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?
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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.
Aqua Luna, a Chinese Junk in Victoria Harbour, Hong Kong. (Wikimedia Commons/Mk2010)
This is a guest article by our friends at GlobalFromAsia.com.
Passing over the Hong Kong border is a routine whether you are a foreigner living temporarily or permanently in Shenzhen. Based on the visa that you may have, there might be a need to leave Mainland China every month, or you may come and go as long as you want. Easy to understand instructions and a few reminders will help you how to cross the border to Shenzhen worry-free.
You might be wondering where to cross the Shenzhen border. For those who make their living in Shenzhen, the most convenient way is to navigate one of the many land or sea borders straight to Hong Kong. Majority of the people make an abrupt turnaround and traditionally journey back by way of China customs while some settle for a few days for some leisure breaks or go on a shopping spree.
A great number of foreigners usually have choices when they wish to cross the border to Hong Kong and vice versa. These land borders include Luohu, Huangguang, Futian, Shenzhen Wan, and Shekou. Wherever you live in Shenzhen, most of the border checkpoints can be accessed either by a taxi or metro train. In case you choose to ride a taxi, just say where you want to go followed by the word kou’an which means “border.”
Luohu
Luohu is considered as one of the most active border crossings between Hong Kong and Shenzhen. It is a pedestrian crossing that connects Shenzhen with Hong Kong in the middle of Luohu and Sheng Shu in the New Territories. The simplest approach to travel to this place is to take the metro train to the Luohu stop, and you will arrive at the Shenzhen Railway Station. The railway station has high-speed trains with destinations to Guangzhou and other stops outside the Guangdong Province.
The Shenzhen Railway Station is so busy with different nationalities boarding the train and vigilance is a must because of several pickpockets. From the train station, you just have to pass the HK Immigration where you need to fill out forms before boarding another train that could take you to Kowloon. After being cleared with the immigration, you can purchase an Octopus card for your next destination. The crossing opens from 06:30 to 24:00.
Barely west of Luohu, you will find the Huanggang border crossing which is distinctly structured for transportation. If you don’t want to get caught in the morning and evening commuter flow, this crossing is more hassle-free, and traffic jam is reduced. One advantage of navigating this border is its 24-hour operation where you will find buses bound for various stations in Hong Kong.
Many expats residing in Shenzhen who wants to go to Hong Kong for some nightlife, cross the Huanggang border. Expect that when you enter, you will be inspected by China Immigration with the crossing situated on the Shenzhen side. Once on the bus, never lose your yellow bus ticket because you will need to hop on another bus after traversing from the mainland part to the HK frontier.
You can purchase a minivan ticket if you want to go to the Hong Kong Airport River without the need to leave Shenzhen or Hong Kong if going to immigration. Huanggang does not have metro or train at Hong Kong or Shenzhen side, only buses and private vehicles. It is 24 hours open and can be contacted at +86 755 83395171.
Futian is one of the land borders that can be reached by train. You will find the crossing at the Futian Kou’An Metro Train Station which is the most recent Shenzhen/HK Metro Border Crossing. This pedestrian crossing links Shenzhen with Hong Kong between Futian Kou’An as well as Lok Ma Chau in New Territories.
Futian Border Crossing is somehow comparable to the Luo Hu Border Crossing in terms of how you will go to your next destination. Here, you will also need to purchase an Octopus Card for Hong Kong Metro. But, in this crossing, you can depart the building and directly return to Shenzhen which is favorable for “Visa Runs.”
This bustling border crossing is located in Nanshan District with no available metro station for transportation but with taxis to take you to your destination. Once you’re done with the HK Customs, you can both ride a bus or taxi and go over the one-kilometer long bridge that could take you to several locations.
In the midst of peak hours (8:30 am to 12:30 pm and 5:30 pm to 8:30 pm) the hanging time for authorization is longer. And when comes the holidays, weekends, and travel seasons you need to have a lot of patience while waiting for your turn to be cleared by the immigration. The border is open from 6:30 am to 9:00 pm. Coaches and taxis are the main transportation here.
People who live and work in Shekou can conveniently travel to Hong Kong by ferry. There will be a free shuttle service provided by the old ferry terminal that can take passengers to the new ferry terminal. The free ride runs every 10 minutes starting 6:30 am to 11:00 pm and the ride takes only eight minutes. The old ferry can be reached either by car or metro. Once on the new ferry terminal, you can board ferries on its way to the Hong Kong International Airport, Hong Kong Island, Macau and Zhuhai.
This electronic card is essential because it is generally used as payment upon riding a bus or metro when border crossing HK/SZ. Purchasing one will save you the hassle of waiting in line with other people buying their tickets at the station. Another advantage of getting this card is the discount you are entitled to every travel. You can buy the Shenzhentong card directly from the station itself or any 7/11 stores and pay 100 renminbi.
If you bought a Metro or Shenzhentong Travelcard, do not lose the receipt that contains the card ID number. You will use this if the card becomes lost or stolen. You need to keep in touch with the station where the ticket was bought and cancel the card. It would be better if you have the receipt available because you get the balance reimbursed excluding the deposit.
We hit a breaking point in our business endeavors. As a business owner, many don’t see the downs in the roller coaster ride. And often it is our emotions more than anything else.
What do we do when we hit a bit downturn in our global business?
This is a big challenge, and there are tons of answers depending on your specific situation. Today I hope to give you some tips and inspiration that have helped me in the down times.
Downtimes Can Happen in your Business Endeavors & Don’t Blame Yourself
Businesses go up and down. There are bad days where the stars weren’t aligned, potential customers were angry at the rain or snow, things happen. Try your best to remember that with good times, there will also be bad times.
Here is one of my favorite quotes for dealing with a bad day:
999 Dolly Parton Quote – to get the sunshine we need to deal with the rain.
So when you’re in a bad state of mind and business is down, remember that the bad times you get through will only make you stronger. And if every day is a good day, then by definition they would be an average day! We need to get through the bad to appreciate the good.
So, don’t be too hard on yourself. The trick is to get through the tough times, as most people fail – or choose to fail – at those times.
Don’t Freeze Up – Keep on Truckin’
There have been some days where business systems were down. In a previous SEO tool company I was a partner in, the system was down for a day! The customer service was blowing up!
Those times, especially in a small business where a lot of work is already overloading the few people in the organization, you want to just freeze up and take a walk.
But this is what separates the good from the bad. The winners from the losers. Face the problem head on. Be honest with your clients, your team, and yourself.
When I lose money in a business decision, I try to remember – this is a one time expense. You can’t predict the one time bad expenses that come up. That is part of business. But you can control that you deal with them, and that you learn from them. And you improve your business systems for the long term.
On the other hand, if this business issue keeps coming up, it is NOT a one time expense and you need to address it immediately. That is your job as a business owner – to look at the big picture, step back and see the workflow of the company, and plug holes.
Look At Your Costs, Budget For The Tough Times
We should all be budgeting. Planning our recurring costs, and looking to growth.
It is our job to leave room for errors. For unexpected mistakes. If we don’t have some kind of safety net in the form of cash, then we’re in trouble.
Bill Gates saved a ton of cash on the books. 999 He did this so that he had enough money to pay for the staff for a full year without any income. That is extremely safe. But by having this safety, it allows us to think more long term, and handle the hiccups that come in our business.
Maybe you can’t afford to have a year’s savings to cover your costs without sales, but try to give yourself a few months. That way when you have these bad days, or probably longer… you can rest a bit more at ease.
Believe me, I have been at times where I was close to running out of money every week. It is so hard to focus when that is the case. Try your best to give yourself some runway.
Be Zen – Step Back While It’s Happening & Reflect
Controlling my emotions is something I learned while doing business in China. Heck, maybe I would have learned it if I had stayed in America. But in China when I got frustrated at business, most of my Chinese associates would tell me to work on controlling my emotions.
This has been a key difference in business practice I have noticed between East and West.
Westerners, we are much more open and straightforward about our emotions.
In the East, it is about not showing your emotions. Being calm and cool on the inside.
While which one is better is up for debate, I do like the idea of reflecting on how you are feeling. Look at yourself in the third person. Be a fly on the wall in the room, looking down at yourself. Why are you feeling the way you’re feeling?
I love to take walks when I’m stressed and overwhelmed. It kind of resets my mind. While walking, I try to analyze the situation and what I am thinking. Why am I upset. If the worst outcome happens, what is the worst result?
Normally when you think in this way, you can be more confident and cool when “getting back in the action”.
Cut Back On Things – Simplify
Here is where I have been weak most of my life. I love to do so many things. I love to learn. To be involved.
But this is like being a pack rat.
And your mind gets cluttered.
You need to write down all the things you’re doing and cross some of them out. Whether this is your personal life, your education, or your professional careers.
I always think of a story back in my college days.
I was in a fraternity, well I was rushing at the time. I was the stressed out “Mikey” with my backpack full to its seams and rushing from class to meeting to class. Josh, one of the older brothers, called me into his room at the fraternity. He saw I was so overwhelmed so he asked me:
“Write down all the things you’re currently involved in”.
I wrote down tons of things, like student government, investing club, and yacht club. He looked at Yacht club and asked me “do you know how to yacht”. I said no, but I was on the boat a couple times, I was the secretary so my role was not to run the boat, but to take notes and keep the meetings in order. He laughed that I was secretary of the Yacht club and had never sailed a boat.
So after looking at the rather long list, he took a thick black magic marker and ran lines through over half of the list. I cringed when he crossed off some of them.
After he finished crossing off a lot of them, he gave me the sheet back and said.
“I want you to come back next week and report back that you have quit all the groups I have crossed off on the list. Ok?”
I was so afraid to quit something I had joined. But I followed the instructions. I went into the groups and clubs he crossed off and told them I was too busy to help anymore and had to cut back on extracurricular activities. They accepted.
Within just a couple weeks, I noticed I had more free time! I was able to de-stress a bit. And the funny thing is, I didn’t feel like I was missing out on anything.
Thanks Josh!
Hopefully you reading this can list out all the things you are doing. Ask someone like Josh to review it and cross out for ya. Or if you are mentally strong enough, cross them off yourself.
Simplify Your Multiple Corporate Structures Around the World.
Now we’re getting a bit more relevant for this Global From Asia blog! We all are so excited to have an international business. The sexiness of having companies and operations in China, America, Brazil, London.
Yes, having global corporate structures and teams around the world is sexy! So exotic. James Bond style.
But when times get tough, upping all these company structures is exhausting. Both on your time, your brain, and your wallet.
I have had to bite the bullet a few times and close some companies within a year or two of setting them up. A UK company was one of them. It took us about four months to get it setup, between the company and the bank account. Mailing documents over the Atlantic Ocean a few times.
But we weren’t really leveraging it enough. A eBay account and warehouse weren’t enough reasons to justify the costs to maintain it all.
We went through the process of closing the operation down. Think some of the stock is still in a buddy’s garage in Ireland (this event happened back in 2008!). Or maybe I told him to give away some of those home bar goods as Christmas grab bags at his company.
It was a tough thing to go through. But once things happened and it was “back to being simple” the business went a lot smoother.
Like many things in life, simple is usually better.
Therefore, when business gets overwhelming – write down – or re-write from scratch – your business processes.
Keep Your Eye On The Ball
So many distractions in our life and our business. Ironically, just as I was writing the last paragraph my wife came in making a lot of noise and totally got me off point.
The trick is to keep your “eye on the ball”, or think about the goal. I have been writing more and more, and now I am documenting how many words I write, at which time, and what makes me more effective. I have found that writing blog posts like today’s helps reach people, help many people out, and also get new clients.
What is helping you get things done? I am quite sure there are a lot of things that get in the way.
Normally it should be about getting sales and additional revenue to your business. Making more money is always a good goal for any capitalist. So write down those activities that get to that goal.
Too many ways to make money, that means too many channels. Pick the ones that have the most ROI – return on investment – meaning either in your time or your money put in, the most benefit comes back.
Focus On The Business – Not Complete Business Structures
So many people talk to me about having an offshore company here, and a operating company there. All too often, they are talking to me about this when they are pre-revenue.
So, they are making things complicated before they even have any money coming in!
Did Google and Apple worry about their offshore structures when starting out? They never worried about it, as once they got big enough they hired smart MBAs and CPAs to take care of all that.
Stick to your core business – making sales of the product or service you are offering. And get to the point where you can hire an expert to take care of all the global corporate structure formations later on, when you’re on your yacht in Tahiti.
Think Long Term Over Short Term
You’re a business owner, and most likely, you’re a major shareholder as well as a major director of the company at the same time. That means you will get the biggest payoff later on.
The beginning is always the hardest. You need to outlast all the competition. You need to fight when everyone else is crying mercy.
Losing money in the short term may be hard, and sleeping on a folding cot in your office is not comfortable, but you’re a warrior. These sacrifices now will pile up and become an unstoppable machine in the market to take over your industry.
You may get in situations with staff where you need to pay out some damages due to cost cutting. You may have a bad client that doesn’t pay a big bill. You may get a lawsuit from a competitor.
These times suck for an entrepreneur and business owner. The world feels like it is upside down. I’ve been there, and you’ve probably been there too.
For me, the best way to get through it is to think long term. That these are one time events, that I can get past, learn from, and prevent in the future. It toughens you up, and you just got to get through them to enjoy the long term benefits of business ownership.
If you’re always stuck in the day to day of your operations, it will be hard to think long term and some of these events feel like the end of the world. Its tough, but we need to step back, look at our business as a whole, and make it happen. If it was easy everyone would do it. Its these tough times that define the winners from the losers. And if you can stick to your guns and get through this, you’ll be better in the long term.
How About You, What Are Your Tips?
I’d love to hear your tips for getting through those tough business days. Especially for those running a global business, trying to keep things in order can feel like plugging holes. A lot of these things haven’t been put in the text books, and that is what gives us the opportunity to get ahead in business and in life.
So I hope you enjoyed this guide. I’d appreciate you leaving a comment below with your feedback and ideas. Let’s make this a source where people can come to when they are overwhelmed in their international business endeavors!
Tired of sourcing from factories and want to setup your own manufacturing operation? Searching for the best corporate structure for a new Chinese factory?
Look no further, today we will dig into Hong Kong being a great place to open your factory under.
How To Open A Factory?
I remember when I first visited a factory in China. I became shocked to think it isn’t as complicated as I had thought. There are three main factors:
Big Open Space
Need a big building with lots of open space to set up the operations.
Machines
You’ll need the equipment to prepare the materials. This can be all sorts of machines but let’s stick to the most common: plastic injection machine. These are the most common in a Chinese factory. They will take the manufacturing mould, and then inject the plastic inside and pop out a bunch of the plastic parts. Significant size and definitely a big upfront investment.
Labor
You’ll need people to put together the plastic parts once they came out of the machines. Debur, check for any defects, assemble. Check the quality. Package. You get the idea.
Of course there is a lot more skill and magic to the process, but these are the main pieces of the puzzle you’ll be dealing with.
Is Hong Kong A Good Place For Your Factory Business?
A lot of people ask me when they’re searching on Alibaba should they pick companies that are in Mainland China or Hong Kong. Yet I don’t know any factories still located in Hong Kong – they are all in China. What is in Hong Kong is the sales office, or even just a virtual office for the parent company.
That’s not to say having your factory established in Hong Kong as a business entity isn’t viable. It is something common. It can be with anyone, Americans, Europeans, Local Hong Kong people, or Mainland Chinese who open the HK limited company. It will not be too easy for the general public to know the nationality of the owners (though there are ways to do company research in Hong Kong). Once you’re a Hong Kong company, you can then open a Mainland Chinese WFOE (Wholly Foreign Owned Entity) that will be where the factory operates from.
You can have a local Chinese partner in the factory with you, and you can both own the shares in Hong Kong. Once that is setup, you will then be “foreign” to the Chinese government even if half the company is Mainland Chinese owned. So you’ll open a Chinese subsidiary that is the fully owned by Hong Kong company. Have the IP owned by the HK parent company, and now you have the benefits of HK’s English legal system while able to operate inside China.
While any company could be the foreign owner of a WFOE in China, Hong Kong is a good choice as it is so close and so common. Hong Kong banks, and other banks and legal entities will be familiar with how to file the documentation. Thus the WFOE won’t have as much of a headache as having it owned by a company elsewhere.
Make sense?
What Things You’ll Need For a Hong Kong Parent of a Chinese Factory
So what are you going to need for this Chinese factory owned by an HK limited company?
It depends, will you have a physical office in Hong Kong? To do sales, meeting clients, trade shows, etc? Or will you work close with a serviced office in HK that will help with the mail from the governments and banks.
I’m going to assume you’ll be living and working in the Chinese factory, and that will be your base. You won’t need the overhead of a Hong Kong office and will instead invest in Mainland China operations.
Thus, you won’t need many things in the Hong Kong company, most operations will happen in Mainland China.
But you’ll definitely need:
Hong Kong Bank – Goes without saying. Any company operating needs to have a bank account. You’ll use this to receive money from customers, and send in money to Mainland China for the production and the rent and staff costs.
Hong Kong Credit Card – To keep your life a bit more simple, you’ll need a credit card to put the expenses on. You’ll be traveling to trade shows, clients, and having certain online software packages.
Paypal. If you’re selling B2B (manufacturing orders) then I don’t recommend having clients paying you by Paypal. But you may like to have this to buy things online and for small sales. This could also come in handy buying things online if you don’t get a credit card.
RMB (Chinese Yuan) Currency Option – Make sure you tell the bank you’ll need a RMB currency account. This will come in handy for managing the risk in currency fluctuations. Plus you can save time at the Chinese bank when you send over Chinese Yuan instead of USD or other foreign currency. It’s much easier to convert to RMB in Hong Kong than it is in Mainland Chinese banks. You can test for yourself, and you can thank me later 🙂
So Here’s How Operations Will Go
So now you did it, you setup a Hong Kong company and then a Chinese WFOE subsidiary. Good job! That took at least 4 months, but more likely 6 months. You may have done some operations already, but now you’re fully legal to do it.
You’ll rent a big space in the outskirts of Shenzhen or in Dongguan. You have your sales team there – and the internet speeds are reasonable for dealing with foreign clients. You have orders coming in. Once the money is in Hong Kong, you can either wire the money on demand to China. A lot of companies work out a monthly invoice for costs of operations and production.
Once you send the money to your Chinese bank from your Hong Kong bank, you order the raw materials and get the factory workers trained up to handle the production. You may need to hire more staff or scale down when production is low. I hope you have a core manufacturing team in place with good experienced factory management.
You process the order. You finish mass production and then send remaining funds to your Hong Kong parent company’s bank from the client. You need to get more cash over to China to finish the deal and get it to the port, FOB Shenzhen.
You will keep some money in China, but you hold your money and IP in the parent company in Hong Kong.
This is the basic idea. Sure the factory can be over in Shanghai, or deeper into Mainland China as well. Where you choose the factory location should base on the type of product and industry you’re in. There are cities who specialize in certain areas.
So What Do You Think? Hong Kong Perfect For Your Factory?
Hope this guide was helpful for you! Where are you opening up your own factory. Often the order of events is a USA import and export company grows bigger and bigger. Getting more clients and specializing more, they want to go even more direct. Since they know their product so well and their customers too, they can invest in a factory themselves.
Sure, this will have more fixed costs and more risky, but you’ll have full control. The trickiest part is to managing the staff and the quality control. All that complaining you did to those factories you bought from before will now be your headache! Its not always the factory owner who does the bad quality on purpose. It takes good management skills to keep things in order and deliver top quality.
So I’d love to hear your experiences and tips about Chinese factories from a Hong Kong company. Please leave comments and questions below!
For 2 days, from Friday April 20 to Saturday April 21, Over 200 e-commerce business owners from both inside and outside of China assembled to take part in the third annual Cross Border Summit. Hosted by the organizations, Global From Asia, it was a conference to bring together top e-commerce business owners from all corners of the globe.
With over 40 top experts in the industry sharing strategies for optimizing your Amazon FBA listing to building an international brand and internet marketing (SEO) — the audience was filled with information and advice on how to take their e-commerce businesses to the next level.
Many international speakers had their first experience in China and Shenzhen. Brian Johnson , CEO and founder of PPC Scope , an American Amazon PPC expert had arrived to Shenzhen, China for the first time to speak at this conference. He was pleasantly surprised by the modern style of the city and the very positive minded sellers in the audience. Will Tjerlund, a top Amazon seller from Minneapolis, Minnesota also returned to share his story on scaling his business to over 2600 products in under six months . He enjoyed sharing his knowledge and the data he has gathered from his years on e-commerce and working with multi-million dollar brands in his consulting firm Goal Consulting.
The summit held a panel where we brought top international sellers such as Danny McMillan, host of Seller Sessions, Anthony Lee COO of Six Leafs, and Meir Simhi from Brand Masters to share the perspectives of the Western side of the sellers mind. Multiple sessions were quite amazing where we took top sellers and experts from both China and overseas and learned their tactics and strategies in a “head-to-head” format.
Michael Michelini, founder and host of the Global From Asia podcast said “We are so happy to bring together top leaders from around the world in the cross-border business industry. This is not your normal corporate gathering, we are here to make business deals, share actionable knowledge, and build long term relations with leaders around the world. We are growing to a new level as the industry matures and governments adopt new and more strict policies.”
“I skipped the after party in the first night to implement what I learned. Very valuable and actionable advice is what I would say this conference is all about.” Said Rolands, a Latvian B2B distributor based in Taiwan who is venturing into B2C e-commerce.
Chinese attendees also enjoyed their time at the third summit: My company is a cross border ecommerce business in China. It is my first time in Cross border Summit. First of all it is a great chance to know the different people from different countries. A good chance to know what foreign people think of China.” said Vicky from YKS Group.
More big sellers from Singapore were present “I definitely recommend coming to the summit to learn, enjoy the food, and build great relationships” said Daniel, an Amazon seller who had his first Cross Border Summit experience.
A highlight of this year’s summit was the announcement of the summit’s expansion into Latin America, with a major trade show planned for Q3 2019. On top of that, a new virtual reality China tour experience was debuted — so people from around the world can enter a Chinese factory, check it out at https://www.globalfromasia.com/vr/ and get in on the ground floor for a brand new way to find and verify Chinese factories.
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…
Steve: Yeah.
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.
Steve: Yeah.
Mike: So I actually never legally work in Hong Kong. I’m an offshore Hong Kong company.
Steve: RIght.
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.
Steve: Yep.
Mike: Either a company account or personal accounts.
Steve: Yep.
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.
Mike: Okay.
Steve:At the boathouse, yeah.
Mike: 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.
Looking to make your first order from a Chinese factory?
Or maybe you’re currently doing it and still crossing your fingers that it is going along well.
We know how nerve racking it is, and hope to help you today.
Here are some 10 tips we have learned over the years from our own experiences and talking to experts in the field.
Make Clear Specifications
If you want to avoid problems with a Chinese factory, then look professional from the beginning. If you come to them looking like an amateur, then they will underestimate you.
What can you do?
Be prepared!
So do as much upfront research and work on your product as possible before approaching a factory. Is it a pre-existing product, an enhancement, or a brand new innovative product? Each one of them requires different level of specifications, but the more homework you do the better. And the ideal is to have a sample of the product in your hands and sending it to the factory, they can look at it and give a full and complete estimate.
But please be careful and make sure this factory is trustworthy before sending over your hard work.
Don’t Focus on Price Alone
If a factory can tell you are looking at price and price alone, then in my experience the good factories will step away and the lower quality, more desperate factories will step forward. I’m sure you want the best quality product with a top supplier, so don’t show them that you are a cheap buyer.
If you want a cheaper price, they can go as low as you want to go.
But don’t expect a nice and shiny new toy…
I can speak from firsthand experience, in my early days in China I kept pushing down the price of a wine corkscrew, and the factory finally “broke” and agreed to my price. Unfortunately for me, the metal was a cheaper one that would rust quicker and I had many returns on my e-commerce website for the next year or so.
Be Patient
If it’s your first time to buy from China, don’t rush it. And this article isn’t going to make you an expert, sorry to say. Give it at least six months I’d say to do your first order.
Think about it.
Between:
* Finding the supplier
* Shipping samples back and forth
* Negotiations
* Making a sales contract
* Sending a deposit payment
* Quality inspection
* Shipment to your facility
Just listing these out I’m thinking this is longer than six months!
Always Get a Sample – Production Sample!
This is where people get impatient and rush. They get one sample that is “kind of close” to what they want. They are based in USA and Europe and tired of spending the 80 US dollars for UPS to ship the samples back and forth each time, so the factory convinces them this is a “basic idea and they will change X, Y, and Z” to make it the way you want.
So then get them to make that sample and send it back!
Yes, it is exhausting but if you cut corners at the beginning, it will cause bigger headaches later on.
Do a Test Order
Buy from a couple factories a lower quantity.
The best time to get to know a factory (or anyone in life or in business) is to do a practice run with them. This is when their true colors come out, as often during the sales process all the promises in the world are made, now is the time to see if they can execute.
It’s Sometimes OK to Use a Trading Company
Many people always talk about going “factory direct” and “cutting out the middleman”, and yes, while you may keep more of the money yourself, there are sometimes extra value add services they can do.
Another reason to use a trading company, they have a network of factories, so you can do a lower quantity across multiple product categories, while a factory has higher minimum order requirements and then you’d need to coordinate with all of the factories yourself.
Use Third Party Services
Similar to potentially using trading company, there are a wide range of third party service providers out there. From quality control, CAD design, sourcing, to logistics, the more of these you use yourself the better control of the entire process you will have. Normally the factory will tell you not to worry about these things – as they have their own partners they work with or they don’t do these services at all! But of course if you pick your own third party vendors you can rest assured they will help you more ensure the factory is doing things in your best interest.
Location Matters
I remember when I was first searching for a factory while home in USA. I had no idea where these factories were located and I thought they were all in the same vicinity. Yup, I didn’t comprehend at the time China is a massive place, and various “clusters” of factories form in certain cities – for example Ningbo is where a lot of gifts and home decor is made, Shantou for toys, Shenzhen for electronics. Learn where these clusters are, and then determine if you can source all your various products and components in that area. Why? This will reduce headaches long term when consolidating shipments and doing just in time (JIT) scrambles for unexpected situations.
It’s Better To Lose / Waste Money At The Beginning Than At The End
Many people look at R&D and they think, yes, this is a worthwhile cost to design a new product. But I think they don’t classify things correctly – I put a ton of various costs as R&D – flying to the factory, sample shipments, buying samples from various potential factories. We can’t cut corners on these upfront investments, and we need to look at them like this – investments – not expenses. As like any investment, the value increases over time, and the knowledge, awareness, and correct suppliers you find at the beginning will save you countless hours and dollars in the long term.
Sadly, when we make the right decisions it isn’t as easy to see as when we make the wrong ones. But if you’re not having headaches in the years ahead, count your blessing and thank yourself for making the right investments and decisions at the early stages
Make a Contract in English and Chinese
This one I wish I knew when I first started buying from Chinese factories. And you can’t just find one on a Google search and tweak it, this is something that will be with you for years to come. Find a qualified lawyer, on my podcast we have Mike Bellamy sharing some of his legal contacts there to use. Or go through recommendations in your own network. While if you’re a smaller buyer, a contract may be hard to enforce, at the minimum it sets the rules of engagement from the beginning and reduces miscommunication later.
Conclusion
So I hope today’s rather brief article helped and got your brain flowing here. It’s a daunting task, sourcing from China, but we need to stay motivated and do it step by step. If you’re currently buying from wholesalers in your home country (like I was) take it one product at a time until you’re confident and comfortable to expand.
This was a guest post I wrote originally on JumpStart Magazine.
So you’re thinking to move to China? Or maybe come to a visit – and 2 cities are sticking out for you – that is Shanghai and Shenzhen.
Which one should you choose?
It’s such a heated debate with expats over beers, I thought today I’d take a crack at writing it up a bit! Let’s just go through each factor and see who is the “winner”! Though the winner will depend on which of these points are more important for you!
Cost of Living
Shenzhen is cheaper than Shanghai. Costs have been skyrocketing across China, with rents doubling or tripling in the years I’ve been here. Yet I think for the same living standard and central location in Shenzhen, you’d pay much more in Shanghai.
Of course this main cost is rent. Let’s just say for a 2 bedroom in Shanghai the cost is about 10,000 CNY and that same place and location in Shenzhen would be 7,000 to 8,000. Of course this is going up and up as the economy gets hotter. Yet as a general rule of thumb from my experience housing is about 30% more in Shanghai.
Borders with China
For those entrepreneurs and other hustlers who come to China on a longer term stay and don’t have the proper work permit / residence visa, I feel your pain! You will need to leave China most likely every 30 days, or if you have a good visa, every 90 days.
This adds up quick in travel costs and travel time.
If you’re based in Shanghai, this will require a flight somewhere. Maybe you can come down to Hong Kong (or some come to Shenzhen for the cheaper flight then take a bus to Hong Kong), while others fly to Korea or Philippines, etc. Its up to you- but you need to take that exit stamp on your passport to not overstay your Chinese visa.
Overstay your China visa? Just a fine per day for each day you’re late, but then the second time it is more serious. Customs may ban you from entering China going forward, which I can say has happened to a few people I know. So don’t risk overstaying your visa, it can cost more than just fines.
So back to the comparison of SZ and SH. Shenzhen has over 7 border entry points to Hong Kong, and going across any of them counts as exiting China for your visa. I won’t get into the political reason of “but isn’t Hong Kong the same as China” argument – it is a different “region” (SAR). So this will count as exiting China.
A ton of expat entrepreneurs I know, myself included for a couple years, got by this way. Just crossing into hong Kong every 30 days. Not a bad thing at all, go shopping, maybe do some banking or other Hong Kong company related business. Maybe a customer too, can stay overnight. You can also file for a new China visa from Hong Kong, and do an express one that you can get back the next day.
Do You Like Snow or Sweating?
Here is a decision you need to make – what weather do you like? There is a ton of hot days in Shenzhen and it never snows, ever. I’m typing this up in December so it is a bit chilly today and I have a sweatshirt on – but you’ll never have snow or ice.
Shanghai doesn’t have a ton of snow, but it will get chilly and there will be snowfall in the wintertime. Not like a risk of an avalanche or blizzard but it will pile up a bit.
Yet here’s a plus for the cold times in Shanghai – apartments have heating systems installed! Shenzhen, none! So you will need a space heater for a couple months in the year here in SZ or extra thick blankets.
Both cities have pretty hot summers, well Shenzhen has EXTREMELY hot summers. And humid, you’ll be sweating and maybe changing your outfit once or twice a day.
So not sure which weather you prefer, some like the different seasons and then others like the warmer climate.
Selling Into China
Shanghai is the place to be if you want to do China market entry. Not exactly sure how that came to be, but it is known as the “cosmopolitan” center of China. Everything comes in there for marketing and design. Its full of creative marketers. They can help you do everything from creating the marketing campaign to customer service to e-commerce building and distribution.
Tons of people ask me if I know people in Shenzhen who can help them sell in China – but most of these full service agencies are up in Shanghai.
Maybe that means there is opportunity for Shenzhen. Shenzhen is more known for hardware and electronics. As well as export e-commerce, which we’ll hit in the next point.
Electronics + Export E-commerce (B2C)
Shenzhen is the king of electronics. Apple via Foxconn has been making iPhones here for years and there has become a complete front to back industry here. From marketplaces to manufacturers to prototyping, Shenzhen has it all. Anything is possible here in Shenzhen for your hardware project.
I meet a lot of Kickstarter campaign entrepreneurs coming here for their manufacturing. They will be coming here often. Some who take it to the next level even open their own office here.
On top of the electronics and hardware, there is the exporting via B2C (business to consumer) e-commerce. Because there is a ton of e-commerce via electronics, the hubs for e-commerce has now spawned into Shenzhen. When people buy iPhone cases and backup batteries, via eBay or wherever, a ton of the time they will ship it direct from Shenzhen. Right out of the electronics market, most likely Hua Qiang Bei.
Learning Chinese
I have to admit, my Chinese language skills aren’t too great. My excuse maybe is because I’ve been down in Shenzhen. Because this is a melting pot, there are tons of Chinese dialects, especially Cantonese. And a lot of immigrants that don’t know how to speak Mandarin well, or correct. I have had friends from north China come down and say how hard it is for them to communicate. Yes! Even though they speak decent mandarin, the taxi drivers or shop owners don’t hear it well and don’t speak it well.
So if you’re looking to study Chinese, sure you can study down here in Shenzhen. You will most likely enroll at Shenzhen University, but I’d recommend going up north. So Shanghai could be a good place, there are tons of chinese learning centers there.
Another side note, for whatever reason, Chinese in Shenzhen have been shy to try to speak Chinese to me. They immediately think I don’t speak Chinese and speak in English. Or they just don’t even make any attempt at all – without me even opening my mouth. When I am in Shanghai or other north china cities, the “general public” speaks Chinese with me straight away.
Why?
I’m thinking because more foreigners speak Chinese there. Maybe here in South China because people do a lot of manufacturing here. Foreigners just come for short trips to visit factories. So over and over again the Chinese public sees the foreigner can’t speak any Chinese. So they become accustomed to just making that assumption.
Pretty frustrating for me who is trying to learn Chinese,so take that into account when deciding which city to live in.
Shanghai is a City Your Friends Back Home Know
Even though Shenzhen is a city with around 17 million people, my friends back home don’t know the city when I tell them. I have to say it’s across the border from Hong Kong. Then they get it.
Shanghai is so famous around the world. And it has that big city image. People know it is a hustle and bustle city with tons of opportunities.
Maybe this is something you could care less about – but Shanghai definitely has more “sexy appeal”. When telling people where you live and work, they seem to show more awe and interest.
Fashion Center is Shanghai
If you’re doing fashion or design, you deal with Shanghai. There are all kinds of events with models and designers on a regular basis there. Not a bad gig right? Shanghai has been building that reputation up for generations. It is well established as a global fashion center.
It is also known as a pretty classy place. Even foreigners there can’t get away with being in tshirt and jeans at bars and clubs. I always notice the difference when traveling. In Shenzhen everyone seems more casual attire and in Shanghai people dress to impress, from morning till night.
Not sure which one is more appealing to you – but image is important in Shanghai when you go to business meetings.
Shanghai Closer to Beijing + Rest of china
Shenzhen is down south. South China is just, how do you say, different from the rest of china. It was Canton, it has Cantonese. There is Hong Kong, and Southeast Asia nearby.
You’re just not in the center of action. Just like an earlier point about selling into China – a lot of that you will do in Shanghai. The distribution is more engrained there.
Plus in Shanghai you can take a fast train up to Beijing no problem, so if you have a meeting there the next day – it’s possible. Whereas in Shenzhen, sure you can get to Hong Kong or Guangzhou quick but it’s more for product based business. The real action for domestic Chinese business is up in Shanghai and Beijing.
My wife moved down to Shenzhen for example, and she still had to always go up to Shanghai and Beijing for business trips. You do things face to face in China, and if you’re selling local -you then need to do a decent amount of travel.
More Expensive, But More Money
While shanghai may be more expensive, you can also earn more money. Salaries are higher, and consulting projects have bigger budgets.
So while the costs are higher, the chances to make more money, local is where it’s at.
Compare that with Shenzhen, and you make most of the money from the export market. So that means a lot of e-commerce, online B2B directories. You won’t get as much sales as an agency or consultant in Shenzhen.
But, Hong Kong is just across the border, and there are a lot of chances to get bigger contracts there.
Less “Guanxi” Requirements in Shenzhen
Was a thing I liked a lot about Shenzhen when I came here. My Chinese friend Huck said it too. He said, there isn’t this “relationship” requirements like in other Chinese cities. It is a melting pot in Shenzhen, and everyone is new – the city is only 30 years old.
So you don’t have these multiple generation family business conglomerates. “Normal class people” need to dig through every time to get some bigger project done. But in Shenzhen, no one knows anyone else. So they have to put down these traditions and get back into finding genuine business relationships based on price and the ability to deliver.
A bit of a stretch here and hard for me to explain, but does that make sense? Sure, it isn’t everywhere in Shanghai or other established cities, but of course there is more “roots” from being there for so long.
Shanghai Nightlife is World Class
Shanghai has the most amazing clubs and bars in the world. It was Lady Gaga who said she loved that city when she visited, and it is a center of party mayhem.
Shenzhen is catching up, with more and more clubs and bars, for the most part in Coco Park area. But Shanghai has them everywhere, every district, you can find amazing clubs and bars.
Not just nightlife, there is more culture too. More history for being around through so many different phases of Chinese history and culture.
Shenzhen being so new doesn’t have this nightlife built up nor the long history and places to visit. They are working hard at it though.
Thoughts? Which City Do you Prefer – Shenzhen or Shanghai?
Have you been to one or the other, or both? What do you think?
I’d love to see your comment below! It can also help give some other readers some perspectives besides mine alone!
Was I too biased on one side or the other? I have no real interest in swaying you on either side, so I didn’t mean to – both have their good and bad, just like anything in life! But if you think I was out of line, please let me know by also commenting below! Cheers!
I’m getting a lot of heated debates lately about should an entrepreneur choose Belize or Hong Kong for their global business.
Today we’ll break this up a bit and see what is best for your situation. Again, please ask an expert for your specific case and situation.
What’s Your Nationality?
The first is what passport do you hold? It’s easy to incorporate a new company almost anywhere in the world, the challenge always comes up at the bank account opening process.
If you’re a USA passport holder, you can apply for a bank account in America without a problem. So what people are doing is opening offshore companies and then via this offshore company opening a US bank account. Seems pretty wild right? Open a company overseas as an American, and then go back to America to open the bank account.
I’m not a tax specialist, but I have heard that this is a great tax shelter setup. And Belize is the most common company structure to have when applying for a USA bank account.
So the reason this section of the guide is asking you which passport you have, if you open a Belize company as a European, for example, it won’t be that easy for you to get a USA bank via this Belize structure. But if you’re American, I’m told this is pretty straightforward process.
How Can A Belize Company Work For Americans?
You may be wondering, I thought America is cracking down on Americans hiding their money overseas. It is crazy to me to hear this can work, but the answer I have heard is this.
High profile American politicians and rich executives in America have this exact same structure. So they won’t make laws that go against their own corporate structure.
So by having a company setup the same as the “big boys” in USA, man feel safe this can work for the long term. Or at least the longest out of the other options.
Hong Kong Case For Your Business
Hong Kong is great if you don’t want to setup this Belize structure with a USA bank account. Maybe you’re not sure how long that will work for. In Hong Kong you will be 100% operating in Hong Kong with a Hong Kong bank account and all your reporting and operations.
Hong Kong isn’t like these offshore island companies that don’t have established banking in their own jurisdiction. HK is a financial center of Asia and the world and has plenty of banking options.
Yes, I have been talking a lot on the Global From Asia blog about how it is getting harder to open a bank account. That is happening all around the world, and you need to have more reasons and cases for relevancy in that region. More enforcement by governments to make sure banks KYC (know your customer) but also report back to the USA government who has accounts there (FATCA) has caused these headaches for legitimate business owners.
What I’ve noticed is that while a Belize company may work for Americans, the hard part for everyone else is to get a USA bank account. This has then re-directed a lot of Europeans to talk to me about setting up shop in Hong Kong.
So Really – It’s About Where You Want to Bank
When it boils down between Hong Kong or Belize, you need to think about where you want to bank. Belize means you’ll apply to a USA bank, with a Hong Kong company you’ll apply for a Hong Kong bank. I have had other people get a bank in Europe via their Hong Kong company for tax reasons, which is pretty interesting and a future topic for the blog.
At any rate, a company in itself isn’t the critical factor – it’s about the banking.
Americans can get USA banks without a hitch. I am told (disclosure, I do not have this structure) that it is pretty straightforward to get a Belize company setup and a USA bank.
But if you’re not American, then you can open the Belize company but will have issues with a USA bank account. Then you may look at other company structures.
It Seems Risky For Me To Bank in USA to Avoid Taxes?
I’m not a tax guru, I’m a business owner. And yes, I’m American (I should put the scarlet letter on my forehead!). While no one likes taxes, I think it is part of life. The tax avoidance game will probably never stop and next year there will be some new way to get around paying your taxes.
Yet I know this is such a hot topic, and heck, may as well have a couple blogs on the site to see what comments we get.
I think it is kinda crazy, as an American, to open a USA bank account in an offshore company to avoid paying USA taxes. Sure, there are really smart people that say this works – but it seems so counter-intuitive. Maybe really wealthy American people do it, but those people probably have really smart lawyers watching over the laws. As soon as there is a policy update, they’ll immediately react and move to another complex structure.
So to me, you need to do what is right for your business. Not just about avoiding taxes.
Does Hong Kong Help For Your Asia Business?
What I’m more excited about when I write up these blogs is doing business in Asia. A lot of readers are buying from Chinese factories, or have development shops in Vietnam. In these cases, it helps a lot to have a Hong Kong company. Sure, taxes are also lower than other places in the world, but that isn’t my focus to recommend it.
You want to do business in Hong Kong because you can headquarter your global business here. Pay your suppliers in China, your outsourcing team in Philippines and Vietnam. And yes, receive your sales income from clients around the world.
You can also open subsidiary companies in China and even in Western companies to do sales and operate locally there.
So those wondering Belize or Hong Kong, try to step back and think where are you going to be operating your business ?
Think Long Term – Play To Win
Make long term decisions. For your competitive advantage as a business owner. Where will life be the most simple? Where can you go to stay on top of the trends in global business?
I’ve been witnessing Asia grow as a global player for almost a decade now. Do you think that will continue? Will you be raising money from investors? If so, where are those investors located? Where are they comfortable investing?
What Are Your Thoughts? Belize or Hong Kong?
I hope I helped you out. You’ll have a lot of other consultants and business experts talking to you about where is best to set up. Full disclosure, I am a consultant and agency to help you set up shop in Hong Kong, so I have my natural bias. Yet I tried my best to give the pros and cons of both sides.
I’m not sure what the yearly upkeep fees for a Belize company are. But in Hong Kong, we have a guide covering the yearly fees you can check out.
Please, leave me a comment below. Am I missing something? I am completely ignorant! Let’s all share and learn together.
Looking for the right place to establish your import and export company? Hong Kong definitely should be one of your top choices! Let’s dig into why, what you’ll need, and how to put in place your business.
What Actions You Do For An Import and Export Company
First, what do you do with a trading company, or an import and export company. Breaking it down today into functions so that you can best find where to establish the corporation.
You will be:
Buying (Sourcing) products
Sourcing is the common word here. You’ll be hunting through B2B directories like Alibaba and Global Sources. You will be going to trade shows and visiting factories. Building up a network of relationships with quality suppliers for you to buy in volume from. This will be for mass production. They will be doing production in at least 1,000 pieces (MOQ, minimum order quantity). You will order and pay an initial deposit so that they can get the materials and start the process. Most likely the countries you will be buying from are Mainland China and Southeast Asia. Maybe some India in there too.
Selling These Sourced Products
Most likely you won’t be the one taking the end shipment. Instead you will immediately sell these products you sourced and then made your commission or your cut. You will be in charge of finding the quality suppliers. The big key is ensuring the manufacturing goes smooth and the products are of acceptable quality. Arrange the shipment to port and you’re paid. Most of the time your buyers are in the West like USA and Europe.
Office and sourcing staff
You will employ, full-time or part time staff to help you manage the business. They could be in your customer’s market such as USA or Europe. They also could be on the ground in China working with the suppliers and logistics. If you are just starting out you may have freelancers helping out here plug holes. Soon you will get your volumes up big enough to have your own in-house team.
Travel and conference expenses
You will be investing a lot of money in traveling and trade shows. You will need to often visit suppliers in China, and buyers in your target market. It is key to keeping your business stable and the main selling point and differentiator is your relationships.
Am I missing something?
Benefits of Hong Kong
A trading company and hong Kong are like 2 peas in a pod. With the rise of China, so has Hong Kong risen. And many companies, both in China and around the world, establish trading companies here to bridge China to the world.
Why?
It has English on all corporate and banking documentation. It leverages the British influence it learned as a British settlement.
Foreign currencies – no problem! Having a multi currency bank account is normal. No need to have to force exchanges of all your incoming remittances to USD or Chinese Yuan. You’re free to operate in the currency(ies) that make you comfortable.
Chinese suppliers also have hong Kong companies and banks. A big one here is that a lot of times you can save big headaches by just transferring from your HSBC Hong Kong bank to their HSBC HK bank account. Same day, no fee, almost instantaneous. (See related post on Chinese suppliers also like HK companies)
Can operate in Chinese Yuan (RMB). Only Mainland china and Hong Kong have permission to hold this restricted currency. Pay your factories direct in the currency the operate in and hedge the foreign currency risk of USD/CNY
There are plenty more, but I’m sure you’re aware. These are the specific benefits for an import and export company.
Main Features You’ll Use
So what do you need to operate an import and export company via Hong Kong? Here we go:
Bank Account
Yup, you don’t have a business without a bank account. Unfortunately it has been getting harder to get a bank account (read related post). But once you have it, this is where you’ll be doing you’re buying and selling from. Most likely you’ll use HSBC – and most of your factories will have it too.
Paypal
I don’t recommend using Paypal to buy and sell from factories. Yet you may use it for purchasing small things online and paying freelancers. See our related post on Paypal Hong Kong guide.
Accounting Software
Well every business needs it. I’m a Quickbooks Pro Advisor in HK, and I do feel it stands out here as it integrated with HSBC online banking – see full post . You should also use this software to create purchase orders for suppliers and invoices for buyers. Keep track of all income and outcome here to manage your P & L (profit and loss).
Credit Card
You’ll want a business credit card to separate your business purchases from your personal. While it may be hard to get a “true” credit card, you’ll need to put up a security deposit. You’ll use this to book your travel expenses and other online tools and systems.
I think that is it! A trading company is pretty straight forward. You find your suppliers, line up your buyers, make sure the production goes good. Then the magic of getting paid, and keeping the profit and paying out to the supplier. Some Paypal too, but try not to get paid in Paypal as you’ll lose a lot of money on the exchange rate.
Keep Your Books Simple & Up To Date
Keep all your invoices together. Use a system. And then when your audit comes up, things will be straightforward. A B2B (business to business) trading company won’t have a ton of transactions. So the auditor shouldn’t charge too much.
Also, run monthly reports to check your profits. Many times when I did sourcing I wasn’t watching my expenses and only looking at my profit margins. Things creep up and by staying on top of your expenses and other fixed costs, you will know your monthly break even.
Hong Kong is your Top Choice For Trading Businesses
This to me is a no brainer. If you’re buying and selling between China and the world – Hong Kong is your number one choice. Check with your suppliers, and see what banks they are using. Then you have a company with a bank account doing your deals. You may still keep a company open in your home country for local operations there (staff, office, local salary). Keep a trading company over in HK for the B2B deal flow and quicker wire transfer turnaround time.
What do you think ? I’d love to hear your comments and feedback in the comment section below!
Company or thinking about registering one? Do you buy things online too? For your company, not personal. Right.
Then you’ll need to get a business credit card.
First, There Aren’t Debit Cards, Just EPS/ATM Cards
In Hong Kong, they don’t have what we know of as “debit cards”. It would make life a whole lot easier for us though, and I may not even need to make today’s guide post.
A debit card is a card that has the Visa / Mastercard logo on it, and you can buy things online just like a credit card. The difference is it takes that cash out of your bank account that the debit card associated with it.
Nope, not available in Hong Kong, for what reason, I’m not sure.
So you will get a “card” when you get your bank account, but it won’t have a Visa / Mastercard logo on it. Instead it will have no “credit card” logo on the front.
What logos are on it? If you flip it over, you’ll see:
EPS
Unionpay
Now, EPS is electronic payment system. This you can use to buy things at merchants who accept EPS. This I have only found at shops inside of Hong Kong borders. You then swipe this card and enter your ATM PIN code and they directly debit the cash from your bank account.
UnionPay, this one is a Chinese version of Visa / MasterCard. But in the case of the bank account card you get with the new account, you can’t use this as a “credit card”. Instead, this means you have to find an ATM network that has the UnionPay logo. There is where you can use the ATM to withdraw cash from your bank.
Unionpay network is expanding everywhere, but please keep this in mind and look for ATMs that have it. Also, make sure you turn on the overseas ATM limit, so you can withdraw cash when outside HK. And also make sure you have HKD (Hong Kong dollars) in the checking or savings account. This is because you can’t take cash out of other currencies at the ATM, anywhere in the world. It will always take out from the HKD account (yes, even if you’re in Thailand and have Thai Baht in the account).
OK, well we’re getting in a bit deeper than I planned for the “default” card explanation. Just remember you get this when you open your bank account in Hong Kong, but you can’t use it to buy things online.
Get a Credit Card So You Can Buy Things Online
Yes, so if you open a Hong Kong company and live overseas, you’ll notice later that you can’t buy things online with your bank card. As we just covered, it will not have the Visa / MasterCard logo on it.
Next you will then apply for the credit card, so you can buy things online – in your business name. I’ve met many blog readers and podcast listeners who get the bank account opened, fly back to Thailand, get approved. Which is great. But then they realize a couple weeks later they can’t use the card to do online business.
So if you’re doing business around the world, you’ll need to find a Hong Kong based credit card for our business – as 99.9% likely you’ll need to buy things online.
The other option. If you have a company overseas for your operations there, you can keep your expenses in that company and on that company credit card. Then keep the Hong Kong company as a trading company, only for bank transfers.
Try To Keep Your Business Expenses Separate From Personal
Another reason you’ll want a Hong Kong credit card is that you have a personal credit card for your own life. Yes, you have a life and aren’t a walking company. That would be weird.
Bookkeepers and accountants hate it when you mix up your personal and business expenses. Governments hate it even more. If you do ever get an inquiry from the Hong Kong IRD (Internal Revenue Department), let’s just hope you don’t. If talking about your business expenses and start whipping out personal credit card statements – watch out. That can be the beginning of a long, long back and forth discussion.
This is another reason why you should get a business credit card. At least, have a separate credit card for your personal expenses and another credit card dedicated only for your business expenses.
The Credit Card Will be in Hong Kong Dollars (HKD)
Whether you like it or not, Hong Kong works in Hong Kong Dollar currency. Sure, the government locks the HKD to USD at about 7.78 HKD/ 1 USD. But when you buy something, you’ll see it on your credit card statement as a HKD amount. Well it will show the USD amount (or whichever foreign currency) on the left column, and on the right it will show the HKD amount.
So yes, you’ll pay in HKD, and then if you have USD in your bank, you’ll need to convert that to HKD to pay the bill. That means you can do 2 foreign exchanges for 1 transaction, the first for buying the goods in USD, and the other for converting to HKD to pay the HKD denominated bill.
While this sounds like a lot of FX exchanges (and spreads to pay banks), this will still help you keep all your income and expenses in 1 company account. Will make accounting and bookkeeping much easier, and keep all business activity in one company.
The other option is, have a credit card in another country and wire money over to pay it. Or have multiple companies in multiple countries and pay the bills from one company to another, etc etc. You get what I mean, that is another overhead and expense.
There Is An Annual Fee, But Can Get It Waived
There is an annual fee for the HSBC card. It’s about 125 USD. Yes, you can get a refund if you call and ask. Just put a reminder to do so!
Points and Benefits
There are points added to the account but nothing like US credit cards. I got like a wallet one time or something. The big benefit I use is the free airport lounge pass at HK airport – take a shower, get buffet, grab a nap. Not sure how often you come through HK international airport?
Main Benefit
What’s the benefit of picking up the card? I’m assuming I’ll get a debit card with the bank, do you use the CC for expenditures to make it easy on accounting? or rack up some nice points for anything?
The benefit of the card is to keep your company expenses in the company accounts. The points aren’t as good as in USA and other countries, but you do get to go to the HK airport lounge free when traveling. There are points but not so great.
Need a Security Deposit
The credit card we recommend is a secured credit card. That means that you need to put a deposit of the matching amount the balance is. The lowest amount if 10,000 HKD (about $1,200 USD). If you want to have a higher balance, you need to have a higher security deposit.
If accepted, they will mail it to your correspondence address 3 weeks after they approve your bank account.
the credit card security deposit: Is that locked into the credit card and I only get it back when / if we close the account? Or does this deposit somehow become ‘available funds’?
The security deposit cannot be for operations. You can get the deposit back by closing the card. After requesting to close the credit card, it will take 60 days to release the security deposit. Which will then post to your HSBC HK HKD account. So keep that bank account open!
The “security deposit” on the credit card itself… I’m not familiar with the mechanics of this. Does this mean it’s a card that you “load up” with cash and have access to the cash you’ve “loaded”? I.E. You put 10k on the card, and can spend that 10k. Or, is the security deposit permanently “held”?
The security deposit will not be able to be used for operations. It is essentially locked in a time security deposit account accruing something like 0.0001% interest. You can get the deposit back by closing the card. After requesting to close the credit card, it will take 60 days to release the security deposit, which will then be posted to your HSBC HK HKD account.
Unsecured Credit Card Is Possible
Don’t want to lock up your cash in a time security deposit? Yea, we understand.
The banks do offer unsecured credit cards – but that application process is a bit more stringent.
First, what’s an unsecured credit card? It is a credit card that most people are familiar with! Its where you apply, and then get a credit line for X amount of money. Say its only $1,000USD. This means that the client can spend a thousand bucks and not pay it back. Sure, it will hurt their credit score and they won’t get approved for another card – but it is possible the bank could not get that money back.
So its unsecured, they don’t have your house, or cash, or other assets to claim (take) if you don’t pay it back.
So in Hong Kong, this is riskier – it’s not USA and they don’t look at your American credit score. They don’t know who you are and if you don’t pay it back, maybe you’ll just never come back to Hong Kong and they’ll have no way to even “mark your account” in a credit system.
This is why it’s more difficult, in general, to get credit in Asia. There aren’t these credit bureaus with established systems like in America.
So you can try to get an unsecured card in Hong Kong – but you should have some kind of track record in Hong Kong. And almost 100% sure you will need a Hong Kong residential address. They just feel safer if you live in the Hong Kong boundaries.
Cancelling Your Secured Credit Card
So, it’s always good to think ahead, to think with the end in mind. So what happens when you want to close the account? I hope you’re not starving and waiting for this security deposit to come back.
It will take 60 days to credit back to your account. Yup – 2 months. So there are ways to speed it up a bit, pay some fines and get it in a month. But still a long time. So you’ll need some patience.
Best to just not expect to be able to use this security deposit for quite some time.
Hope This Helped! Consider Letting Us Help You?
We hope this guide helped you out today. These are questions our banking clients always ask us, so why not share it with everyone.
If you want us to work alongside you through this credit card application process, we have a service just for you! Check it out.
Also, have you applied yet for a credit card? Any issues or questions, we’d love to hear from you in the comments. Let others learn from some of the issues you’ve had!
In terms of shopping or paying, there is no greater thing than a cashless transaction – it is fast, easy, and accurate in terms of paying the exact amount; it has made online shopping easier, and it is safer. Since Hong Kong banks do not offer debit cards, and you may find credit cards a little too complicated, there’s another option called Tap & Go.
Tap & Go is basically an e-wallet / prepaid mobile MasterCard that can be accessed at your fingertips through your smartphone.
Application for Tap & Go offers 3 plans with different eligibility requirements and features
TYPE
A
B
C
Age
All ages
11 years old or above
18 years old or above
Supporting Documentation & Information
None
valid Hong Kong/Macau identity card or Macau/PRC passport or Exit-entry Permit for Travelling to and from Hong Kong and Macau
(a) A copy of your valid Hong Kong/Macau identity card or Macau/PRC passport or Exit-entry Permit for Travelling to and from Hong Kong and Macau; and (b) A copy of your permanent residential address
To use Tap & Go with your mobile phone, your operating system must be iOS 7 / Android 4.2 or higher for you to be able to download the app either from Google Play or App Store.
Once you have downloaded the app, you have to purchase a Tap & Go Card through a designated branch or retailer. The easiest way to acquire a card is at 7-Eleven, which is basically available on almost every corner in Hong Kong.
To activate your account, you will have to link the card with your mobile app. In this step, you will have to submit/upload an identification card using your phone’s camera.
Here are links to more detailed tutorials on how to use Tap & Go:
The card is customizeable; they have a limited promo called Selfie-a-Card wherein you can choose any photo to use as the design of your card — it could be a selfie. Cool, right?
Peer-to-peer fund transfer
Discounts at selected stores
It enables you to settle payment anywhere worldwide or online via MasterCard® contactless technology embedded in the SIM or Tap & Go Card
Tap & Go Disadvantages
Fees – $300 cancellation fee if you wish to close your account within 1 year from date of activation, and the refund for the remaining balance takes a maximum of 3 months to arrive. Moreover, if you do not use the card within 6 consecutive months, your account becomes dormant; hence, you will be charged a HK$10 maintenance fee every month.
Unlike a debit card, there is no interest payable on the account
Not many rewards
Tap & Go for Foreigners?
Based on their website, it says that as long as you are aged 11 and above and possess a Hong Kong/Macau identity card, you may be able to open and activate a Tap & Go card. Unfortunately, as per Tap & Go’s terms and conditions, a US citizen may not be qualified to open an account. See below for reference:
1. WHO CAN APPLY FOR TAP & GO
1.1 By activating for Tap & Go, you confirm and declare that you are not a US Person as defined in US Tax legislation or a U.S. taxpayer for any other reason, in particular, (i) you are not a U.S. citizen, U.S. resident or U.S. green card holder; (ii) you do not fulfill the “substantial presence test” in the U.S.; (iii) you are not born in the U.S.; and (iv) you do not have a mailing address or contact details in the U.S
If Tap & Go does not allow Americans to open an account, then that’s another addition to its disadvantages. Overall, it’s far less complicated than applying for a credit card in Hong Kong, so to me, Tap & Go could be a great alternative for cashless and online transactions.
Exports in the Qianhai area from online sales quadrupled during the first half of this year to over 2 million packages, bureau officials said at a press conference yesterday.
The Shekou Ferry Terminal is looking quite old in the tooth and finally the decision has been made to move the terminal to the upcoming Prince Bay Cruise Terminal project. Cruise Ships will doc as well as ferries at this new location and it will include a shopping arcade, restaurants, and even a Maritime Museum. Ferries will stop at the new ferry terminal from Hong Kong, Zhuhai, Macau and more.
I am in the customs line now there is a 14 year old girl wearing a baseball cap one side says “69” one side says “fucking problems” and the front says “pervert”! 😀
The Wanchai bus station near the Wanchai Ferry peir is now under construction and so if you want to take the 24 hour cross border bus from Wanchai to Huanggang Kou’an in Shenzhen you will need to find the ticket counter next to the 7-11 on Harbor road.
The Wanchai to Shenzhen temporary ticket counter.temporary bus station in Wanchai wait in the shade under the construction barrier Note there is also a cross border bus from Wanchai to Shenzhen Bay border crossing.
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