Why Starting a Business in Hong Kong is a Game-Changer for Indian Investors

As India’s economic strength grows, forward-thinking Indian investors and businesses are increasingly considering new opportunities for global growth, including starting a business in Hong Kong. The special administrative region, a key hub of international commerce for decades, now calls to Indian entrepreneurs as a strategic launchpad for global expansion.

It makes sense, then, that Indian businesses are looking to take advantage of the same financial and regulatory levers that have propelled Western companies to international prominence. Starting a business in Hong Kong provides Indian firms with a unique position as a bridge between East and West, offering unparalleled access to global markets and a highly favourable business environment.

This article will explore the city’s strategic benefits, the surprisingly strong ties between India and Hong Kong, and the opportunities across various sectors. We’ll also discuss how Hong Kong has recently made it easier for Indian workers to be employed by Hong Kong-registered companies, enhancing the city’s appeal as a gateway for Indian businesses looking to scale globally.

Advantages for Starting A Business in Hong Kong for Indian Businesses

We have spoken at length about the advantages of doing business in Hong Kong, but for your benefit, let’s briefly go over how Hong Kong offers Indian businesses a unique set of advantages:

• Prime Asian Location: Hong Kong is at the centre of Asia, giving Indian firms quick access to China and other fast-growing Asian markets. 
• Business-Friendly Setup: Hong Kong ranks third in the world for ease of doing business. Clear rules, low taxes, and a simple tax system make it ideal for Indian companies.
• Strong Money Hub: Ranked fourth in the Global Financial Centre Index, Hong Kong offers Indian businesses capital access, investor links, and steady currency with free money flow.

Close India-Hong Kong Ties: India and Hong Kong share solid bonds. Hong Kong ranks as India’s 12th largest export market and 11th largest import source. About 44,000 Indians live in Hong Kong, with many in banking, IT, and shipping.

History of India-Hong Kong Bilateral Relations

The relationship between India and Hong Kong is built on a surprisingly solid foundation of historical ties and mutual economic interests. 

Historical Connections 

India’s ties with Hong Kong date back to the 1840s, when Hong Kong became a British colony. Over nearly two centuries, these relations have evolved from simple trading links to cover a wide range of sectors including investment, finance, services, maritime, shipping, logistics, culture, and education.

Key Bilateral Agreements 

Several important agreements are in place to facilitate business and legal cooperation between India and Hong Kong:

1. Double Taxation Avoidance Agreement (DTAA): Signed in March 2018, this agreement helps prevent double taxation of income, making it more attractive for Indian businesses to operate in Hong Kong.
2. Agreement on Mutual Legal Assistance in Criminal Matters (2009): This agreement supports legal cooperation between the two jurisdictions.
3. Air Services Agreement (1996): Facilitates air connectivity, crucial for business travel and logistics.
4. Customs Cooperation Agreement (1997): Streamlines customs procedures, aiding trade flows.
5. Agreement for Mutual Recognition of Authorised Economic Operator (AEO) programs (2013): Enhances trade facilitation for trusted traders.

While much of this history has flown under the radar for everyday Indians, this established relationship offers Indian investors a level of familiarity and security that can be particularly valuable when venturing into new international markets.

Trade and Investment Between India and Hong Kong

India and Hong Kong have built strong economic ties, with trade and investment showing substantial growth recently.

Key Trade Statistics:

• Hong Kong was India’s 12th largest export destination in FY 2022-23
• India’s exports to Hong Kong: US$9.89 billion (FY 2022-23)
• India’s imports from Hong Kong: US$18.27 billion (FY 2022-23)
• Total trade: US$28.166 billion (FY 2022-23)

Main Indian Exports to Hong Kong:

• Gems & Jewelry
• Iron & Steel
• Electrical Machinery
• Meat & Edible Meat
• Machinery

Source: Consulate General of India

Key Industries and Opportunities for Indian Businesses

Hong Kong offers Indian businesses numerous opportunities across various sectors:

Financial Services and Fintech:

• Global financial hub with over 70 of the world’s top 100 banks
• Growing fintech ecosystem, supported by government initiatives

Innovation and Technology:

• Robust R&D infrastructure
• Government funding for tech startups
• Cybersport and digital entertainment hub

Professional Services:

• Demand for legal, accounting, and consulting services
• Gateway for professional services into mainland China

Trading and Logistics:

• Strategic location for Asia-Pacific trade
• World-class port and airport facilities

Hong Kong as a Prime Destination for Family Offices

Over recent years, Hong Kong has emerged as a preferred destination for family offices worldwide, particularly as investors seek stable, regulated environments offering diverse investment opportunities. 

Setting up in Hong Kong presents clear benefits for Indian investors. The city is home to approximately 400 family offices, with an additional 30 established in 2023 alone. Hong Kong provides access to a wide range of financial products and services, enabling customised investment strategies that align with specific needs. Most famously of course, Hong Kong’s favourable tax policies, including no capital gains tax and a low corporate tax rate, enhance the efficiency of wealth management.

The strategic position of Hong Kong within Asia also adds genuine value, serving as a gateway for Indian investors to expand their portfolios across the region. The stable legal and regulatory framework ensures that investments are secure and operations run smoothly.

Recent trends show that Indian family offices are increasingly taking advantage of these benefits. For instance, Raffles Family Office has successfully integrated Indian investments into its portfolio, showcasing the potential Hong Kong offers as a base for managing wealth. As economic ties between India and Hong Kong grow, the opportunities for expansion will only increase.

For more detailed information, you can read our article Guide To Starting A Family Office in Hong Kong.

Hong Kong Visa Facilitation for Foreign Staff

Hong Kong has brought in new measures to streamline the visa application process for foreign staff employed by companies registered in the city. These initiatives are particularly advantageous for Indian businesses, offering a smoother transition for key Indian personnel relocating to Hong Kong. 

Priority Processing for Foreign Staff

One of the most beneficial aspects of the new visa arrangements is the introduction of priority processing for foreign staff of Hong Kong-registered companies. Indian employees can now access a special queue for expedited service at the visa application centre by presenting documents such as a staff card, business card, or employment contract. This significantly reduces waiting times and helps companies get their essential personnel on the ground much faster.

Urgent Visa Processing for Mainland Travel

For Indian businesses requiring their staff to travel to Mainland China on short notice, Hong Kong offers urgent visa processing services. Employees can apply for this service and receive their visa as early as the next working day. This feature is particularly valuable for Indian companies that may need to deploy personnel quickly for business negotiations or other critical activities in the region. 

Specific Considerations for Indian Businesses in Hong Kong

Much of business is Hong Kong goes beyond dollars and cents. When establishing a business in Hong Kong, it is important to be aware of several key factors that can significantly impact your venture’s success.

Cultural and Business Practices

Hong Kong’s business environment is highly efficient and professional. Indian entrepreneurs will encounter a fast-paced decision-making process where clear and direct communication is essential. Adapting to cultural nuances, such as punctuality, respect for hierarchy, and a straightforward approach to negotiations, can greatly influence business outcomes.

Legal and Regulatory Compliance

Hong Kong offers a transparent legal framework based on English common law, which provides strong protections for businesses. The company registration process is therefore straightforward, but careful attention to detail is necessary, so engaging a trusted service provider like InCorp is always beneficial. Compliance with local employment laws, maintaining accurate financial records, and fulfilling tax obligations are essential for smooth operations.

The Double Taxation Avoidance Agreement (DTAA) between India and Hong Kong is particularly beneficial, helping to optimise tax strategies and prevent dual taxation​. Again, seeking guidance from professionals familiar with both Hong Kong and Indian regulations will help ensure that all legal and tax requirements are met.

Support Networks and Community Resources

As mentioned earlier, Hong Kong is home to a well-established Indian community, including many professional networks and business associations. Getting involved with these networks provides valuable support, practical advice, and connections that can encourage the establishment and growth of your business.

Indian banks and financial institutions in Hong Kong can provide additional support for managing financial operations and facilitating transactions between Hong Kong and India​. Utilising these resources will contribute to smoother integration into the local economy and long-term business success.

Where to Next?

Establishing a business in Hong Kong presents many lucrative opportunities for Indian entrepreneurs, from access to a global financial hub to favourable legal and regulatory frameworks. While this article has provided a comprehensive overview, the process of incorporating and operating a business in Hong Kong can vary depending on your specific circumstances. Tailored advice is often necessary to navigate the complexities and make informed decisions.

InCorp is here to assist you every step of the way. With a presence in eight countries and a team of over 1,300 professionals, InCorp offers a full suite of services, including corporate secretarial, accounting, tax, payroll, HR, and compliance solutions. Our deep on-the-ground experience ensures that you receive the most relevant and effective advice, helping you establish strong partnerships and achieve your business goals in Hong Kong.

To get personalised guidance and support tailored to your business needs, contact InCorp today and let us help you make your venture in Hong Kong a success.