Premia TNC Hong Kong Team
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HKTVMall, Hong Kong’s leading online shopping platform, offers a significant opportunity for various brands and small and medium-sized enterprises (SMEs) to sell their products to Hong Kong consumers. For Korean companies in particular, it offers an excellent gateway to the Asian market through Hong Kong. Successful entry requires advance preparation and consideration of several factors. Below, we outline key points Korean companies should know, including the HKTVMall entry process and the advantages of establishing a Hong Kong subsidiary.
Benefits and Legal Essentials of Incorporating a Company in Hong Kong
Upsides of a Hong Kong Incorporation
Hong Kong offers many advantages as a global business hub and is also an attractive location for incorporation. To open a store on HKTVMall, a Hong Kong-registered company is required, so it’s important to take advantage of the benefits of a Hong Kong incorporation.
- Low Corporate Tax Rate: Hong Kong boasts a corporate tax rate of up to 16.5%, lower than many countries, including South Korea. Furthermore, net profits up to HK$2 million are taxed at an 8.25% rate, and profits generated outside of Hong Kong are exempt from taxation. This is a significant advantage for companies operating globally.
- Foreign Exchange Liberalization: Hong Kong has virtually no foreign exchange regulations, allowing for free foreign exchange transactions. This is advantageous for Korean companies primarily involved in international trade and payments. Hong Kong’s role as a global financial hub also facilitates easy integration with various international payment gateways.
- Robust Financial Infrastructure: Hong Kong is a global financial hub, home to a diverse network of global banks, enabling effective access to cash management and financial solutions. This allows Korean companies to expand their global business from a Hong Kong base.
Hong Kong Company Incorporation and Store Setup Guide
Establishing a Hong Kong company is simple and can be quickly completed through an agent. To open a store on HKTVMall, you must be registered in Hong Kong and have access to the platform. The process is as follows:
- Apply for Store Opening: Apply for store opening on the HKTVMall official website. You’ll need to provide your company information and the product line you plan to sell.
- Commissions and Contract Closing: HKTVMall charges a commission of approximately 10-15% of sales, with commission rates varying by category. After signing the contract, you’ll need to register your products, set pricing, and develop a marketing strategy.
Utilizing HKTVMall
Hong Kong’s e-commerce market has experienced rapid growth since the COVID-19 pandemic. HKTVMall, virtually the only e-commerce platform, has arguably benefited the most. Let’s briefly summarize HKTVMall’s key features.
Extending Services Worldwide
Initially, sales were limited to Hong Kong, but the scope has expanded to include Macau, the UK, Australia, Canada, and other countries. While the Hong Kong online market may be small, expansion into various countries is broadening the target market.
Consumer Trust Driven by Barriers to Entry
In Korea, the possibility of insubstantial or uncertain foreign businesses entering the market, which has recently become a problem, has been reduced. Unlike in Korea, a store opening fee is required, which enhances the credibility of sellers entering the market, and consumers, in turn, trust and utilize the platform.
Physical Store Sales
HKTVMall also sells some items, including fresh produce, through offline stores. This allows for some market research before opening your store.
Launching Pad for Global Expansion
Hong Kong’s high GDP allows for testing overseas online sales. Through its diverse community, Hong Kong can be used as a test market, paving the way for expansion into Greater China, Taiwan, and Southeast Asian markets like Indonesia and the Philippines.
Key Considerations for Korean Companies
Hong Kong Market Characteristics and Localization Strategies
Hong Kong consumers are sensitive to global trends and have a particular preference for Korean brands. While K-beauty, K-fashion, and K-food are already gaining popularity, successful localization requires customized marketing that reflects the specific tastes of Hong Kong consumers.
- Ensuring Product Localization: Developing and promoting products that suit Hong Kong’s climate and lifestyle is crucial.
- Language and Customer Service: Hong Kong is a region where English and Chinese (Cantonese) are spoken, so providing product descriptions, packaging, and customer support in the local language is essential. Localizing customer service is crucial to quickly respond to the needs of Hong Kong consumers.
Logistics and Inventory Management
Once you open a store on HKTVMall, fast and reliable delivery within Hong Kong is crucial. You should utilize HKTVMall’s own logistics system or work with a Hong Kong-based logistics partner. Especially when shipping products from Korea, inventory management and logistics costs must be considered, and a clear return and exchange policy must also be established.
Local Marketing and Branding Strategies
Leveraging K-Brand Strengths
In Hong Kong, Korean products have a “premium” image, and K-beauty, K-fashion, and K-food are particularly popular. It’s crucial to actively leverage these K-brand strengths early on in your HKTVMall journey.
- Social Media and Influencer Marketing: Marketing through social media platforms like Instagram, Facebook, and YouTube is highly effective in Hong Kong. Collaborating with local influencers to promote your products can be a huge help in increasing initial awareness.
- Price Competitiveness: With so many global brands competing in Hong Kong, competitive pricing is essential. Even with high-quality products, maintaining reasonable prices is crucial to gaining a competitive edge.
Utilizing Promotional Opportunities
HKTVMall offers a variety of promotional opportunities for participating brands. Actively utilizing advertising and promotions early on can increase brand awareness. It’s crucial to secure early consumers through discounts, coupons, and other means.
Payment and Exchange Rate Risk Management
Various Payment Options
Hong Kong consumers use a variety of electronic payment methods, including credit cards, PayMe, Alipay, and WeChat Pay. Korean businesses should also be prepared to offer these payment options. HKTVMall supports a variety of payment gateways, so you should leverage them to build a system suited to the global payment environment.
Managing Exchange Rate Fluctuation Risks
Exchange rate fluctuations between Korea and Hong Kong can affect product prices. Managing risk against exchange rate fluctuations is crucial to maintaining profitability, and pricing should take these factors into account to create a stable profit structure.
Long-Term Growth Strategy
Exchange Rate Risk Management
Exchange rate fluctuations between Korea and Hong Kong can affect product prices. Managing risk against exchange rate fluctuations is crucial to maintaining profitability, and pricing should take these factors into account to create a stable profit structure.
Global Expansion via Hong Kong
Hong Kong is a global hub and international trade center in Asia, offering opportunities to use HKTVMall as a springboard to expand into Southeast Asia and other global markets. If you’ve established a successful presence in the Hong Kong market, you should develop a strategy to expand into other overseas markets.
To Conclude
HKTVMall is a significant online shopping platform with a large consumer base in Hong Kong, providing a powerful channel for Korean companies to enter the Hong Kong and Asian markets. By fully leveraging the advantages of a Hong Kong incorporation, including low corporate tax rates and free foreign exchange transactions, you can build a successful business. Through thorough localization strategies, competitive pricing, and marketing expertise, you can achieve successful entry and sales on HKTVMall.
Premia TNC Hong Kong Team
Author
Premia TNC Hong Kong is a dynamic team of experts dedicated to supporting businesses and entrepreneurs as they establish, manage, and grow their presence in Singapore and across the region. Premia TNC Hong Kong specializes in providing tailored corporate services, from company incorporation and compliance to tax planning and accounting. With our extensive experience and deep understanding of the local regulatory environment, we are here to make business operations smoother and more efficient.
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