Incorporating an e-commerce company – Part 1/2

Incorporating an e-commerce company

For years, e-commerce has grown significantly colossal and popular at the same time in a global scale. Various entrepreneurs and companies are venturing into the e-commerce world since its boom. Due to its reputation as an international hub for global companies and businesses, Hong Kong is easily one of the best, if not, the finest jurisdiction for incorporating an e-commerce company due to its offshore nature and lenient regulations.

There are several types of e-commerce businesses that you can create and capitalize on depending on your personal preferences. To mention some, here are your possible choices:

D2C – Director to Consumer

This method is designed to eliminate the middleman structure in a business model. This form of business was made to directly sell the products to customers through an e-commerce website. Normally, D2C businesses are the manufacturers or producers of products themselves.

White Label & Private Label

The White Label business model hinges on a strategy of branding and putting their label on a generic product that was purchased directly from a manufacturer or a distributor. Meantime, for private labeling, the retailer would simply negotiate and create an agreement with the manufacturer so that they can produce a unique product for them to sell exclusively. Either way, both method works perfectly on capital investments since there is a possibility of building your own marketing strategy and approach at the same time.

Wholesaling

Wholesale is simply offering products in bulk with discounts. Mostly appealing to budget conscious customers. By using an online platform, e-commerce based wholesalers will purchase their products from suppliers and manufacturers at a wholesale price. These goods are then sold in their online platforms with a markup price that will generate a viable ROI. This business models are typically suitable in Hong Kong since most of the cheapest producers of goods and products around the world are found in the APAC region, and HK is the door to Asia.

Dropshipping

This method is one of the most popular and growing e-commerce business around the world. Dropshipping is typically a business model wherein the retailer/seller directly sells and markets their product on their online platform that is fulfilled by third party shipping providers.

Subscription Service

Convenience and savings is the main method of this e-commerce business model. By creating an avenue for customers to subscribe to a product or service for a prescribed period of time, usually on a monthly trial period by using their credit cards. After the free trial is done, customers are either charged automatically for an another one (1) month supply or has a choice to renew.

Comparatively, if you already have an existing e-commerce business overseas or you still plan to enter the e-commerce market then Hong Kong is definitely the best option for you so you can tap on the Asian market and explore possibilities for collaboration with manufacturers and producers in China and other parts of Asia. Simply start by incorporating your business, acquiring the necessary business licenses and begin the process of acquiring a Hong Kong bank account for your business to thrive on.

Our thoughts

On top of our incorporation, bank account opening and accounting services, we also have a dedicated team of Tech Experts that can boost your knowledge on CPM, CPC, CTR, monetization, digital marketing and affiliate marketing. Usually, e-commerce businesses are met with various problematic privacy law issues, VAT thresholds, offshore partners, traffic fraud, mirroring businesses just to name a few. By using our expertise in the digital economy, we can navigate the market for you in order for your business to connect with the big players and game changers in the e-commerce market worldwide, and to prevent any issues that may arise and challenge your business.

To get to the next step, proceed to Incorporating an e-commerce company in Hong Kong – Part 2 (next week)


    Changing a Company Secretary in Hong Kong

    company secretary in Hong Kong

    If you are looking to appoint a Company Secretary in Hong Kong or you already have one but is not satisfied with their current services, well we do have the solution for you.

    Having a credible Company Secretary is very important in Hong Kong, most especially for your company in Hong Kong. Since your Company Secretary is a direct representation of your company with the government and has a responsibility of ensuring that you are compliant with your annual filings. Its role is indispensable considering there’s a lot at stake if the functions of a company secretary is not performed well at a level that is at par with standards.

    Good thing we provide our clients with Company Secretarial services that promotes confidentiality and proper disposition of functions that is focused in providing a service that assures that compliance is met without any issues.

    Roles of a Company Secretary

    You might be interested to know that the role of a company secretary is not just allocated for government compliance, in fact here are some of their most important roles.

    • Direct participation in the incorporation process in Hong Kong
    • Handling transfer of shares as well as issuance
    • Monitoring on any updating of laws and regulations pertaining to regulatory compliance of the company. Making sure that the company’s need is at par with the new laws if applicable
    • Convene with lawyers and auditors for compliance purposes
    • Filing and handling of annual return of the company
    • Handle de-registration procedures for the company
    • Maintenance of company records on changes to directorships
    • Provide a registered HK office for correspondences with the HK government
    • Provide assistance in cases of bankruptcy or liquidation
    • Take charge of mandatory corporate compliance or issues

    Generally, the function of the company secretary in Hong Kong is actually focused on being the intermediary between the company and the government. Which makes it more imperative to have a competent once in place. Incompetence in the performance of being a Company Secretary can result to delayed compliance and filings with the government, which could potentially lead to unwanted penalties and a bad record for the company. If you are having a hard time with your current service provider, then it is probably time to reconsider and be open for changes.

    Common signs of a terrible company secretary

    We have compiled some tell-tale signs that you have a terrible company secretary in your company and its time to change before it affects your company record and compliance. This is due to a careless service that only cares about the payment being made on their side without due regard if the service that they provide is something worth it.

    Here’s some reasons why you need a change your company secretary asap:

    • Communication is not prioritized and sluggish. Sometimes, there’s no communication at all even with repeated reminders, leading to a compromise government compliance.
    • Providing vague or immaterial advice that leads you to being uniformed and suffer compliance risks.
    • Incompetent in responding to your requests or inquiries, or does not respond at all when you need an advice in emergency situations.
    • Their manner of doing business with you is going nowhere and their advice and performance are not sufficient to keep you compliant with your regulatory obligations making you more open to onboarding problems with your future filings and vulnerable to penalties or worst cases being filed due to oblivious filings.
    • You constantly suffer disappointment due to the fact that they do not meet your needs as a company.

    Changing your company secretary

    If you feel that after evaluating your current situation that you need an urgent change to your company secretary, here are some things that you can do to make it formal on record. Once you are ready to being the process we will check if your compliance is up to date and if your company has some issues with it. We will also check if and inform you on what has to be done and all you have to do is keep track on this and we will do the rest for you.

    • Submit a request for our status as your Company Secretary
    • Provide us your company details, so that we can already check if your company has compliance issues and we will do this through an audit type of checking to ensure that everything is in place. If not, we will do whatever is legally possible to update your filings.
    • Once you allow us as your company secretary, we will then proceed in processing the changing of your company secretary on your company records and take charge of the filing to make our appointment official. All you have to do is approve and sign the necessary documents to formalized our engagement. This process can be done digitally or otherwise.

    Contact us now if you want to appoint us as your company secretary.


      Top 3 reasons why Hong Kong banks reject applications

      Banks reject applications

      Do you have plans in opening a bank account in Hong Kong? well were telling you now it’s not a walk in the park. Banks reject application more often these past few years, and we’ve seen this personally due to the influx of clients going in at our doorsteps to ask for help in opening their bank account in Hong Kong because they were rejected by other banks.

      To put a reality into this, we have compiled several factors that will affect the application for a bank account in Hong Kong, and what are the real reasons why most of these banks are rejecting these applications.

      Nationality

      This may sound fishy but this is not an exaggeration, nor it is an unfair disadvantage. A lot of people belonging to high risk countries can find it hard to open a bank account in Hong Kong, and this is already expected by the people themselves. Under this predicament, controlling persons of a company is also affected by this since directors, shareholders and authorized signatories are part of the corporate substance and their nationality could also be a hindrance into the application process. Aside from this, companies and businesses who have clients and suppliers in high risk countries could potentially be a problem in the application process.

      If you do not meet the criteria for a low risk client with significant financial assets, then you will eventually be rejected by any bank in Hong Kong. Oftentimes, even if you meet or go beyond the required initial deposit by most banks, it’s still not a guarantee that you can secure a bank account approval.

      Applicants belonging to high risk countries (e.g. Iran & North Korea) and monitored jurisdictions will find it hard or even impossible to secure an approval. Just to give you a bird’s eye view and some example, as of February 2020 these countries are belonging to the FATF increased monitoring list:

      • Albania
      • The Bahamas
      • Barbados
      • Botswana
      • Cambodia
      • Ghana
      • Jamaica
      • Mauritius
      • Myanmar
      • Nicaragua
      • Pakistan
      • Panama
      • Syria
      • Uganda
      • Yemen
      • Zimbabwe

      Anti-Money Laundering and Counter Terrorism Financing (AML-CTF) has something to do with this situation, since there is significant chance that nationals who belong to these countries are more prone to committing money laundering activities and terrorist financing. In fact, some banks in HK have a pre-existing list of nationalities that are banned from applying for a bank account.


        Vauge, unusual & high risk business activities

        Your business activity can play a big role in your approval. Most banks in HK are keen on onboarding clients belonging and engaging in trading activities since they deem this form of business as an ideal and favourable entity, considering that this form of business activity possesses a lot of credible business documents that would be easily justified by way of import or export proofs, bill of lading, supplier agreements and plenty of other things.

        Just like nationality, high risk business activities can block your chances of securing an approval since some industries are well regulated, if not considered to be extremely risky. Business activities such as:

        • forex trading,
        • bitcoins / cryptocurrency,
        • oil,
        • gas,
        • precious metals and stones,
        • as well as mining activities,
        • online gambling / casinos

        are considered to be high risk. These industries are marked high risks due to their perilous nature and tendency to lean on AML-CTF issues. However, this should not discourage you, because if you haven legitimate documentation that supports your business activities as a legit entity with a valid business activity then this could help you in the process, and all you have to do is to acquire an exceptional service provider just like us to guide you through the process since we know which bank accepts or rejects clients depending on their industry.

        Insufficient or weak documentations

        Documentations to evidence that you have a legitimate business is a primary factor, if not, a very important aspect of the application. You will need to present undisputable and credible proofs to show and validate that your business is running a lawful business. The requirements would range from company/business invoices, client contracts, supplier agreements, updated bank statements, company presentations, and other strong proofs or documents that would evidence that you are running a legit business. In general, the stronger your documentations are, the higher the chances of securing an approval.

        Once you collate all your documentations, the bank will then evaluate all the submitted data and perform Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) to dig out any irregularities. This practice is common and a standard with Hong Kong banks.

        For companies falling under the category of newly incorporated entities would have a different process to undergo since the burden of proof that you have a credible business relies upon your ability to provide evidence that you will be running a lawful company.

        Our thoughts

        The process may be hard but we have a solution in all issues pertaining to the rejection of applications in Hong Kong banks. Regardless of your current situation, we can create a solution for you and your business that can help you secure an approval with any banks in Hong Kong since we know which banks works best for any type of clients. We have the experience and first-hand knowledge to know which banks could work with you and give you an approval depending on your nationality, business activities and documents. In other words, we can align our clients to the bank that will surely approve their application since we know what these banks are looking for, and what kind or types of clients it onboards.

        To increase your chances of getting an approval for a bank account in Hong Kong, feel free to Contact Us!