work anywhere, let alone China. Trouble Maker is there to give you the support you need every step of the way.
Whether it is registering a business, applying for a patent, or seeking trademark protection, Trouble Maker can share their experience. Through their network, you can apply for government grants, receive crowdfunding, and establish retail channels with local online and offline markets.
Take part in regular workshops and training
On top of that, Trouble Maker provides workshops and training for individuals, groups, and schools. Below is just a taste of the kind of events that the team can arrange:
Investor speak – Pick up the language of VC’s and investors.
Valuating my start-up – Get funded by understanding your value.
Laser cutting – Learn to prototype fast and safe with a laser cutter.
School events including robot building and PCB assembling.
Become part of the Trouble Maker network
When you join Trouble Maker, you aren’t only becoming part of the community at Huaqiangbei. You are joining a much wider network.
There are established locations in Bao’an and Longgang, where you can take your product from prototype to production. While in Norway and Germany there are growing maker communities, where you can connect with the kind of people that can progress your project.
Be in control of your project every step of the way
Usually, when you want to develop a new product in China, you need to give over some control of your project to the manufacturer or a design house to create a prototype. But when you are part of Trouble Maker, you can keep that control.
Here, you are on the ground developing your project by yourself. If you need a Mechanical Engineer or an Industrial Designer, then you can find them in the co-working space. You can refine your design and you can create that prototype, but you are still directly in control of what is happening. The project does not go to a third-party and you can see every step of the process.
How to join Trouble Maker
It’s simple. To find out more about Trouble Maker, get in touch with Henk, one of the co-founders and manager. You can find him on WeChat at ‘Protopro’ or by scanning the QR code below. He will be happy to answer any of your questions or arrange a tour of the maker space so you can see more.
China is the world’s largest manufacturer and it has the second largest economy next to the United States. For this reason, China plays an important role in the global economy. Unsurprisingly, many expats relocate to China for business purposes. China’s financial capital is very attractive that many expats move in for incredible opportunities. From a survey conducted by HSBC, an expat in China earns $170,970 average gross personal income per annum, compared to the global average expat income of $99,900. Interesting, right? However, taxation in China is very complex that many expats find it difficult to comprehend. Just recently, a draft amendment to the Individual Income Tax Law was proposed and expats will surely be affected when the basket of changes take effect. What’s in the draft law? And what are the new tax laws coming for expats in china? Read on to learn more.
China’s Draft Amendment to the Individual Income Tax Law
1. Revision on determining tax residency status. Foreign nationals who have physical presence in China for at least 183 days would become liable for Individual Income Tax (IIT), unlike before when non-residents have one full year year before he/she be subject to IIT. Its purpose is basically to protect national tax rights and interests. Whether the income is sourced inside China or not, the tax residency status will be based on how long an individual resided in the country.
2. New tax system, rates, taxable income brackets
Current IIT Law
Income from wages and salaries
3%-45% 7 brackets of progressive tax rates
7 brackets of progressive
– Adjusting the taxable
income brackets of lower
tax rates (i.e., 3%, 10%,
20% and 25%)
– Taxable income brackets
of higher tax rates
unchanged (i.e., 30%,
35% and 45%)
Income derived from
remuneration for personal services
3 brackets of progressive
Income derived from
remuneration for manuscripts
Income derived from royalties
Income derived from
production and business
operations by individual
industrial and commercial households
5 brackets of progressive
5 brackets of progressive
– The minimum threshold
applicable to 35% tax rate
increased to RMB
Income derived from
contractual or leasing
operations of enterprises or institutions
5 brackets of progressive
Category removed with relevant income
incorporated into comprehensive income or
business operation income respectively
3. Anti-avoidance Rule. Anti-tax avoidance rule was introduced in the draft law – wherein authorities are strengthening tax collection especially to individuals having cross border transactions and tax plans. Its main purpose is to avoid multinationals to transfer or move profits to affiliates in low-tax havens and to tighten the IIT’s overall application and enforcement.
4. Additional special expense deductions including children’s education, major illness medical expenses, continued education and housing loan interest and rent. Its purpose is to reduce the amount of income subject to income tax therefore raising the taxpayers’ income and boosting household consumption.
5. Tougher stance on foreign companies. Foreign companies should pay special attention to changes affecting the timing of the tax levy on foreign employees, foreign labor costs, contract profitability, and budgeting requirements, as well as the rippling effects they have on withholding and tax equalizations.
6. New Tax Brackets that would benefit middle and low-income groups.
Apparently, high-income earners don’t really benefit so much from this amendment. So, basically, if an expat in China earns USD170,970 average gross personal income per annum or around 95,000RMB per month, no matter where that income was sourced and regardless of where the payment is made, he/she would be subject to 45% IIT tax.
China is indeed a booming economy with unending opportunities. The proposed tax reform simply relieves the tax burden of small and medium sized enterprises as well as middle and low-income individuals while optimizing the business environment through higher consumption.
Disclaimer: if you’re an expat in China, it’s best to consult a taxation specialist in China to help you more understand the country’s upcoming overall tax amendment that is expected to take effect on January 2019.
As Shenzhen continues to boom with young entrepreneurs and start-ups, Bee+ is opening their second co-working space in Futian. What separates Bee+ from other shared working spaces is its real emphasis on the social side and to creating a genuine sense of the community.
As well as offering working spaces, Bee+ have an impressively stocked café and a draft craft beer range to rival most bars in town. The organizers are very proactive too in hosting events with a wide and eclectic mix of things going on including beer tasting nights, dancing classes, and wine and cheese nights,
The Bee+ approach is certain to attract the young and entrepreneurial types in the city. It’s a very organic way to connect people together who otherwise may never have met.
Bee+ appears to be on the rise with partnerships already secured with global corporation such as Calvin Klein, BNP Paribas, Colgate, and Orange. As it establishes itself in Shenzhen further, that list is sure to grow.
Address: Bee+ Shenzhen, Fortune Building Space, No. 88 Fu Hua San Road, Futian, Shenzhen
Shenzhen’s startup revolution is set to continue to with the announcement that WeWork will unveil a workspace at the start of September.
The American company built its success on providing shared workspaces for freelancers and startups and has spread to 283 locations situated across 75 cities around the world. Now, WeWork has targeted China as a market with massive potential and Shenzhen has been identified as the spot for its newest workspace.
WeWork will be located in Houhai in Nanshan, where it will be in good company surrounded by Chinese tech companies such as Tencent and DJI. The space itself will be made up of three floors with an open deck, lush greenery, and a spiral staircase acting as a centerpiece.
The announcement comes at the perfect time in Shenzhen with more and more startups popping up seemingly every day. WeWork will be able to offer a platform to work for these entrepreneurs and also freelancers as well as smaller companies and even divisions of large corporations.
Keep checking this space for more information as WeWork prepares to launch in September.
Address: China Construction Steel Structure Building, 3331 Zhongxin Lu, Nanshan, Shenzhen (南山区中心路3331号中建钢构大厦)
This article is originally found here: https://www.globalfromasia.com/makingstaffhappy/
Coming to Asia to do business? Hiring staff in Asia?
Then today we will teach you how to lose them as soon as possible. How to get them to quit and tell everyone you are a horrible boss.
Well, sure you shouldn’t do these things – but we want to get the point across by learning what you should NOT do.
Hope this is fun as well as informative.
Lose Your Temper and Yell
I worked on Wall Street for almost 5 years. I know all about high-pressure situations and getting yelled at. As a trading assistant on a junk bond desk, I was often on the receiving side of the yelling. They told me it was good for me to get toughened up.
Also I was in a fraternity in college. As a pledge (trying to join the fraternity) there was “light” hazing. I don’t want to make it seem like those newspaper article horror stories – but there was some sessions that were challenging.
They also said that was to toughen me up.
So when I came over to China and hired my staff in Asia, I was still in this mentality. I was still in the New York mode, fast paced, aggressive.
There were those “China times” when I started to lose my mind. Bank account transfer issues, miscommunication with factories, and countless other headaches. Just some things that a foreigner will face when getting accustomed to China business.
I lost my cool often.
That definitely didn’t make things better. Maybe even when I was on Wall Street that wasn’t the correct way to behave, but it seemed to work.
Not in China. The Chinese staff will see you as an unpredictable and “weak” minded person. And this is a big difference I have seen in business personalities between East and West. Chinese managers do not show emotion to their staff. Or to anyone.
If you look a Chinese boss, most of the time you’ll see they are calm and cool in the office. Never raise their voice, never show anger or even much happiness. It is kind of this calm overtone.
Chinese staff respect that more. This person is in control of themselves and their mind. Maybe it’s the Zen / Buddhist mindset culture. But a leader is more cool and calm in China.
Whereas a lot of leaders in the West (of course can’t say all) are more vocal and “flamboyant”.
Won’t say which is right. But back to this point, if you want to have your Chinese staff, as well as other staff in Asia, lose respect for you – lose your temper. They will get annoyed (whether they say it to your face or not). Especially when you complain about issues doing business in China. They may agree with you that it is cumbersome to do business here, but they don’t like to hear you complain about it over and more.
Take it from me, I’ve learned a lot from my own staff in Asia over the years.
Don’t Care About Their Family Life
I don’t have too much management experience in America in a corporate setting, so this may be true there too. But in Asia, to be a good manager means you care about the team and their personal / family life.
Especially if you’re a Western manager here, they will feel so happy that you even care about them / their family! But once you start to show a little bit of interest, they will share out in the open. You can do this in the workplace or at a company outing. Yet however you do it, even if it is a little small to you – means a lot to the staff.
If you’re in China, some examples are to ask about their hometown. Is their family living with them in the city (assuming your office is in a “big city”) or they are in their hometown “village”. This is a common question because a lot of Chinese moved to the big cities only in the last generation or two. A lot of the “older” family members didn’t have interest/desire to leave their hometown. It can go into some fascinating stories about their complex family structure. Then you can show some interest in their hometown, what kind of food comes from there, what their favorite hometown dish is.
While it might not be a smart idea to ask about their dating life. Yet if you have staff with their own family, it would be cool to know a bit about the family. Do their parents live with them? Will they go to hometown for Chinese New Year? As a new parent myself, I would love to hear how they are raising their children and what is important to them.
You can get creative here, and keep in mind China is a vast landmass! There are so many provinces with various cultures. You’ll start to learn that your staff all come from different backgrounds.
A little tip here, some managers try to hire staff all from the same province. Its not as big of a deal nowadays, but having a team that is all from similar backgrounds can make them work better together. They might have their own dialect (local language), as well as trust each other more than “other Chinese” people. Could be a fun topic to discuss with your Chinese senior management, maybe they’re already doing that and you didn’t know!
Main summary here – “care” about the Chinese culture. Care about where your staff has come from. Appreciate the hardships they have been through to get to the big city and build their career in your company!
Play The Blame Game
This is a tricky one that took me years to master – or well, maybe understand as I’m still a student of Chinese management myself!
Problems and mistakes happen, in life, and especially in a company. Let’s take website design as an example. Your company designs websites, and you are working on a new client’s request. After you make some tweaks, you show the client.
Client sees an obvious mistake in the design and becomes upset. You talk to the client and say you will resolve it. Getting off the phone, you go into the staff area and talk to the staff assigned to this project.
Going up to their desk, you put the paper down and say “this design had X on it, but they wanted Y”. You’re doing this in a public setting, with other staff able to hear (and most likely everyone’s listening to every word). The team member, let’s call him Rocky, gets defensive.
He’ll immediately deny it was his fault. Getting embarrassed as well, and maybe a bit aggressive, he will fight to the bitter end that it wasn’t his fault.
I remember when this happened to me quite a few times, I was so confused. As a Westerner, I’m used to going straight up to someone and saying “this is a problem”. They are quick to say “sorry, my mistake” and fix it. Or maybe it wasn’t their fault and they’d have a counter-argument. But it was pretty painless.
We’re talking about pretty minor issues here, not major company threatening ones.
So when I deal with Chinese staff now in a problem situation, I try my best to make it look like I am not blaming them. I try to be as indirect as possible and show the project and re-iterate what is wrong and not finger point.
I know, you may be saying – but if it is their fault, they should admiit to it.
I think it boils down to culture. And face. Especially if you do it in the room with everone else there, they will defend. They will treat this as a form of demotion. Even if you didn’t demote them, but in the “face score” in the company. Its hard for me to write down in words, but there just seems to be an invisible point system for “face” in the Chinese office.
Heck, maybe there is something similar like this in the Western workplace.
So the summary of this point, don’t blame and to solve the issue, just make it as non-“offensive” as possible. I know, it goes against the way you work, and the way your mind thinks. Just think and plan out the conversation before having it.
Be a Weak Leader
This one is a tough one for me to describe. My style is to be more of an open and level playing field kind of leader. But it is a dangerous act to play in the Chinese workplace.
We covered this a bit in the “Yell At Your Staff” point above, but it is worthy of its own section. On top of being “calm and cool headed”, you also need to show vision and clarity in the company direction and decision making.
If you look wishy washy, or you ask the staff to make decisions, it will not be a good outcome. They want the boss, the leader, to make the decisions.
This is why when you try to do business with a Chinese company, you need to wait for the CEO to sign off on almost everything. It is hierarchal and subordinates are not expected to make big decisions.
Again, this is a mind shift from your Western way of thinking and modern management training. At least for me, I enjoy having my team involved in the decision making process, and I don’t mind to admit I was wrong.
But in the Chinese workplace, if I am admitting I made a mistake, the team will see this as weakness. Just like the “blame” point earlier, if the boss admits fault – then the staff in Asia will question his or her experience and vision.
Tricky one here – and a reason a lot of Westerners don’t end up being the daily operations manager in a Chinese company. Most of the time a you need a local manager or a Chinese partner in the company who manages the staff in Asia. Things like this are so hard to describe – it’s a lot of indirect power measuring and balancing.
Take Positive Steps To Improve Daily
I’m no saint here, I have made many of the mistakes listed above. But the key is to be aware of them. To catch yourself making these mistakes and working towards improving.
Mediations is my favorite thing to do now to ground myself and act better under pressure. Especially away from your home country in China or other parts of Asia – we need to realize this is a foreign place. Respect the land and the people. Take a deep breath.
Or, if you really can’t handle it – hire an office manager and go back to your home country. No shame in that, many great business people have done it.
Startup mentor and entrepreneur, Daniella Santana, first arrived in Shenzhen in 2005. The vibrant Brazilian has high energy, a generous spirit and real insight into the challenges foreigners face operating a business in China. Recently, Peter Fenton, from Evertop Legal Solutions, caught up with Dany between her keynote addresses, master of ceremonies duties, and running her own business.
Shenzhen Party (SP): What was your first impression of Shenzhen?
Daniella Santana (DS): When I first arrived in Shenzhen, there was not much going on in the city. The foreign community was very small and most of the people were in the export business. In those early days, I left and came back to China twice, but now I have lived in Shenzhen for a decade.
Shenzhen is a great place to start a career. Compared to some cities, there are still plenty of great opportunities for those who can offer certain skills and services. If you come to Shenzhen to start a local business, you have a great chance to succeed.
The rapid development of the city is what impresses me the most. When I first arrived, there was only Line 1 on the metro, which was half the length it is now. Today, the metro has 11 lines. The city now has a wide variety of restaurants, bars, five-star hotels, and lots of business and networking events.
SP: You have a wealth of experience in logistics and assisting companies with OEM. Based on what you are seeing, where do you see the trade opportunities in Shenzhen at the moment?
DS: Shenzhen has diversified and developed. The city has had a great number of startups, both in tech and in hardware, working on all kinds of projects. In terms of trade, the market with the most potential is to import products into China for the country’s growing upper and middle classes. The domestic consumer market is booming, especially for high-quality goods and healthcare products.
SP: You facilitated the first TEDx event in Shenzhen. What interested you the most about the TEDx experience?
DS: TEDx was one of the best experiences of my life. A few years ago, I decided I would like to give a talk at TEDx, but I could never have imagined that one day I would help to put together, what has so far been the best TEDx event in Shenzhen. Held at the Shangri-la Hotel, we had 150 people attending the event, with top speakers coming from all over the world including London. It was the first time that the foreign community could attend a TEDx event in Shenzhen.
What I loved most was, firstly, to organize my first ever live TEDx talk, and secondly, to provide the foreign community with a TEDx talk in English, which for many of them would also be the first time they attended such an event.
SP: What do you see as the opportunities and the challenges for women in business in China?
DS: China is far ahead of many other countries and also gives more opportunities to people, no matter their age, race, or gender. As long as you can deliver a good job, you can have the world at your feet.
There have been few instances where I felt it was difficult to do business as a woman in China. Most of the experiences here have been overwhelmingly positive and have helped me to get to where I am in my career today. I don’t think I could have achieved what I did, if it wasn’t for China.
China inspires you to be an entrepreneur. There are so many opportunities to open your own business here, and this is very inspiring and empowering for women. In China, it’s very easy to meet and develop relationships. You may meet someone at a networking event today and next month you could be starting a business or working on an amazing project with this person.
For instance, we have the first international Female Book Club of Shenzhen since July last year. All the books are free and we read one book per month then meet at the end of the month to discuss what we have read.
All the books are meant to help the women with their development, both in their business and their personal life. This non-profit event has helped and inspired many women to start a business or to get back into business after many years of being a stay-at-home mother. For me, this is a great source of inspiration.
SP: You recently addressed the Cross-Border Summit in Shenzhen. What was it like and which topics did you address in your presentation?
DS: The Cross-Border is a great initiative from Mike Michelini, which helps entrepreneurs and business owners to fill in the gaps for those who have a cross-border business in Asia. It covers quality control, logistics, Amazon, import/export, among other important topics.
Additionally, I also recently participated in the first “women only” fireside chat alongside other amazing women who are doing incredible things in China. I was very flattered to be invited this year. We talked about the challenges women face in business, how we got to where we are, and we gave a few tips for female entrepreneurs on how to get started and how to pursue their dreams.
SP: You also assist with Startup Chile. What opportunities do you see Chile has in China?
DS: At Startup Chile, I mentor female entrepreneurs on manufacturing in China and business development for the Asian market. Startup Chile is the number one accelerator in Latin America, and my idea is to help as many startups as I can to not only enter the Chinese market, but also create their prototypes and products here and export them to Chile.
Due to the free trade agreement between both countries, products coming from China are more competitive in Chile, and the same applies to Chilean products going to China such as wine, blueberries, and avocados. Also, I have been working closely with the Chilean Consulate in Guangdong to increase awareness of Chilean products in Shenzhen.
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…
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.
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.”
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:
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
Bosnia and Herzegovina
Central African Republic
Democratic People’s Republic of Korea
Democratic Republic of the Congo
Lao People’s Democratic Republic (Laos)
List of Restricted Industries
Foreign Exchange Dealers
Gambling and Casino
Jewel, Gems, and Precious Metals 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!
We have heard a lot about buying a shelf company in Hong Kong, this is common talk in the blogosphere. But have we heard about buying a Hong Kong company that has a Chinese WFOE (Wholly foreign owned entity) with it?
Today, we will dig into this, why you would consider it, and what you need to do
Getting More and More People Approaching Me To Buy / Sell Their HK/ China Business
As the Global From Asia blog gets out there more and more, we get emails from people for all kinds of things. One has been people who are looking to buy or sell their businesses here in Hong Kong and China. It is a pretty complex process, and there are a few different case studies we can cover in future blogs.
One I received recently is interesting. The client has a couple of Hong Kong company businesses that each own their own Chinese WFOE company, all setup and operating. He would be open to selling and transferring it to a new buyer.
He sees that there is more and more discussions about buying companies here. Getting plugged in fast with the China market for those who still haven’t tapped in yet.
Why Buy a HK / WFOE Combo?
So as part of the sale, it would not include the customers or supplier database. It would be the structures set up with their licenses and banking accounts. So you’re not buying this business for the customer assets or any IP – but instead to:
Save time. Getting banks in HK has become slow and tedious. China is also, and has been like this for quite some time.
Business in a box. All the banking arrangements are setup, and the licenses you need for an import / export company are ready to go.
Aged company. These are older businesses. Having some years already put away for the company history always helps out. Use it when applying for financing or other “intimate” business relationships.
Get all the licenses you need, right away. Many people want to do business in China, but aren’t sure if they are getting all the licenses and paperwork they need. This will make sure you have it all, used for years that way.
How Would a Transfer of a Hong Kong Company with a Chinese WFOE work?
Ok, so you’re interested in this and still with me here – great!
Because the Chinese company is 100% owned by the Hong Kong company – all the activity would happen at the Hong Kong level. You would become the new owner and director of the HK limited company. Then you would automatically own the Chinese subsidiary because it is owned by the HK parent company.
There would be transferring of bank account signers on the Hong Kong side as well as the Chinese side, and that would do in person.
There would also be some updating of the legal representative in the WFOE side, which the seller can help you with.
So, you will then be the owner of an optimized and functional trading company. That is, without the months of headaches and the current issues with banking.
How Much For What You Will Get
You’re now asking yourself, ok, how much? The price won’t be less than if you started one from scratch – but this shouldn’t be the reason you’re doing this. This is to get an operational and functional import and export business without the headaches.
This is for trading and manufacturing WFOES with full import-export rights. This means you can use it for VAT rebate facilities and even domestic sales.
The price is negotiable for how much involvement you need from the seller, and we will take serious inquiries if you contact us.
The price range is starting at $200,000 US dollars to $350,000 USD. The range is dependent on your specific terms and requirements.
I’d love to hear your feedback and comments on buying a full on HK/China trading company operation. This is for serious business owners who are doing serious business in their home countries and want to plug right into the Hong Kong and China market fast and seamlessly.
Will keep people posted on the progress, in the meantime please leave comments or questions about this in the comment section below.
Which Hong Kong Bank Features To Look For When Selecting a Bank Account
As the global banking system has gotten more selective and difficult, more and more people are contacting me when they got rejection letters. A lot of times this is HSBC HK as everyone goes there first.
Are you one of these people getting the rejection letters? Or maybe your account closed?
You have a Hong Kong company setup, but without a bank account, how can someone do business? Crazy right.
So the scramble for bank account alternatives to HSBC comes up.
Today I’m going to go through the various features you want in a bank account, and give some other banks to look at.
Because we are global business people, we need to handle multiple currencies. The thing people love about Hong Kong is the ability to hold so many currencies. Many countries force clients to convert into their home country currency such as US dollars or Chinese Yuan.
The line between savings and checking accounts have blurred over the years. But the main difference is a checking (also called “current”) is that you can access it from an ATM account. Sure, there are some ATMs that let you choose between checking or savings. But when you’re traveling internationally or not at your home bank, you don’t have that choice always.
But multi-currency is a key feature in a bank account, and let’s use this as top criteria in selecting top bank accounts to apply for here.
Yes, I’m typing this in in the year 2015 and still there are many banks with none or limited online banking. I hate to say it, I have to say a decent amount of Hong Kong banks that leave a lot of room for improvement for online banking. HSBC has the best for online banking, and that is still nowhere near as convenient as international and American banks.
But besides HSBC, which banks have good online banking?
First, let’s define good online banking.
Able to view your account balance and activity
Able to send payments and international bank transfers (wires)
Email alerts on various types of account activity (incoming deposit, outgoing wire, bill payment)
Multiple user login, with various account level access to allow your bookkeeper access and not able to send outbound transfers.
Download / Export transactions as a CSV file or Excel.
Think these are the core functions of online banking. Other things I would classify as “nice to have”, but these you need to use online banking.
Visa / Mastercard Debit Card
Have you seen bank cards that you are not able to use when buying things online or at shops?
Yes, those exist.
They are only valid at the banking ATMs inside Hong Kong, either in their network or other Hong Kong banks. They will not work outside of China, even in Mainland China.
This is a big problem for global business people like us right?
We need a bank account that gives us a Visa or MasterCard “backed” debit card. So we can use them at ATMs around the world. But not just the basic function as getting cash from an ATM, but also the ability to make simple daily business purchases when out and about.
While this may seem like a basic function, we may need to ask for this feature when applying to a bank. And they may not have the option! Or, they will charge a one time, or monthly fee to have this functional debit card.
Reasonable Monthly Fees
No one is a fan of bank fees.
Yet around the world, bank fees have been creeping up more and more. I predict it is due to low interest rates. As higher overhead costs the banks need to follow with international regulations.
So these costs get passed down to the user, us, in the form of monthly fees or all kinds of crazy transaction fees.
So our alternative Hong Kong bank account needs to have reasonable bank fees.
What is reasonable? Well, let’s baseline it to HSBC HK, which is 50 HKD (approximately $6.50 USD) per month. The bank can waive this fee if you maintain a monthly average balance of 50,000 HKD ($6,500 USD) as of writing today’s guide.
I’ve seen monthly fees as high as 300 HKD ($40 USD) from certain HK banks. You can avoid it by having a minimum balance of 200,000 HKD (approximately $25,500 USD).
So we need to be cautious of bank fees when selecting a bank account.
Custom HeadlineLow / No Application Fee
In all my years with Hong Kong business, I have not seen application fees for banks. But lately I have seen them pop up more and more.
The banks require you to pay the fee upfront and non-refundable even if you get rejected. The justification for these fees is that nowadays there is more and more “red tape” or paperwork due to FATCA regulations for all clients. This is a lot more paper that you need to fill out, mailed around, and warehoused for years.
Who is going to pay for that?
Banks seem to want to pass this down to clients.
So let’s be weary of these new application fees for Hong Kong banks. These are popping up all the time, so keep your ears open when going to your bank account opening interview.
Also, I may miss some of these over the years and months, so if you can leave a comment to help me and others out, that would be amazing!
Decent Customer Service
Customer service, that is decent.
I’m not going to get into cultural differences and customer service in today’s article. But I will just say, that we want to have basic and polite service when dealing with our banking needs.
I’ve been in bank account application interviews and the account representative is…not engaged with the client. They say that this is the way things are, and that if they don’t like it they can apply somewhere else. This comes out a bit rougher when typed out today, they say it in a more soft tone.
But because bank accounts have gotten more “exclusive” to get, the bankers feel that we should be happy they are talking to us and considering our applications.
Let’s vet out banks who have poor customer service. I’m hoping today’s guide can keep up to date with other people’s experiences.
What Is Your Hong Kong Banking Plan?
Hope this helped you out. Hong Kong is a great place to do business. Once you get the bank account! While the banking solutions on the market today may have some things left to be desired, it is much better compared to other options in Asia.
What is your next step?
The team at Global From Asia is offering a full service banking application service. We understand your current business and banking requirements and work alongside you. As the banks around the globe get more challenging to apply for and get approved for, it is more of a headache than ever! We have worked with many clients to get the banking application and approval process streamlined and would love to work with you!
We hit a breaking point in our business endeavors. As a business owner, many don’t see the downs in the roller coaster ride. And often it is our emotions more than anything else.
What do we do when we hit a bit downturn in our global business?
This is a big challenge, and there are tons of answers depending on your specific situation. Today I hope to give you some tips and inspiration that have helped me in the down times.
Downtimes Can Happen in your Business Endeavors & Don’t Blame Yourself
Businesses go up and down. There are bad days where the stars weren’t aligned, potential customers were angry at the rain or snow, things happen. Try your best to remember that with good times, there will also be bad times.
Here is one of my favorite quotes for dealing with a bad day:
999 Dolly Parton Quote – to get the sunshine we need to deal with the rain.
So when you’re in a bad state of mind and business is down, remember that the bad times you get through will only make you stronger. And if every day is a good day, then by definition they would be an average day! We need to get through the bad to appreciate the good.
So, don’t be too hard on yourself. The trick is to get through the tough times, as most people fail – or choose to fail – at those times.
Don’t Freeze Up – Keep on Truckin’
There have been some days where business systems were down. In a previous SEO tool company I was a partner in, the system was down for a day! The customer service was blowing up!
Those times, especially in a small business where a lot of work is already overloading the few people in the organization, you want to just freeze up and take a walk.
But this is what separates the good from the bad. The winners from the losers. Face the problem head on. Be honest with your clients, your team, and yourself.
When I lose money in a business decision, I try to remember – this is a one time expense. You can’t predict the one time bad expenses that come up. That is part of business. But you can control that you deal with them, and that you learn from them. And you improve your business systems for the long term.
On the other hand, if this business issue keeps coming up, it is NOT a one time expense and you need to address it immediately. That is your job as a business owner – to look at the big picture, step back and see the workflow of the company, and plug holes.
Look At Your Costs, Budget For The Tough Times
We should all be budgeting. Planning our recurring costs, and looking to growth.
It is our job to leave room for errors. For unexpected mistakes. If we don’t have some kind of safety net in the form of cash, then we’re in trouble.
Bill Gates saved a ton of cash on the books. 999 He did this so that he had enough money to pay for the staff for a full year without any income. That is extremely safe. But by having this safety, it allows us to think more long term, and handle the hiccups that come in our business.
Maybe you can’t afford to have a year’s savings to cover your costs without sales, but try to give yourself a few months. That way when you have these bad days, or probably longer… you can rest a bit more at ease.
Believe me, I have been at times where I was close to running out of money every week. It is so hard to focus when that is the case. Try your best to give yourself some runway.
Be Zen – Step Back While It’s Happening & Reflect
Controlling my emotions is something I learned while doing business in China. Heck, maybe I would have learned it if I had stayed in America. But in China when I got frustrated at business, most of my Chinese associates would tell me to work on controlling my emotions.
This has been a key difference in business practice I have noticed between East and West.
Westerners, we are much more open and straightforward about our emotions.
In the East, it is about not showing your emotions. Being calm and cool on the inside.
While which one is better is up for debate, I do like the idea of reflecting on how you are feeling. Look at yourself in the third person. Be a fly on the wall in the room, looking down at yourself. Why are you feeling the way you’re feeling?
I love to take walks when I’m stressed and overwhelmed. It kind of resets my mind. While walking, I try to analyze the situation and what I am thinking. Why am I upset. If the worst outcome happens, what is the worst result?
Normally when you think in this way, you can be more confident and cool when “getting back in the action”.
Cut Back On Things – Simplify
Here is where I have been weak most of my life. I love to do so many things. I love to learn. To be involved.
But this is like being a pack rat.
And your mind gets cluttered.
You need to write down all the things you’re doing and cross some of them out. Whether this is your personal life, your education, or your professional careers.
I always think of a story back in my college days.
I was in a fraternity, well I was rushing at the time. I was the stressed out “Mikey” with my backpack full to its seams and rushing from class to meeting to class. Josh, one of the older brothers, called me into his room at the fraternity. He saw I was so overwhelmed so he asked me:
“Write down all the things you’re currently involved in”.
I wrote down tons of things, like student government, investing club, and yacht club. He looked at Yacht club and asked me “do you know how to yacht”. I said no, but I was on the boat a couple times, I was the secretary so my role was not to run the boat, but to take notes and keep the meetings in order. He laughed that I was secretary of the Yacht club and had never sailed a boat.
So after looking at the rather long list, he took a thick black magic marker and ran lines through over half of the list. I cringed when he crossed off some of them.
After he finished crossing off a lot of them, he gave me the sheet back and said.
“I want you to come back next week and report back that you have quit all the groups I have crossed off on the list. Ok?”
I was so afraid to quit something I had joined. But I followed the instructions. I went into the groups and clubs he crossed off and told them I was too busy to help anymore and had to cut back on extracurricular activities. They accepted.
Within just a couple weeks, I noticed I had more free time! I was able to de-stress a bit. And the funny thing is, I didn’t feel like I was missing out on anything.
Hopefully you reading this can list out all the things you are doing. Ask someone like Josh to review it and cross out for ya. Or if you are mentally strong enough, cross them off yourself.
Simplify Your Multiple Corporate Structures Around the World.
Now we’re getting a bit more relevant for this Global From Asia blog! We all are so excited to have an international business. The sexiness of having companies and operations in China, America, Brazil, London.
Yes, having global corporate structures and teams around the world is sexy! So exotic. James Bond style.
But when times get tough, upping all these company structures is exhausting. Both on your time, your brain, and your wallet.
I have had to bite the bullet a few times and close some companies within a year or two of setting them up. A UK company was one of them. It took us about four months to get it setup, between the company and the bank account. Mailing documents over the Atlantic Ocean a few times.
But we weren’t really leveraging it enough. A eBay account and warehouse weren’t enough reasons to justify the costs to maintain it all.
We went through the process of closing the operation down. Think some of the stock is still in a buddy’s garage in Ireland (this event happened back in 2008!). Or maybe I told him to give away some of those home bar goods as Christmas grab bags at his company.
It was a tough thing to go through. But once things happened and it was “back to being simple” the business went a lot smoother.
Like many things in life, simple is usually better.
Therefore, when business gets overwhelming – write down – or re-write from scratch – your business processes.
Keep Your Eye On The Ball
So many distractions in our life and our business. Ironically, just as I was writing the last paragraph my wife came in making a lot of noise and totally got me off point.
The trick is to keep your “eye on the ball”, or think about the goal. I have been writing more and more, and now I am documenting how many words I write, at which time, and what makes me more effective. I have found that writing blog posts like today’s helps reach people, help many people out, and also get new clients.
What is helping you get things done? I am quite sure there are a lot of things that get in the way.
Normally it should be about getting sales and additional revenue to your business. Making more money is always a good goal for any capitalist. So write down those activities that get to that goal.
Too many ways to make money, that means too many channels. Pick the ones that have the most ROI – return on investment – meaning either in your time or your money put in, the most benefit comes back.
Focus On The Business – Not Complete Business Structures
So many people talk to me about having an offshore company here, and a operating company there. All too often, they are talking to me about this when they are pre-revenue.
So, they are making things complicated before they even have any money coming in!
Did Google and Apple worry about their offshore structures when starting out? They never worried about it, as once they got big enough they hired smart MBAs and CPAs to take care of all that.
Stick to your core business – making sales of the product or service you are offering. And get to the point where you can hire an expert to take care of all the global corporate structure formations later on, when you’re on your yacht in Tahiti.
Think Long Term Over Short Term
You’re a business owner, and most likely, you’re a major shareholder as well as a major director of the company at the same time. That means you will get the biggest payoff later on.
The beginning is always the hardest. You need to outlast all the competition. You need to fight when everyone else is crying mercy.
Losing money in the short term may be hard, and sleeping on a folding cot in your office is not comfortable, but you’re a warrior. These sacrifices now will pile up and become an unstoppable machine in the market to take over your industry.
You may get in situations with staff where you need to pay out some damages due to cost cutting. You may have a bad client that doesn’t pay a big bill. You may get a lawsuit from a competitor.
These times suck for an entrepreneur and business owner. The world feels like it is upside down. I’ve been there, and you’ve probably been there too.
For me, the best way to get through it is to think long term. That these are one time events, that I can get past, learn from, and prevent in the future. It toughens you up, and you just got to get through them to enjoy the long term benefits of business ownership.
If you’re always stuck in the day to day of your operations, it will be hard to think long term and some of these events feel like the end of the world. Its tough, but we need to step back, look at our business as a whole, and make it happen. If it was easy everyone would do it. Its these tough times that define the winners from the losers. And if you can stick to your guns and get through this, you’ll be better in the long term.
How About You, What Are Your Tips?
I’d love to hear your tips for getting through those tough business days. Especially for those running a global business, trying to keep things in order can feel like plugging holes. A lot of these things haven’t been put in the text books, and that is what gives us the opportunity to get ahead in business and in life.
So I hope you enjoyed this guide. I’d appreciate you leaving a comment below with your feedback and ideas. Let’s make this a source where people can come to when they are overwhelmed in their international business endeavors!
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.
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.
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.
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!
(Disclosure: we are not tax professionals, just making a conversation and thought process for your own situation and to ask your own tax professional before making decisions)
The last two years or so I have been consulting for an American pump manufacturer. Helping them with supply chain and other issues in China, Hong Kong and even Vietnam and India (haven’t been to India physically though).They are now talking about hiring me full-time. It seems that for budget bucket reasons, they want to hire me via their 100%-owned Hong Kong trading company. I would be the first employee there. I really just have one big question set:
How much time would I need to spend in Hong Kong physically to be counted as an employee? And, of course, pay Hong Kong’s beautifully lower income tax rates. My wife and kid are now in California and I would want to spend time with them but if I could do that AND spend time in HK (for the lower taxes) that would be ideal. I am going to be going much more often too — so might as well place me as an employee over there.
Mike – I would really appreciate your time and thoughts on this. Let me know
(Reader’s name removed upon request)
Factors To Consider
As almost all advice, please do you own due diligence. I’m not a lawyer, and am sharing as best to my knowledge and research can provide. Disclaimer, don’t blame me if I am wrong!
Are You American?
I think first question is, are you a US citizen? Believe this will make things more complicated.
Especially if you are living and residing in California, the most expensive state in the United States. They will want your tax income. I believe you are still seen as a California resident, and have to declare this income to the state and pay taxes on it.
Tricky one, as it’s not a US based company.
Where Do You Spend Your Time? Where Do You Deliver The Work / Value?
So, where are you going to be most of the time? Still in California? If you are in USA more than 330 days a year, you fail the exemption status for foreign earned income.
If you are to be outside of America, especially California, for more than 330 days, as an American, this foreign earned income could be exempt from taxes.
But I can’t imagine the US tax department liking you getting paid offshore and sitting at your home office in California most of the time. Make sense?
The Hong Kong Company is Giving Your Proper Employment Contract
They intend to hire you full time, right? So then I would assume you would get an employment contract from them, in Hong Kong.
As an employee in Hong Kong, you would need to then get a Hong Kong ID card. That isn’t a bad thing, it has a lot of perks and advantages. But HK immigration will want the company to see if the company can hire someone in Hong Kong locally first. That is just normal immigration things, Hong Kong is seriously overcrowded and they are getting strict on who they allow to come into the region.
Then, of course as an employee, you and the Hong Kong company hiring you would need to pay the associated taxes in Hong Kong. Which, you mentioned are much lower than in USA and most other parts of the world.
How will this company be paying your salary? I would assume you have to have, or setup, a personal bank account in Hong Kong. Then they would setup payroll and have the funds deposited to your bank account either every couple weeks or monthly.
Will you need to access these funds right away? Will you use these funds to pay for your cost of living in California, USA? If so, I would then imagine you’d have to wire transfer the money from Hong Kong into your American bank account.
That money would then be treated as income in America? You will put those transactions in your personal bank statement. At the end of the tax year you’d have to figure out how to classify that to your tax accountant.
But, to stress, you can’t hide your money in Hong Kong from the US tax authorities anyway. You were never supposed to, but nowadays it is impossible. So you’ll have to declare this income to the IRS and explain that it comes from Hong Kong and that you’re hired by a Hong Kong company.
If you are doing it this way, you’ll be paying monthly bank wiring fee, and then declaring taxes in America as, a sole proprietor? Not sure to be honest.
How Big Is This Company?
The next point to look at, how big is this company? And when I say company, I mean the entity registered in Hong Kong. Doesn’t matter if this company is a massive conglomerate registered in the UK. What matters is how big the company is in Hong Kong.
That means, how much revenue. How big is the “real office” (not a serviced address or virtual office). How many full time staff, located in Hong Kong, and a legal hiring with employment contracts are there. Also, there is a difference between how many local Hong Kong people have jobs as a percentage of how many foreigners have jobs.
Any company that has a lot of locals hired, and is doing a lot of payroll tax is contributing to the local economy. Governments love job creations – for their people.
So these kinds of figures will help in your case as a foreigner in a Hong Kong company.
This is a Local Hong Kong Limited Company (Not Offshore Elect)
I am assuming that this Hong Kong domestic company (as opposed to offshore elect) and paying the 16.5% corporate tax rate on earnings. If you think you can get the 0% offshore election option and you can still get a local job in the company, you’re a bit mistaken.
You can’t have your cake and eat it too.
If you’re an offshore company, that means you have no local Hong Kong operations. One of those factors being a Hong Kong employee – which you are trying to become.
What’s Your Salary? Above or Below Market Value?
Another thing the Hong Kong government looks at, as well as any government, is it is a fair salary? That means is your salary what a local Hong Kong person would be in this same position? If you’re the director of the company trying to give yourself a lower salary to avoid taxes, may not work.
Other cases are if you give a lower salary to yourself or your foreign staff in exchange for support on the employment visa. Some people are willing to take a lower salary just to be able to stay legally in Hong Kong. But this will also raise flags and be problems.
You need to pay what the market will bear for someone in your exact position, in Hong Kong.
Has The Company Tried To Hire a Local?
Are you trying to use this salary and income as a way to immigrate to Hong Kong? There may be instances where the immigration department wants to see if the company has put out a job advertisement to place this position in the job market. That means, give a chance to the local Hong Kong market to get this job if they are capable and willing to accept that salary level.
You may say, why does that matter, the owner and director of the company picked me! Again, this depends on the case of how hard it would be for the company to find a local person to do the same role as you. Maybe you’re so special that no one else in Hong Kong can do this job? There are of course cases where that is true, especially in computer programming and technical roles. There is a big shortage of supply in the job market for this job speciality.
So if you’re working in a position that is in short supply in the Hong Kong job market, you’ll have a better chance of this Hong kong salary scheme you’re working on.
What’s Your Long Term Goal with this Job?
So you need to ask yourself, you’re living in California, you’re American. Your family is there too, you’ll be flying back and forth between the 2 continents. Where do you want to spend your time?
Do you want to immigrate to Hong Kong? Bring your wife and kids here, go through the education system here? Or is this just a temporary income stream at the current employer. You want to use it to get more cash, save some taxes, and build some international experience on your resume.
Nothing wrong with either case. But of course, if your long term plan is to relocate to Hong Kong, going through these hurdles will be more logical. If it is a short term play, you may re-consider all the paperwork and hassles your employer and you will have to go through.
Do You Need / Care About a Hong Kong ID?
Another thing, from the email I got – it seems there is no interest in getting a Hong Kong ID (HKID).
A HKID is a pretty valuable thing to have, wherever you are in the world.
As a local resident in Hong Kong, you will get access to the medical system. Sure, public hospitals are not as good as private – but if you’re in a bind, you can always rely on public hospitals taking care of you.
Related: We talk about Hong kong medical options and insurance plans here.
You’ll also be able to cross into Mainland China much easier. Take it from me, as someone without a HKID, my friends who have it zip past me on the borders. If you’re an international business person going between USA, Hong Kong, and Mainland China – you’ll like to get this ID card if you can.
What Do you Think? Get The Job contract in Hong Kong?
So that covers my points. What do you think?
There are other options for how you’re compensated. You can always be an independent contractor and get paid in cash / wire transfer. You’ll file with your US taxes as an independent contractor and your US tax accountant will be able to classify this.
Disclosure, I am not a tax specialist, and this article is a general guideline and free help for those curious on the topic.
Are you an e-commerce expert, or maybe just getting started out? You should get serious and check into leveraging the power of Hong Kong. For your global business, and Amazon USA sales and supplier center’s headquarters.
Today we’ll dig into why Hong Kong is such a great place to base your Amazon business.
Notice – This Is for Everyone Except US Citizens
This article is only applicable for those who are non US citizens. If you’re a USA citizen, Amazon will enforce that you use your US personal tax ID or a US company.
The rest of the world, you can choose where to establish your company and have your Amazon sales go. Just keep that in mind. When you are setting up your Amazon seller central account, it will ask if you, or anyone in the organization is American. If it is 10% or more owned by a US citizen, Amazon will tell you that you must have misunderstood the form. You’ll get sent back to the beginning of the setup process and open a US-based Amazon account.
Benefit 1 – Corporate Tax is 16.5%, And Can Also Apply For Offshore Status
So, as a global business owner, you can choose where you setup your business. In Hong Kong, even the “normal” corporate tax is at a global-low of 16.5%. There is an offshore elect option that you can file. (Plug- we can help you with offshore status) If you qualify you can get a 0% exemption.
So ya, Amazon sellers can enjoy this lower tax.
Benefit 2 – Still The Same as a USA Based Amazon Seller
If you’re selling on Amazon USA marketplace, they don’t make the sellers look any different, based in America or not. So you don’t have to worry at all about your sales and marketing being at a disadvantage because you’re not registered in US.
Many people don’t understand this and think they need to be American or they need a USA based company to sell on Amazon USA. Nope.
If you’re interested in digging in more, we have a good podcast with Wilson Blues on selling in Amazon USA from Mainland China. This applies to not just Mainland China, but Hong Kong and other places as well.
So if you’re European, you could just sell from your European company in Amazon USA. But the trend I see is a lot of European entrepreneurs re-structuring their businesses over to Hong Kong. For their Amazon businesses, as well as many business types in general. So why not just start fresh with your new Amazon business? 🙂
Amazon handles the payments to Hong Kong by Payoneer and will deposit it to your Hong Kong bank account.
Enjoy USD Accounts and Multi Currency Accounts
Here’s another big benefit- multi currency bank accounts. A ton of people. The Australian dollar currency volatility is crushing Australia business owners. They don’t have a choice to get a multi-currency account. (Not sure if that is true for all Australians, there must be some multi-currency banking somewhere in the country, no?) So they are getting destroyed when Amazon USA sends them their sales proceeds.
When they register in Hong Kong and get the bank account all setup, they can then get the payouts in USD. This means no more currency risk, and they can convert to any currency they so desire, when they are good and ready. Maybe you can pay in Chinese Yuan to your Chinese factory, or keep that in USD too.
Tons of entrepreneurs I work with are so happy they don’t need to deal with the currency of their home country. They are international business people, traveling the world. They don’t want to worry about the risks in the country they were born in having currency fluctuations.
In today’s world, we are free to do business anywhere we like, and Hong Kong allows us to choose the currencies we hold our cash in. Should be like that everywhere, by default. But until that day, Hong Kong is a good place for you to set up!
Easy to Buy from Chinese Factories
For decades business owners from around the world have benefited from Hong Kong when doing business in Mainland China. Counterintuitive I know, many of us think we should just go direct to Mainland China. But Hong Kong is where it’s at, and even Chinese factories have HK businesses with bank accounts.
So rather than wiring the money from your home country of Europe, Australia, etc, you can save money! Just doing a HSBC Hong Kong bank transfer to your supplier’s HSBC HK account. Free transfer, settles there in an instant.
Easier Legal Contracts
Like buying from Chinese factories, it is also easier to make business deals with them. Because they may have a HK company, a contract such as a sales contract, NDA, or even an invoice is easier to arbitrate if both companies are in the same country!
And even if the factory is only set up in Mainland China, there is a special relationship and understanding between HK and CN. It’s just closer, and the factory will respect you more. Plus they will see you are more serious and long term committed to Asia, China, and business on this side of the world.
As most buyers are still just using their home country’s business structure, you will stand out from the rest! Take this extra time and do it right – factory owners will take your business more serious!
Banks Are Fine With E-Commerce Business Models
We all worry these days about banks approving our accounts and keeping them in good standing. Don’t worry about the banks flagging you as a high risk business if you’re selling on Amazon USA. Banks in Hong Kong know this is a gold mine, because it is!
Come to your bank account interview and application day with your Amazon sales records. Show them the volume you have been generating and the revenue you have. Show the screenshots of the product listings and that you have your own brand.
I’ve helped a lot of Amazon seller clients who have set up their bank account with HSBC and not had a problem. Just be confident and transparent about your business model, Hong Kong is the right place for you to set up your global Amazon business.
It makes sense to do it here – buying from China, selling in USA. This is the trading business of the past, just now re-built for the new technology age.
What Do You Think? Will You Establish Your Amazon Empire in Hong Kong?
There you have it, brain dump of why Hong Kong is the right place for your Amazon USA sales business. As I meet these sellers on at least a weekly basis. I am confident to say that this is the right destination for your long term e-commerce business.
What are you thinking, do you have a company setup yet? A lot of clients started selling on Amazon through their personal accounts and it is getting bigger and bigger. Take that big step and make it formal. It will feel a lot better and REAL.
Or you already have a company setup in your home country for this Amazon business? Restructuring is a bit of a hassle, but you can get through it. Start the HK company and re-work everything around Hong Kong, step by step. The Amazon sales, the supplier orders, a new Paypal HK account.
Today we sit down with Stephen Barnes from Hong Kong Visa Centre and discuss how business owners should consider the visa and immigration process in Hong Kong. Is it right for them? Will they be registering a HK Limited and planning to remain in Hong Kong, or working “offshore”?
Its a rather complex topic, and we’re lucky to have the “Hong Kong Visa Geezer” break it down piece by piece to help get our heads around it and deal with it properly!
Topics Covered in this Episode
Brief introduction of Stephen Barnes and his Hong Kong Visa Service company
Entrepreneurs in Hong Kong and out of Hong Kong, thought process of considering a Hong Kong visa
Investment Visa, what it is and who its for.
Comparing an Investment visa to an Employment visa to a Student visa, and a Tourist visa. Putting it all together, which one is for who, and why.
Those Hong Kong companies in Mainland China (Like me) or in Southeast Asia or other countries, how they are treated
Diving Deeper into the Investment visa for entrepreneurs and small to medium sized businesses
Newbie tip for a Foreigner in USA or Europe looking to make the move to Hong Kong to startup.
Below we had this podcast converted to text, as it is a top listened episode, enjoy!
Introduction: Welcome to the Global From Asia podcast, where the daunting process of running an international business from Hong Kong is broken down into straight up actionable advice and now your host, Michael Michelini.
Mike: Okay. Thank you everyone for tuning in to Global from Asia episode 4. I’m here with Steve Barnes from Hong Kong visa center. Thank you for coming, Steve.
Steve: Mike, it’s my pleasure entirely.
Mike: Okay. Great! So let’s just jump right in. Maybe you could introduce yourself and your company to our listeners today.
Steve: Steve Barnes, been in Hong Kong for 27 years, started immigration practice in Hong Kong 20 yrs ago. I’ve been practicing ever since.
Mike: Okay, great! Yeah, I met you actually at a seminar where you were sharing your knowledge and appreciate you being on podcast for everybody today. It’s a hot topic, visa and immigration…
Mike: For expats here in Hong Kong. So I think a lot of our listeners are sometimes in Asia where they are coming through Hong Kong, doing their either startup or their entrepreneurial endeavors as a small business or medium sized business. What do you kinda advice them for immigration or visas in Asia or in Hong Kong specifically?
Steve: Well, I’m just telling that my expertise is Hong Kong. I’m gonna limit my comments to Honey Kong, it is an immigration opportunity for anybody who want to established a joint business here but effectively, if you’re a foreign national and you want to reside in Hong Kong to promote, pursue your business activity, you need to make an application for an investment visa, which is an employment visa a credit cases on you undertaking an active investment in Hong Kong and probability test. Together this institution show that you are in a position to make a substantial contribution to the economy of Hong Kong. Now, in many ways, everyone asking how long is visa strings, right? But there are certain things that run a bit advice around every investment visa application that goes on to get approved. The things that you need to show through your planning and through your, through early months of your operation that you are in a position to create local employment opportunities. Don’t get any local jobs on day 1. If you have a business plan that you put into immigration department for investment visa application and there is no opportunity to locally create a local employment, then you’re going to travel together and the second thing that the immigration department are looking for, a suitable business premises and there is a premises that kind of vibe for who you are and implementation direct going to time of your plan. You can kick off with a mere virtual office, which you borrow to cheap place, but the expectation is, then your course, sooner or later, once your business plan arrived at point where you’re hiring your first employee. That first employee will have some more sensible to report, to work to each day, because you can’t expect this person to going that, fulfill their employment duties where employee from your kitchen table or a spare bedroom so no matter how economically to have any kind of bring some quality time, place for your employees to work, you need time to spare and prepare the pre-requisite for a proper engine course. The 3rd leg of approvability still is actually divided into two parts, the first is cash and the second is resources. Cash million dollar question everybody asked me is literally how much cash you need. It all depends on the circumstances. in my experience, if you have less, less than 500,000 Hong Kong dollars, you may find that your application could be compromised, so deem to be weak especially with the other aspect than your plan is a little bit marginal but if you got a half a million or more, it’s reasonable to achieve that you can go on, to expect the consideration of the immigration positively approved rather than negatively think if you haven’t enough cash. So half a million can do it but I’ve seen in application they approved less cash as well but it’s not hard and fast. The trick is to understand that you shouldn’t be really thinking that the immigration department gonna buy into your startup laying type activity which is fine without at least having some cash because you know, laying doesn’t mean cashless, laying means having a money and spending the right kind of money so that’s an important consideration. The max and the more have the issue, it is swiping very smartly got to eye level funding so that’s always good. So that deals with cash and the other element is resources, Now resources are usually all the kind of things that are driving you to make a decision to pursue investment will come in the first place. So if you got a bit of code and you already developed, you wanna use new investment in Hong Kong to be able to build on that. The fact you’ve got a basic version of your product written already. It’s a resource for first of your application if you’re coming to Hong Kong and youre general trading, and you’ve got some kind of clientele that are already in place, that’s all good. Any other resource will allow the immigration department to objectively conclude that your business, if you use those resources together with the cash that you’ve got will eventually go on to results in a solidly and commercial enterprise, that’s the challenge.
Mike: Okay, got it. Thank you so much, Steve. So I just like to recap. He mentioned 3 points. That you’re going to employ local Hong Kong residence or Hong Kong people in the business.
Steve: Anybody in Hong Kong includes lawful employable but without further promiscuous of the immigration department
Mike: Lawfully employable.
Steve: Those people are account as well for persons for the purposes of local employment
Mike: Okay, got it. And that was not to be immediate but yeah to have convincible, clear playing that you will do that. I mean what time of year, 1 year?
Steve: That’s what your plans is, right? I always say to clients, “dont think about structuring your business around immigration, think about structuring your business and ask yourself actually what does this business works for immigration purposes and you will find that there is a quite close-call relation doing business that you will expect to be successful`and those businesses which immigration department approved.”
Mike: Got it. Okay. And then second point is the office, for when you’re employing the workers that is suitable location.
Steve: Suitable environment for them to work. That’s correct, yes.
Mike: And the 3rd is the cash and the resources. I think I just like to kinda some like convert to dollars when we talk, so he’s saying, of course it is always hard, I knew everyone asking how much money.
Steve: Let’s say $75000 – $80000 US dollars into Hong Kong business bank account. Interesting there is you don’t actually need to have all the money in the business bank account. You can have enough money in the Hong Kong business bank account to finance first 6 months of cash flow, and the rest of the funds is you can attest in your personal account anywhere in the world. So you can show you’ve got the money ready to deployment into the business. You need loan those funds by the way then efficiently through at least 2 years it means before you make out a purchase so the best part would good confident proof that you are not just borrowed money and shot fine it back which is always just the perks of visa application. They all know the tricks. They’ve done it.
Mike: Yeah, I can imagine. Okay. So those are the 3 main points. I kinda a lil bit follow up the resources, so code, I mean your degree, or like education…
Steve: Yeah, your service, yourself is also a resource, your background, what you bring into, you got to have a good track record and business in the past, if it becomes successful, they come through all those types of businesses. All that stuff.
Mike: Okay. So then I think some people used a trick of employment visa even though maybe they are not familiar or for a small business. I know you don’t that more greyer.
Steve: This is an old guess not. People think that you can somehow separate ownership from your business vehicle and become a third party and also an employee, You can’t. So during the currency of the application if its a new business situation, you’ve come to this interaction, that the existing composed interaction they’ll going to look to say who the owners and director of the channel is are. i would say that you putting yourself as an employee but you’re actually own the company and director of the company. You expected on how you dresses up. They are going to comply the investment visa probability test here. that’s the hard to test of substantial contribution to the economy rather than the lesser test which is do you personally possess special skills and and expected knowledge that are not already available in hong kong . So your personal skills in the contacts of business that your shares it will be seeing merely as a resource and they will apply an investment visa approval test on you but if you’re making the application for an employment visa, and you don’t have an interest in the business and then address you will just apply special skills and obviously, experience to anyone move so much to the ability of the business to substantial contributions to the economy of Hong Kong.
Mike: Got it. So there’s a 3rd option I heard of, student visa?
Steve: Well, student visa will get you on ground of Hong Kong but you not lawfully employable, you can’t join a business of your own based on Hong Kong, you can only study and thats it.
Mike: Okay, okay. Thank you for that. Lets, so we talked about, this is kinda recap, I think there’s a three even four I mean, technically there’s a tourist visa, to make on your passport. I am on my US passport holder. I have 90 days stay.
Mike: So I actually never legally work in Hong Kong. I’m an offshore Hong Kong company.
Mike: So, I sometimes visit Hong Kong, sometimes working up a coworking space, gather some meetings. I’m okay, right?
Steve: Well, they say, it’s all about residing. So if you, as I know you are living in China but you spent most of your time in Hong Kong and pursue some business you establish here and your status is visitor, if your intentions to reside, it’s crystallize, then visiting days are just actually suitable in various before, because you’re effectively directing, controlling, employees of your company and visiting is not what it intend to do. the visitation is supposedly to come, interaction with Hong kong as a regular visitor and you gonna depart again. So, when you end up spending a great deal of time in your visiting days status instead in reality your intention is to reside is crystallized then you need to change your status from visitor to investment that you’re running in Hong Kong.
Mike: I understand. So, yeah. I mean, it’s actually complicated for me, so we talked about it, i think the correct way is, I, as entrepreneur and I wanna reside in Hong Kong as an investment visa.
Steve: Absolutely. You need to incorporate a company, get a business registration, you need to have a really good business plan which doesn’t actually need to be reflective in form of document cause in many ways immigration department normal one want to register their business plan that you might have write to an ipad. So if you’re self funding your business, there’s no formal need of business plan that might be a good practice to crystallize your thoughts and the immigration department will look at your stories as whole. They need to see that you got all the resources that you just discussed. They need to be satisfied that there is no security objection to you being granted decision to reside in Hong Kong to employ your business plan. When you have a good story, you carry can the arguments, you can tickle the bosses and you got the right level of money and there’s no security reason for you not being granted a permission you’re looking for, there’s no reason to expect, the immigration department will give you what you need.
Mike: Okay ,time frame normally?
Steve: 6 – 8 months.
Mike: 6 – 8.
Steve: 4 – 6 months, I’m sorry.
Mike: 4 -6 months.
Steve: If you’re not a resident in Hong Kong, you live somewhere else like, you do, when you want to make an application it’s going to take 4 – 6 months. If you presently reside in Hong Kong and you’re actually working for another employer and you want to stop working for another employer and start up for yourself, you still need to pass in investment visa probability test. Thus an existing residents that application dealt with different section of immigration department. It applies the same criteria but it’s a different team that handles the work. And because you’re an existing residents, that thing will finalize your application 6-8 weeks not 4 -6 months.
Mike: Okay, got it.
Steve: Make sense?
Mike: Yes. Thank you so much. So yeah, to kinda recap. Even if, so if you are working for a company in Hong Kong and you’re a resident of Hong Kong, when you wanna start your own business, apply for an investment visa, it’s a little bit shorter a month, two month and a half, still have to the money in your control.
Mike: Either a company account or personal accounts.
Mike: But if you’re doing it offshore or like me on China or others in Southeast Asia or West or as a visitor, so then if I came on 90 days stay and i’m staying in a hotel.
Steve: You can apply for guest status while you’re here but the immigration department dont allow the fact that you have a pending investment visa application to somehow advantages you in relation to 90 days of your stay. You have to leave before the 90 days are up and make a re-entrance some station if you want to comeback as a visitor before the immigration department approve your investment visa application.
Mike: Got it and really, really viable information, Steve. So again, I like to always ask on this talks. One kind of tip for newbie listener. I think a lot maybe don’t have the 500,000 Hong Kong Dollar but they are educated hustler entrepreneur. What kind of information would you give them?
Steve: Well, bear in mind that the visa class by definition called for active investment. So the fact that you may be a viable entrepreneur and you can you know, duck, dive and wave above by the best of it, that’s all well and good but you gotta understand that immigration department applies to the security of you that are mandate to make sure that they don’t approve foreigners who set up business here that have access to red label broker credit terms that you can find in Hong Kong and basically you know spend your way to disaster, trail of Hong Kong creditors on your way so even though you may have,maybe you made a license peripheral stuff to crack on with it, with very little capital using all year, argument and natural skills the immigration department don’t actually do not place a great deal creations on that. You still have to have a body of cash behind you to support yourself while doing this.
Mike: Got it. It kinda gives me a followup question. So if I answer investment visa issued, do I have more advantages on business?
Steve: Well, once you get investment visa, the immigration will approve you initially for 12 months to undertake the work you’re planning to do to promote that business as reflected in your business planning that you’ve told the immigration department is going to do on how you gonna spending your time in the context of that company and that company so you can get approval but just to do that business nothing else. Now, if opportunity put the things developed that perhaps you need to private half way through you often do something else because 1st activity is not working, that’s okay. Bear in mind that some point you even have to report that to the immigration but you won’t have to report that, the point where you privative but if, as they usually do this type of start up scenario, they grant you an approval subject to business reviews at the end of the first 12 months, so then the first 12 months immigration department will going to lift up the full and everything you’re doing in the business so if you privative in the meantime you have to explain to them. The more importantly they’re looking to see that through the lackluster performance that you have in fact been engaged in the activities that they can objectively conclude, willing to you to make a substantial contribution to the economy of Hong Kong. So you get the approval to performance, saying ok, we like your story, we believe you, see to it at 12 months mark, 80% of new business situations do not very well capitalized, tend to get approve subject to business reviews 12 months will lift up. If they do not subject to business reviews, if they really like your story from get go, then you will get what I call a freeing clear approval which means that the 12 months mark, the process to get your first extension is really just manage to get bags and you can expect that you’ll can go on to get 3 limits of stays and then you go and get numbers 1- 2, 2 -3 years pass which gives you a potential full 8 years in Hong Kong, to managing, directing, control that business. At the seventh or most people do taking constant history in temporary residents here, they want to application for permanent residency and up there absorbs same responsibility to have keep working in that business because this is a permanent residency and actually you can employ or engage your own business without further reference in the immigration department.
Mike: Got it. Wow! That’s a lot of information. So just to recap, after you get an investment visa, even if you passed, another 12 months later you’re gonna have to fly, go back,
Steve: There’s an 80% chance that they will subject your initial approval to business review.
Mike: Okay and then if you passed that usually, you have 2 years.
Steve: And if marginally, strike through that 12 months then you’d expect to business review, if you have created local jobs if you don’t have much cash in the tank. If you have been able to meet your revenue projection whatever it is, you know, just be in reasonable milestone in the first 12 months. If you have achieved that, you may find immigration department really extends you up to 2 years but then they can give you 12 months and that is subject to business approval again at the end first 12 months. But if you have a good story and slippy on the text phase and halfway supply of cash there’s no reason to expect that they respond and they will say no based in my experience.
Mike: Great! Okay. Lastly, there’s a lot of listeners that wanted to contact you. We’ll put your website upon the website too but what’s your…
Steve: Oh! We have a number of websites. We have a website which is called the HongKongVisahandbook.com and that’s basically our foundation content. It’s a DIY definitive guide to Hong Kong process. No singing, No Dancing completely free of charge, no registration required and textbook if you will, although it got videos, screencast, podcast, templates, the whole shooting match, all completely free of charge, hongkongvisahandbook.com. Tthen I do daily immigration content of the site blog called hongkongvisageeza.com and I post on that 4, 5 actually on my mind 7 times a week i don’t usually plan this so that feeds you sorts of updates of information, all completely free charge.
Mike: Great! Yes, it’s really great and we will linked that on golbalfromasia.com/episode4.
Steve: I have a, I’m gonna be Shenzhen, a week on Friday, you might put on your show notes at the boathouse. I think.
Mike: Oh, yeah.
Steve: I’m giving a talk. Oh! Not Friday, Thursday it is.
Steve:At the boathouse, yeah.
Steve: So perhaps if you put the link in your show, the people listening to me, I’ll talk about my favorite subject live.
Mike: Okay. You’re very passionate and you’re also good Internet Marketer. Your blog and your content and your handbooks, you also know a lot of listeners are Internet Marketers too. So we like the, you are also up in the game.
Steve: Our marketing was built in by design and our product is driven from marketing of inspector.
Mike: Great! That’s definitely the right way to do it. So alright. I guess if there is any last points right before we end here.
Steve: Right. I wanna, just so basically, carries anyone that is thinking about Hong Kong to understand that Hong Kong is very open. W are set and very welcoming and what might have been your early experience from the immigration agency if been to either Thailand or China, don’t expect that you’ll have that kind of experience in Hong Kong. We have very rule of law, incorruptible public service at the immigration department. We have a customer service mandate, very open, accessible and friendly but there’s a lot of stuffs that you can have access to because the immigration department play the role of gamekeeper and coucher at the same time at their website is designed to inform and not give you advice and the immigration department shows to inform and decide not to advice. So a lot of people look at Hong Kong immigration department website, they look at investment visa category and they say “Oh just get to put these document, fill this forms and i’m home and hopes.” It doesn’t work like that. There’s a 4 -6 months interrogative process where you have to show that you can make that substantial contribution to the economy of Hong Kong and if you can do it, clean and honest enough, you got the money, you got the will, you made a right entrepreneurial stuff, you have 95% chance of getting what you’re looking for and that’s how it works.
Mike: Great! Okay. Thank you so much. I’m sure we, I enjoyed you talk a lot. Thanks, thanks a lot.
To get more info about running a business via Hong Kong please visit our website at www.globalfromasia.com that’s www.globalfromasia.com. Also be sure to subscribe to our iTunes feed. Thanks for tuning in.
I remember those first trips over to Shenzhen, China all the way from America and I had no idea where to stay. Lucky for me I had some friends in Hong Kong who had contacts in Shenzhen (I mis-spelt it Schenzen back in 2007!) and they helped arrange a hotel for me.
They also warned me not to answer the door at night! I was so scared.
Shenzhen has improved so much and there are top notch hotels to choose from in the city – a bit overwhelming.
So today, I’m writing this guide for someone like me – on their first trip to China and having no idea which kind of hotel to stay in!
This post first started for our Cross Border Summit as attendees asked for hotels near the venue, and that is how it will start. We will add more hotels as we go along, so check up on this same post in the future!
And as always, if you have recommendations or feedback on certain hotels, please leave a comment at the end of this post!
Now let’s go through some hotel options, go!
Hotels Near Shekou IT Torch Park (Netvalley)
These hotels were near our first Cross Border Summit conference in Netvalley. These next few hotels are within a block or two from our summit, and will “take care of ya”. Mention Cross Border Summit and you’ll receive a discount as well.
Here’s a list of the names, then you can scroll down to find the details for each of these.
This is a new hotel I’m not familiar with, but exactly across the street from the venue. Its its own building, and the management has been pretty friendly with us as we discuss hotel rooms with them. The pricing is:
Self-booking Discounted Pricing:
Room Type /Rack Rate（RMB) /Global From Asia Rate / Buffet Breakfast
Superior Room 608 / 388 One Breakfast
Deluxe Room 708 / 458 One Breakfast
Address: No.6 Industry 6st Road, NanShan District, Shenzhen China
This is a big chain throughout China. Some friends even have VIP member cards. Its a budget hotel for business travels. Rates currently range around 200 to 300 Chinese Yuan (about 50 to 65 USD) per night.General Membership Pricing:
Regular Twin Bed 229 RMB (without breakfast)
Business Twin Bed 282 RMB (without breakfast)
The closest one to our summit would be at the Crossing line of Nanhai Avenue and Industry Seventh Road, (gong ye 7 road)
Nanshan District, Shenzhen 518054, China
There are a couple of these near the venue, and plenty throughout Shenzhen (currently 19 in this city alone) and the rest of China!
A top of the line hotel, my friend and podcast guest Steve Marsh says this should be a 6 star hotel if there was a rating! Right in the heart of Seaward in Shekou, top of the line rooms, pool, etc.If you are good at searching for deals the price can be as low as $150 USD a night.This is about a 5 minute taxi ride from our venue, and will be by far one of the highest class there is in town!You can find details and bookings can on their website.
This one feels like the equivalent of Motel 6 in America. I feel like there should be a sign “we’ll leave the light on for ya”. When I first came to China, the 168 meant that there was always a hotel in there that cost 168 RMB. This is back in 2007, that was about $25usd at a 7.4 exchange rate. And the more premium hotel in this chain called Motel 268, meaning rooms started at the 268 rate. Pretty easy to remember and clear before entering.
The number 168 also represents “work” in Chinese. So this chain is also targeting the business traveller.
Nowadays this has turned into just a number in their brand. Tates have increased about the 168 rate and people are still filling the place up! I’d say it is fine to stay in, but will have the simple essentials.
Another big chain throughout China. Like 7 Days Inn and Motel 168, it is for the busy business traveler who is on a budget. Rooms pretty straightforward and basic. They have locations across Shenzhen and other parts of China. I do have friends who have VIP cards and get deals at these places.
They don’t seem to have an English website that I can find.
Hostel in OCT (Overseas Chinese Town)
This one is popular with a lot of entrepreneurs I have known who are passing through.
OCT is a pretty artistic (can we call it hipster?) area in Shenzhen, and will allow you to
You can find their website can at http://www.yhachina.com/ls.php?
The latest lifestyle Serviced Apartment and Hotel – Residence G Shenzhen has debut in Shenzhen on 25 March 2017. The property is complete with a two-floor dynamic community hub; G Club. Part restaurant, part community centre; G Club is the first space of its kind in a hotel or residence in Shenzhen’s Nanshan District. Residence G Shenzhen will cater to the needs of business travelers as well as families looking for a modern hotel or fully equipped serviced apartment with ideal location. The complex will host 178 stylish rooms and serviced apartments ranging from studios to 3-bedroom residences. The rooms and apartments feature modern European design, range from 32 to 174 square metres and combine functionality with high-tech style including complimentary high speed WiFi and user-friendly Internet Protocol televisions with E-readers.
And of course, our friend and ally, Shenzhen Party is another good source for English information. They have the latest hotels in Shenzhen, China. So if this short list doesn’t help you out, I’d suggest you hop on over to their website and browse around. They work hard to add all the hotels as they come (and go)
Plenty of Local Choices
The tricky part is – if you’re on a real budget, where to stay can get complicated. There are a lot of great deals, but they don’t have English websites, and you can’t book in advance – at least not overseas.
What I did was I had my Chinese assistant book for me before I flew over. She searched for hotels near the factories and venues I was looking to stay, and reserved. Many times the hotels won’t need money up front, and will hold your reservation for most of the evening.
Though it was a funny story: one of my earlier trips (think my second trip to China) I had a delay with my flight and finally got to the hotel at about midnight. They didn’t hold my reservation! They didn’t think I was showing up – I think they waited until about 9pm, then released it for other guests. So just find out the terms and conditions of the reservation and how long they will hold it for you. Especially if you’re flying in from overseas – flights are often delayed. Plus you can get a bit lost finding the place, so have a back up at least or a local Chinese assistant to help you out.
Your Favorite Shenzhen Hotel? Any Tips?
Now it’s your turn! Have you stayed over in Shenzhen before? Where did you stay? Was it a good deal, good price? Helpful staff. I’d love to hear all your feedback and ideas. We will work to add good hotels to this list and help new travelers to this unique and growing city called Shenzhen
Want to open up your bank account remotely for your Hong Kong company?
Today, let’s go through this. It’s such a hot debate going on, let’s use this post to make a difference!
You Can’t Open Your Bank Account Without Being in Hong Kong
The quick answer is, you need to be in Hong Kong to open your bank account. They want to meet all the directors and significant shareholders of the company to know who the client is.
I’ve talked to almost every bank in Hong Kong over a 2 day full time effort, and all needed the directors to come in person.
But there are some ways around it, I’ll dig in a bit today.
HSBC in Mainland China Works
So for those entrepreneurs in Mainland China with Hong Kong companies, you’re in luck. They will allow you to apply for a Hong Kong business account from a HSBC in Mainland China.
There are fees, and in 2016 these fees are going up. From what people have told me who did it, it’s about 2,000 Chinese Yuan range. They choose to come to Hong Kong instead, as that is about the same fee as an airline ticket.
So maybe you need to come to Hong Kong anyway. Let’s say your passport visa is running low on time. So make a visa run and then also apply for the bank account.
Don’t have a reason to come to Hong Kong and you’re in North China? It may make sense to pay this extra fee to do a remote bank account opening. I’d love to hear people’s experiences in the comments of today’s post (thanks in advance!)
HSBC Premier Customers
So, I’m putting this in here because this is one I hear over and over. As far as my research and network of people tell me, it is not possible in today’s environment, (yes, we’re in 2016 now), to open a Hong Kong business bank account from non-HK or non-Mainland China HSBC branches.
In the past years, people told me that premiere level (minimum deposit of 1,000,000 USD) could open bank accounts in other countries. Maybe that was for personal and not business, and maybe that is still active up into today. But I have asked bankers, who have become somewhat of my friends, and they assure me you cannot open a business bank account for HSBC HK outside of Hong Kong or China.
Again, please prove me wrong! You can leave a comment below or send us an email.
DBS Hong Kong Has a 20% “Application”
Few have mentioned that you can apply for DBS bank online. So I was like, heck let me try this. They call it an application, but in my opinion it’s more like a lead capture form.
They asked me a few questions about me and my business, and once I did that, the site said they would email me later for more details about applying.
Not sure if my case was that horrible, but I never got a response back! Still seems to me I need to go there in person. And now their new SME bank application fee (upfront, no refunds) is 10,000 HKD! Insane right?
Anyway, so that is what DBS calls applying online.
Why Is It Not Possible To Open An Account Online or Remote?
So you may be wondering why it’s not possible to apply online.
There are 2 possible reasons:
They are afraid of fraud
The financial industry has been getting tougher and tighter lately. Government regulators are slamming banks with fines. If they feel the bank didn’t do a good enough job in verifying the banking client (KYC – Know your Customer). It’s the job of the bank to ensure the client isn’t a terrorist or a money launderer.
The banks need to make sure they don’t “slip up”. If they let a “bad egg” who says they’re a trading company for t-shirts get by but in reality is doing drug trades, slip through the cracks. Uh-oh, bank is in a big problem.
So what’s happening is the government regulators are pushing the job of being a policeman to the banks. Seems kind of smart for the government. They don’t need to hire more people to dig into the banks and can instead put the responsibility and overhead onto the banks.
They don’t want to invest / embrace technology
Another reason is, I’m interested in opening a bank in Hong Kong. I talk to tons of people frustrated with the current banking options there and lack of customer service.
In a normal business industry, a new tech company could come along and disrupt the old players. But banking, in Hong Kong at least, is so sealed – when has a new bank opened here? I’ve heard it was in the 1970s!
So what is the incentive for the banks to innovate? They’d need to spend a lot of time and money. Plus they’re not good at the internet, they’re better at crunching excel formulas and clearing cash trades.
As far as I understand, the Hong Kong banking association allows digital signatures for online banking. That means that at the least, for account maintenance items such as updating details on your bank, you are legally able to do online. But most banks still want you to come in person or mail a hand signed document to do that.
Some Have Opened Banks Outside of HK (Offshore)
So one thing I have been learning is that some who don’t get a HK bank end up using their HK company to open a bank account in Europe or in an offshore island. Seems a bit strange to me, but it is a business account and not a personal account, so the owners limit their liability in the business. Would need to dig more into this, some use it to receive money from customers in those regions / countries.
A Tip – Add New Owners / Directors Later On
So what some do, to avoid having to have all the owners come to Hong Kong to open the bank account, is keep it simple to start. Maybe one or two directors when filing the new company and applying the bank account.
Later on, once things are operating and stable, then you can update your company documents and add the new shareholders and directors.
This is one tip that has saved a lot of travel time and headaches for many clients.
Sure, those owners not on the original company documents are taking a risk. But they also need to be aware if they can’t all fly to Hong Kong together, this is the most reasonable option. You can have a personal contract between the owners that can help ensure you will get your shares in a future date. You should trust your business partners that much anyway.
This Is What We’re Working On – To Make It Easier
As Global From Asia has converted from a podcast and blog into a full service agency, we have picked up more and more cases like this. We are building one big strong case and talking to the Hong Kong government about it.
In order for Hong Kong to stay ahead of the game in the global business space, they need to work on being more online friendly.
If you want to get involved, please let us know! Hopefully this blog post can spawn some new ideas and get some change to happen!
Why Do you Think It’s So Hard To Apply For Banks in HK Online?
So I’d love to hear from you! Please leave your comments and thoughts in the comments section below. Let’s help each other to figure this puzzle out.
I’m curious if you have had any problems applying for a new HK bank account. What happened, why did you get declined? Let’s help each other and see if we can fix this for the long term.
Best of luck on your global business domination! Original: here
Many entrepreneurs cringe when they hear the word bookkeeping and accounting in Hong Kong. To be frank, I used to, and in some ways still do. But rather than running away from it and hoping it will go away – it’s best to suck it up and take charge.
Today we’ll go through the thought process of organizing your bookkeeping for your HK Limited company.
Get a cup of coffee, jot down some notes, and get inspired. Now let’s go!
What Your Business Type Matters For Bookkeeping
Not all bookkeeping is the same. There are a few different criteria to consider:
Products Business, Service Business, or Mix of Both? Are you a business that earns money by selling products (hard goods), or are you making money by providing a service. You can sell online or offline, as in bookkeeping terms it doesn’t matter (of course the technical method for online and offline is a bit different).
B2B or B2C? Buzz words you probably hear quite a bit. B2B means you are selling from your business to another business (business to business). This means that your customers (oftentimes I call them clients when they are a business account) are companies, not an individual. B2C is the opposite, you’re selling to end consumers, often called retail customers. These people are individuals making decisions for their own benefit and use, or as a gift for a special someone. You might say “well, I do both B2B and B2C”, so don’t get stressed out, but be aware that you are doing both.
What Is Your Industry? Various industries have a lot of different ways to have their businesses operate. Normally when you do accounting, it will only really let you put in 1 or 2 different industries in the system.
Create a Chart of Accounts
Cringe. Yes, this is overwhelming for newbies. But this is the center of your business. Here is how your accounting and business will flow. Many accounting software packages will help auto-generate them based on your industry and other questions you answered above. Yet I would still recommend working with your bookkeeper to ensure nothing is missing.
Here are typical accounts that you would list on a chart of accounts:
Parts / products sold
Sales write offs
Cost of Goods Sold
Inventory used for promotion
Bank Service Charges
Dues and Subscriptions
Business Liab & Contents
Licenses and Permits
Maintenance & repairs
Meals & Entertainment
Merchant credit card fees
Postage and Delivery
Other Office Expenses
Salaries – Officers
Don’t stress too much if you miss something or want to remove something later. Of course it’s ideal to have it all set from the get-go, but you can go back to this as your business develops.
Add Your Products & Services
Once you have the chart of accounts setup, now it is time to add in the data you’ll be working with to buy and sell. This is a strategic event and you should do it before you start to enter all your transactions.
You can use the template spreadsheet in Quickbooks and download it to your desktop. There you can match up the products in your shopping cart or your service offering page. The more details you put in here the better, as it will save you time from entering it one by one each time you put in a new transaction.
List Out Client and Supplier Accounts
Next you will want to write out your customer accounts and supplier accounts.
Now this is when B2B or B2C comes into play. If you’re doing B2C, yes it’s a lot of transactions! You will not manually type in each individual’s name, address, and contact details in your accounting system. That is insane! So you can call them “Retail customer” as a general journal entry. Another way is you will integrate your ecommerce or POS system to your accounting software.
If you’re doing B2B, you may want to spend time putting in your bigger clients company name, contact person, address, email, and phone number. This way when you create an invoice to charge them for a product or large product order, it will auto-fill. And you can also run reports to see who your top clients are, as well as those who are late on paying you.
Do the same thing for supplier side. This is again up to you how detailed you want to get and how many suppliers you want to input. If you are buying from a supplier on a regular business and the monthly or yearly amount is significant, take care. I would recommend to invest the time to put their full company contact details there.
You can also use an Excel spreadsheet and then if you have software bulk import it to save time.
Start Entering Transactions
Now that you have the charts setup and the client/supplier information prepared, next you should start to put in some transactions.
This is where the magic happens! There are a few ways to get you transactions into the system:
Manually Create Invoices and Purchase Orders
This is the traditional way, and if you’re a B2B business, might be the main way you will enter your business transaction flow.
When you want to receive money, you will create an invoice. You can then export it as a PDF and email it to the client. Many times accounting software has the ability to send the email right inside the system. As you have the customer information already entered in it’s easy! The invoice will auto-complete their contact details in the invoice.
If you have products or services already created, you can then choose them from the dropdown menu. Either it will auto-fill the price and description, or you can manually type in what you need.
On the supplier side, for the most part it’s the same thing, except you make a PO (purchase order). If you have their contact details and what you’re buying pre-defined this is fast as well.
Once you make the payment, or the client pays the invoice, you can mark it as paid, and it will balance in the accounting system.
Import via CSV (Excel Spreadsheets)
Most online banks now allow you to export your transactions. Normally they let you do as a PDF, as a Excel, or as a CSV (comma separated values) file.
Most accounting software systems work with CSV format. Let’s hope your online banking system supports it.
You’ll then download the file from the online account and the import it to your accounting system.
You may need to make sure the “mapping” is correct. This is where the “First Name” field in the excel spreadsheet connects to Fname in the other system (it’s what the database calls first name, for example).
It is nerve-racking at first, and normally it will ask you for your confirmation before doing the import. I’ve had some messy times trying to undo imports when the mapping was wrong – so be a bit alert, especially the first couple times you do this.
Automatically Pull From Online Banking & Merchant Accounts
Are you a B2C business, selling on Amazon, eBay, or other e-commerce shopping carts? There is no way you can have the time to have a team member entering in all these transactions. That’s because you’re doing high volume (you and I both hope!) and making tons of money selling lower priced items.
This is where the magic of technology comes into play!
You’ll look into integrating your business with an accounting software solution. Check if it works with Paypal, eBay, and whatever e-commerce provider you have. The more the better, so that you can avoid having to deal with
Make Sure It’s In Sync
Once you do link up the various third party integrations, you’ll need to check on a regular basis to make sure they stay connected.
Why do they disconnect? This is for your security, and different systems have different lengths of times. The better ones will let you set the length depending on which service you integrate with – for example 30 days, 90 days, 1 year, or indefinitely.
But alas, all these systems integrating together each one has their own preference. Just be ready to get an alert that you need to re-authorize the connection. Your bookkeeper may help check it for you, but it is still best you as the owner and director check it on a monthly basis, or even more often.
Pick Reports You Want To Read
Now, time to reap the rewards of keeping your books in order – reports! Quickbooks and any accounting software loves to take the data you’ve been entering it and give you a bunch of summary reports to see.
Some of the more popular reports you may access:
P&L (Profit and Loss)
This is the most important one in my opinion. This will take the total amount of each transaction classification and then take a total for the time period you are running the report for. Looking at this report will see if you have made or lost money during that period.
It’s hard to hide a loss here, if you’re sales are less than your expenses, it will be an ugly and scary red loss or a negative number.
But this is why having books will help! Double click on one of the numbers and it will run a report of all the transactions there. See where you’re spending your hard earned dollars. Knowing where your inflow and outflows go is essential in the success of your business. Don’t delegate this to anyone, this is the key role of a business owner.
Tip – I like to run this report for the past 12 months, and to have it divided up by month. That way I can quickly see which months the business is making money, losing money, or has high / low margin times.
Another critical report, this shows you how much cash you have in the bank. How much debt do you owe? Who owes you money. This report will show you how much money you would walk away with if you closed up shop today. That is, paid off your debt holders and took out all the money from your bank. There is also Shareholder’s Equity, which you consider as intrinsic value of the business. It is taking A-L (assets minus liabilities) and becomes the third part of the balance sheet.
This report will show you how “strong” your business is if things start to get difficult going forward.
Do you let your clients pay you later? Such as Net 30 terms, which means they pay you a month after they receive the goods. Then you should keep a report like this bookmarked. Here it will show you which of your customers are late paying you and maybe get you off your butt and making calls to remind them to send the money in! The longer it waits, normally the lower the chances are of you getting it. Business moves fast, and maybe they will shut down – the more old receivables on this report, the more nervous you should be!
Here is where you should look at the monthly breakdown. Check which vendors are getting a lot of your money. Also look at the report by type of transaction, such as office expenses. Maybe don’t be such a detail freak that you count how many reams of paper you bought, but at least be aware what your average cost is on those accounts. And question some people sometimes, keep them in check. Make sure your team knows you are running these reports and analyzing the numbers. Also shows them you are being responsible and care!
Budget vs Actual
A cool feature of accounting software is you can put in your monthly budgets. If you have an expected amount of money you’ll be spending each month, or a target for your sales team, put it in here. In this report, you can get a better idea if your company is staying on track of what it said at the beginning of the year. Way off track? Schedule an executive meeting scheduled ASAP! Decide do you lower your forecasts going forward or is the team able to bring things back up to where they predicted?
I’m sure you’ll have more reports you’ll want to run. Each business is different. The main idea is you should have a good grasp of what money is coming in, what’s going out, who owes you money. Check on a regular basis and ensure you are on track from what you predicted at the beginning of the fiscal year.
Keeping Things In Order For a Smooth Auditor’s Report
Another benefit of keeping on top of your books throughout the year is when you get your Profit Tax Return from the HK IRD, you’ll be ready. Just run the latest reports from the software and submit to your HK CPA auditor.
Not many people enjoy digging into the numbers, but we need to take responsibility as business owners. Hope today motivated you.
Any Questions or Need Help?
So that’s all we have for today. Get to it, and start entering those transactions into your favorite accounting software. Need help? We offer full bookkeeping services and you can check out our plans and pricing.
If you enjoyed this article, feel free to leave a comment below. Let us know how you are keeping on top of your books.
Looking to make your first order from a Chinese factory?
Or maybe you’re currently doing it and still crossing your fingers that it is going along well.
We know how nerve racking it is, and hope to help you today.
Here are some 10 tips we have learned over the years from our own experiences and talking to experts in the field.
Make Clear Specifications
If you want to avoid problems with a Chinese factory, then look professional from the beginning. If you come to them looking like an amateur, then they will underestimate you.
What can you do?
So do as much upfront research and work on your product as possible before approaching a factory. Is it a pre-existing product, an enhancement, or a brand new innovative product? Each one of them requires different level of specifications, but the more homework you do the better. And the ideal is to have a sample of the product in your hands and sending it to the factory, they can look at it and give a full and complete estimate.
But please be careful and make sure this factory is trustworthy before sending over your hard work.
Don’t Focus on Price Alone
If a factory can tell you are looking at price and price alone, then in my experience the good factories will step away and the lower quality, more desperate factories will step forward. I’m sure you want the best quality product with a top supplier, so don’t show them that you are a cheap buyer.
If you want a cheaper price, they can go as low as you want to go.
But don’t expect a nice and shiny new toy…
I can speak from firsthand experience, in my early days in China I kept pushing down the price of a wine corkscrew, and the factory finally “broke” and agreed to my price. Unfortunately for me, the metal was a cheaper one that would rust quicker and I had many returns on my e-commerce website for the next year or so.
If it’s your first time to buy from China, don’t rush it. And this article isn’t going to make you an expert, sorry to say. Give it at least six months I’d say to do your first order.
Think about it.
* Finding the supplier
* Shipping samples back and forth
* Making a sales contract
* Sending a deposit payment
* Quality inspection
* Shipment to your facility
Just listing these out I’m thinking this is longer than six months!
Always Get a Sample – Production Sample!
This is where people get impatient and rush. They get one sample that is “kind of close” to what they want. They are based in USA and Europe and tired of spending the 80 US dollars for UPS to ship the samples back and forth each time, so the factory convinces them this is a “basic idea and they will change X, Y, and Z” to make it the way you want.
So then get them to make that sample and send it back!
Yes, it is exhausting but if you cut corners at the beginning, it will cause bigger headaches later on.
Do a Test Order
Buy from a couple factories a lower quantity.
The best time to get to know a factory (or anyone in life or in business) is to do a practice run with them. This is when their true colors come out, as often during the sales process all the promises in the world are made, now is the time to see if they can execute.
It’s Sometimes OK to Use a Trading Company
Many people always talk about going “factory direct” and “cutting out the middleman”, and yes, while you may keep more of the money yourself, there are sometimes extra value add services they can do.
Another reason to use a trading company, they have a network of factories, so you can do a lower quantity across multiple product categories, while a factory has higher minimum order requirements and then you’d need to coordinate with all of the factories yourself.
Use Third Party Services
Similar to potentially using trading company, there are a wide range of third party service providers out there. From quality control, CAD design, sourcing, to logistics, the more of these you use yourself the better control of the entire process you will have. Normally the factory will tell you not to worry about these things – as they have their own partners they work with or they don’t do these services at all! But of course if you pick your own third party vendors you can rest assured they will help you more ensure the factory is doing things in your best interest.
I remember when I was first searching for a factory while home in USA. I had no idea where these factories were located and I thought they were all in the same vicinity. Yup, I didn’t comprehend at the time China is a massive place, and various “clusters” of factories form in certain cities – for example Ningbo is where a lot of gifts and home decor is made, Shantou for toys, Shenzhen for electronics. Learn where these clusters are, and then determine if you can source all your various products and components in that area. Why? This will reduce headaches long term when consolidating shipments and doing just in time (JIT) scrambles for unexpected situations.
It’s Better To Lose / Waste Money At The Beginning Than At The End
Many people look at R&D and they think, yes, this is a worthwhile cost to design a new product. But I think they don’t classify things correctly – I put a ton of various costs as R&D – flying to the factory, sample shipments, buying samples from various potential factories. We can’t cut corners on these upfront investments, and we need to look at them like this – investments – not expenses. As like any investment, the value increases over time, and the knowledge, awareness, and correct suppliers you find at the beginning will save you countless hours and dollars in the long term.
Sadly, when we make the right decisions it isn’t as easy to see as when we make the wrong ones. But if you’re not having headaches in the years ahead, count your blessing and thank yourself for making the right investments and decisions at the early stages
Make a Contract in English and Chinese
This one I wish I knew when I first started buying from Chinese factories. And you can’t just find one on a Google search and tweak it, this is something that will be with you for years to come. Find a qualified lawyer, on my podcast we have Mike Bellamy sharing some of his legal contacts there to use. Or go through recommendations in your own network. While if you’re a smaller buyer, a contract may be hard to enforce, at the minimum it sets the rules of engagement from the beginning and reduces miscommunication later.
So I hope today’s rather brief article helped and got your brain flowing here. It’s a daunting task, sourcing from China, but we need to stay motivated and do it step by step. If you’re currently buying from wholesalers in your home country (like I was) take it one product at a time until you’re confident and comfortable to expand.
This was a guest post I wrote originally on JumpStart Magazine.