The Economic Freedom of Hong Kong is attracting several actors from the Digital Economy. Digital entrepreneurs are crossing borders, they can leave anywhere and run their companies from various tax friendly countries, but the tax environment isn’t by far their main interest.
In most countries operating a SME is complicated, digital entrepreneurs will have to dedicate a lot of time filling paperwork for many government agencies.
Everything is time-consuming but this is considered normal in absence of comparison, so instead of focusing energy on sales and marketing a bright individual will end up spending hours on laws and regulation for its activities.
Hiring a new team member, understanding a complicated tax system, reporting VAT, managing accounting and audit, filling payroll…. each topic is a waste of energy, so the impact of bureaucracy is crucial for a company development and ease of operation.
The Frasier Institute publish every year an index of economic freedom and basically ranks the countries for their ease of operation for a business in digital economy to operate in a simple and efficient environment. Hong Kong is number one since 1970, out of 165 ranked countries.
Let’s compare the 2020 ranking of few countries attracting digital entrepreneurs:
- 1st Hong Kong
- 2nd Singapore,
- 4th Switzerland
- 11th Mauritius
- 25th Spain
- 33rd Portugal
- 40th Costa Rica
- 47th Italy
- 53rd France
- 55th Malaysia
- 58th Philippines
- 68th UAE
- 70th Indonesia
- 89th Thailand
- 126th Vietnam
Operating a Hong Kong company in the digital economy is allowing digital entrepreneurs to focus on their company development without distraction, surviving a heavy competition and benefiting from a low tax environment, with pro-business attitude from multi-lingual team, purchasing at better costs to the world factory next door.
Living in Hong Kong remains attractive, despite the high costs of living, as the proximity with Mainland China offers access to better sourcing and cooperation with business partners. The current quarantine requirement makes it impossible to start the immigration process but this would change soon or later.
China economic dominance is a fact, this is creating political tensions and adverse medias but as a matter of fact this has no bad influence on a SME operation. The only issue faced by Hong Kong is the 21 days or 14 days strict quarantine at hotel requirement which is impacting negatively the businesses.
This quarantine requirement is similar to the ones in:
- Laos, etc…
so we are all facing a divided world with totally different approaches on health management.
As you don’t need to be present to setup a Hong Kong company the digital entrepreneurs are benefiting from the world freest economy and could decide to leave in a low costs’ country (under the sun) such as Thailand and others.