Starting a business: Singapore versus Hong Kong
8 minute read
Both cities are English speaking countries with excellent banking services, robust legal systems, and low tax rates. These qualities make them ideal choices as a gateway between the East and West. Due to their similarities, there has always been a friendly competition of sorts between Hong Kong and Singapore to become the #1 destination for companies wanting to set up their base in Asia.
This article is a primer intended to show the key differences in Singapore’s and Hong Kong’s corporate structures. So what are they? Let’s take a look.
Based on World Bank’s Ease of Doing Business Report 2018, Singapore is ranked #2 in the world whereas Hong Kong is ranked #4. This is how Singapore fares compared to Hong Kong:
Starting a business
Trading across borders
Additionally, if a company has significant intellectual property requirements, Singapore is an obvious choice. The World Economic Forum’s Global Competitiveness Report ranked the country as having the best IP protection in Asia and ranked #3 globally.
Both countries boast world-class banking systems.
Hong Kong is known for having a notoriously difficult bank account opening procedures (particularly in comparison to Singapore) for non-locals. Fortunately, alternative providers such as Neat have started to meet this need.
Secretary vs. Director Requirements
Here is one of the significant differences in the legal requirements of Hong Kong and Singapore.
Therefore, in this case, Hong Kong has a slight edge over Singapore due to the cost savings of having a non-local board of directors.
Although the Hong Kong startup scene is rapidly flourishing, Singapore is still seen as the premiere startup ecosystem in South East Asia.
The Singapore government actively promotes a culture of entrepreneurialism, and back several VCs and accelerators by matching the funds they have invested in startups. It is comparatively easier to raise seed and angel rounds in Singapore than Hong Kong.
Hong Kong, meanwhile, is still playing catch up in the startup scene. Although angel investors are on the rise in Hong Kong as younger members of wealthy local families gain interest in diversifying their family’s investments, the presence of well-developed investment programs and funding for promising entrepreneurs is still less developed than in Singapore.
Aside from jurisdictional, tax and banking decisions, it’s worth considering your target market within the Asian region, and where your customers are based.
Singapore – “The gateway to Southeast Asia”
For decades, South East Asia has been trailing behind the global economy. But in recent years the region has seen tremendous momentum. More foreign investors paying close attention to the rise of wealthy middle class in countries like Thailand, Vietnam, and Cambodia.
Although these countries are experiencing growth, their infrastructure is still sorely lacking. These countries are inadequate in handling large amounts of foreign capital. Therefore, most businesses choose Singapore to set up their business structure due to its close proximity. While you can still own a Southeast Asian company in Hong Kong, a Singapore structure is a more popular option.
Hong Kong – “The gateway to China”
The best thing about Hong Kong is that it is situated right next to Mainland China. Being a SAR (Special Administrative Region), it enjoys a reasonable degree of autonomy especially when it comes to economic policies.
This makes Hong Kong an ideal place to base your company at as you prepare to enter the elusive Mainland Chinese market. As your Hong Kong business matures, you can also use your HK company as the parent company in a WFOE (wholly foreign-owned entity) structure.
Quality of Life
The living standards of both countries are pretty amazing, and it is worth mentioning here.
Work visas and relocation in Singapore and Hong Kong
It is reasonably easy to get a visa to work in Hong Kong. Visas can be granted for for startups that are accepted into a select list of incubator programmes (such as StartmeupHK Venture Programme and the Design Incubation Programme, to name a few). There is also an “Investment as Entrepreneurs” visa intended for foreign entrepreneurs who want to start a business and relocate to Hong Kong, which grants an initial stay of about 24 months.
Relocation to Singapore is possible under many different work visas such as the Employment Pass or the Entrepreneur Pass. Salary requirements, your academic qualifications and employment history matter – take a look at our guides to learn more.