According to heritage.org, Hong Kong’s economy was rated the freest in the world from 1995 through 2019. As of 2020, Hong Kong is still one of the freest economies in the world, second only to Singapore. Not only is it the freest, but it is also among the fastest-growing economies in the world.
One reason for such growth is because of the government’s open-mindedness to technological innovations and commitment to human resources.
As of 2018, the World Bank ranked Hong Kong the fourth best country for doing an online business efficiently and easily.
E-commerce in Hong Kong is currently growing at a rate that is attracting a lot of investors. This growth is going to be very appealing to anybody interested in making an online business, but there are other reasons to get involved in the e-commerce industry in Hong Kong specifically.
Here are 5 things you need to know about Hong Kong’s e-commerce growth:
1. Internet access
Hong Kong has about 5.5 million internet users, which accounts for an impressive 74% internet penetration. It also consistently ranks as one of the countries with the fastest online connections worldwide. Not only that, but Hong Kong is one of the most smartphone-friendly markets in the world, and with multiple e-commerce platforms optimizing for smartphones, the ease of creating an online store it has greatly improved. This article about Wix Hk gives a well-detailed review of Wix.com—one of the world’s leading website builders, in Hong Kong.
Furthermore, Hong Kong provides a good environment for online businesses to thrive. E-commerce is developing rapidly in Hong Kong as more retailers set up their online presence and shoppers upgrade their lifestyles. With more than 4.5 million e-shoppers, the e-commerce penetration rate in Hong Kong was at 59.8% in 2018 and is expected to hit 72.6% in 2022. Many traditional stores have established online purchasing platforms. The key factors that lead Hong Kong’s customers to buy online are price and the convenience of shopping anywhere at any time.
2. Geographical location
Hong Kong’s air and sea links are driving an emerging e-commerce sector. The city’s geographical location in the heart of Asia puts it within a five-hour flight of half the world’s population. Hong Kong’s airport has taken the boom of Chinese e-commerce in its stride. The city’s international airport has been the world’s busiest cargo airport since 2010. In 2017, Hong Kong’s cargo and airmail tonnage topped five million tons, the first airport to clear this milestone.
As e-commerce users demand more from vendors and expect products delivered within days, Hong Kong is perfectly placed to meet stakeholder needs. Starting an online business in Hong Kong should really interest you because the city is also well positioned geographically for direct access to China—one of the world’s leading logistics hubs. It has been estimated (by the Hong Kong Economic and Trade Office reports) that approximately 40% of China’s foreign trade goes through Hong Kong. You will be able to find great deals with shipping and logistics providers for global distribution (like DHL offering very low rates for global next day shipping).
3. Government policies
The Commerce and Economic Development Bureau oversees the operation of E-commerce in Hong Kong. Additionally, the Hong Kong Monetary Association (HKMA) has an important role to play in ensuring that different forms of digital payment can be accommodated and processed in Hong Kong. In September 2017, HKMA announced the “Faster Payment System” initiative which supports the use of mobile phone numbers or email addresses for payments in the Hong Kong dollar and Renminbi anytime and anywhere, thus setting the stage for ease of online transactions.
Due to its free-market economy, Hong Kong has also been growing as a much-preferred destination for many global companies that are seeking to set up their regional headquarters in the Asia-Pacific region. Moreover, the country has a reputation for excellent governance, which means that you would not encounter any corrupt officer while you do business here.
The city also has a favorable tax structure. Businesses that generate less than HK$2 million (US$255,000) pay just 8.25% of corporate profits in tax (see more here). Profits above HK$2 million are taxed at a rate of 16.5%. Hong Kong’s government does not impose a sales tax or value-added tax (VAT), nor does it levy any capital gains taxes.
4. Power Supply
Electricity powers the whole infrastructure of the internet. If there are power disruptions that take place every now and then, it would affect the accessibility of the online business. In Hong Kong, you can easily enjoy a continuous and reliable power supply. And, in case of any unplanned cut in the electricity supply, the entire cut lasts for a maximum of 3 minutes.
5. Efficient Banking System
When you are setting up an online company, you need every option open to you since the world would be connecting with you and your services. Hong Kong has a sound and efficient banking system, with about 71 of the world’s 100 largest international banks having major branches in Hong Kong. Hong Kong’s economy is built on the idea of safe, secure, and easy banking for businesses. Once you register your online business in Hong Kong, you will have access to a wide range of banking services, and products, from the multicurrency accounts, and merchants.
With the help of these, business owners can easily transfer their money internationally and can bank on these financial institutions to securely hold their money. Most importantly, you will not face any problems while opening a Hong Kong business bank account if you have registered your organization correctly in the freest economy of Hong Kong.
The potential in the e-commerce sector in Hong Kong is clear to see. The good news is that you don’t have to be a large, established business to take advantage of this potential. The brief guide above will give you the basics that will help you to get your own e-commerce store established. To also make the decision on the right e-commerce platform to use, Easy Ecommerce HK does a good job of reviewing the major e-commerce platform builders in Hong Kong.
Year on year, more and more people are gaining access to the internet, thanks to the massive use of smartphones and the ease of access to the web. Not only are more people coming online, but people are also shopping more often than before thanks to the increase in online e-commerce stores around the world. Hong Kong is no exception and it creates plenty of opportunities for entrepreneurs who would like to benefit from a trending industry.