Hong Kong economic freedom attracting actors of the digital economy

digital economy

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.

Digital Economy

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
digital economy

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.

Covid situation

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:

  • Australia,
  • New-Zealand,
  • Japan,
  • Singapore,
  • Indonesia,
  • Philippines,
  • Vietnam,
  • Thailand,
  • 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.

Reference: Interactive map - See how countries position goes up or down from 1970 till 2020

Compare yourself to the losers and end-up just as one of them?

winner or loser

The European governments are leading with a new concept consisting of comparing their results to the worst of their neighbors.

As an example, when the French are proudly stating that they are doing better than the Spanish in term of COVID management, why don’t they EVER compare their results with Asian countries? 

This doesn’t only translate on health and security subjects, this tainted mindset spread continuously by the medias is destroying the moral foundations of a nation.

Educating the youth by advocating auto-satisfaction is a change of values, no standing what our political views are; US and Chinese populations aren’t nurturing auto-satisfaction but are instead dreaming their futures and fighting to gain a better life.

Nobody is dreaming anymore in Europe, they are certainly too focused to erect new laws and regulations, to protect a dying system.

BUT the new generation is understanding what to do!

Young entrepreneurs are leaving Europe, waves of Digital experts and E-commerce founders are now trying a new way of life, far away from their native countries. The covid didn’t stop them, surprisingly, and they establish themselves in Asia and in Dubai.

They might be disappointed after their honeymoon period as guests in a new country, after all life is difficult everywhere and governments are showing inability to deliver their promises.

But as a guest in a new country, you know from the start that your actions only, your success only, will allow you to stay, no social net is expected.

The more courageous are leaving, the ones with a true entrepreneurial spirit and, let’s face it, the ones with a minimum of financial capacities. This mobility of an entire generation of digital entrepreneurs is an absolute disaster for Europe.

Can Europe stop waves of digital entrepreneurs living the continent?

I believe it’s too late, the ones hesitating, for family reasons or because of a fantastic way of life (that might come back in 2-3 years after Covid constraints) will continue to hesitate…. and this wait and see attitude reflected in the management of their projects will anyway kill them economically. Absence of decisions and success are the two main reasons behind bankruptcies. 

A Moral U-turn is urgently needed.

This would start by pragmatism,

The Chinese Communist Party is doing more for its population than most (to not say all) of the governments, they do deliver results. The main stream anti-Chinese opinions are here only to divert attention to the true reality faced by most of European habitants.

If we forget for a while the disastrous foreign policy of all the US administrations in the past 70 years, we should all agree that they are keeping dreams alive in US, creativity and sense of entertainment are contributing to a population often happier and definitively POSITIVE.

So, the two dominant nations are in fact delivering hope, and taking care of their populations but in the same time Europe is increasing poverty and insecurity, with continuous failures in the past 30 years.

Then, facing the reality,

We should embrace our differences and not be afraid about our values being challenged, this is part of an evolution that couldn’t be rejected.

We should start to admire results, and stop to recognize efforts, stop leniency and favor strengths. We should be attracted by good practices, copying good solutions when not creating our owns.

The world is changing fast and not for the best, we have the choice to fight changes or to embrace them, to spend energy trying the status quo or to focus on opportunities.

Time to compare ourselves to the winners and to adopt the same attitudes, this means going EAST and going DIGITAL. 

GOING DIGITAL

Only the old generation is willing to protect taxi drivers against UBER, only the old generation is willing to protect jobs by erecting new laws and regulations. Even the most politically motivated are turning to e-commerce for their purchases and are participating unwillingly to the slow death of retails shops.

GOING EAST and understanding China

10 facts about China to (hopefully) change your perspectives:

  1. Workers are not underpaid, they have very often higher salaries than in Europe.
  2. They don’t live all in dormitories, a lot of them are purchasing flats which are much more expensive than European properties.
  3. Factories are facing difficulties to attract workers: a qualified wood worker is taking home more money than his French colleagues and despite this it is difficult for factories owners to hire new workers.
  4. The population wasn’t only drastically forced to a strict covid confinement, they also did wear face masks and respected instructions.
  5. They suffered weeks from a total absence of freedom, the rest of the world is suffering since months of a partial absence of freedom.
  6. Without the Asian’s purchases most of the luxury brands would bankrupt.
  7. By the end of 2020, about 989 million people had access to internet in China, Alibaba was fined $2.8 billion after antitrust investigation; a move to protect smaller businesses which wasn’t even considered with the same power by Europe or US against GAFA dominance.
  8. Chinese government never commented political decisions of other countries, except rarely about their foreign policies, when requesting the same respect this is denied.
  9. The Chinese’s wealthy are slowly but surely purchasing properties and companies around the world, not a show of trust for their government but without doubts a show of financial power.
  10. Gambling is a real issue in China and this disturbing reality is a cause of great concerns for the government, its fueled with underground banking and other practice endangering the national sovereignty.

If you want to go East and benefit from a pro-business environment, setting-up your company in Hong Kong and starting a new life in Asia, please feel free to contact me.

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