9 Benefits of Setting up a Company in Hong Kong in 2025 (+5 Considerations)

Thinking about launching, relocating, or expanding your business into a new market? If Asia is on your radar, Hong Kong should be high on your list. Its tax benefits and easy access to China make it a long-time favourite for many companies.

As someone who runs a business in Hong Kong and has helped many others make the move, I’ve seen firsthand what makes this city such a powerful base for growth. It’s not perfect (no place is), but for the right business, it can open doors you won’t find elsewhere.

In this article, I’ll walk you through the main advantages of setting up in Hong Kong, along with some of the challenges to be aware of. Whether you're just exploring or already considering the leap, this should help you decide if it’s the right move for your next phase of growth.

Hong Kong offers powerful advantages for businesses looking to start, expand or relocate. 

These include

• Direct access to the Chinese market through CEPA, a free trade agreement
• Low and simple tax rates with no VAT or capital gains tax
• A free-market economy with minimal government intervention
• A straightforward and fast company setup process
• Government support through various funding and incentive programs
• A highly educated, bilingual workforce
• Robust infrastructure and global financial services
• Business-friendly immigration policies 
• Strong access to capital funding and investment opportunities
  

Let's take a closer look at how each of these can benefit your business.

Being a Special Administrative Region of China, Hong Kong is a gateway to mainland China. This is not only because of its close proximity but also due to strong economic ties through the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), a free trade agreement.

According to the Hong Kong Trade and Industry Department and the Census and Statistics Department, Hong Kong was Mainland China's third-largest merchandise trading partner last year, accounting for 5.0% of its total trade. Mainland China was also Hong Kong's largest export and import destination, taking in 55.9% of its total exports and supplying 45.9% of its imports.

This close economic integration means businesses in Hong Kong can strategically leverage their location to tap into the vast mainland market with fewer barriers and lower tariffs.

In Hong Kong, companies pay a low profits tax rate of only 8.25% on their first HKD 2 million in earnings, and 16.5% on any amount beyond that. For sole proprietorships and partnerships, the tax rates are set at 7.5% for the initial portion of profits and 15% for the remainder.

Not only is this figure one of the lowest in the region, ranking around 11th in all of Asia, but Hong Kong’s tax system is also business-friendly because profits are taxed only once and dividends are not subject to additional taxes. The jurisdiction also has a network of double taxation agreements with over 50 countries, ensuring the same income is not taxed twice, once in Hong Kong and again abroad.

Additionally, Hong Kong offers an offshore tax exemption, meaning that income earned outside of Hong Kong may be exempt from profits tax, provided certain conditions are met.

On top of this, there is no capital gains tax, withholding tax on dividends, or VAT. 

Many economists, such as Milton Friedman, explained that Hong Kong is one of the prime examples of a laissez-faire economy. This means Hong Kong operates under a free-market capitalist system, which emphasises minimal government intervention in economic affairs.

With minimal government intervention, businesses in Hong Kong enjoy freedom to operate, innovate, respond to market demands, and invest with confidence.

In addition, Hong Kong ranks 1st in international trade regulations in the World Bank’s Business Ready Index. This means the jurisdiction has efficient, transparent, and streamlined systems for handling international trade, which is a significant advantage for companies engaged in cross-border commerce.

Hong Kong is also recognised for its duty-free imports and exports.

Hong Kong offers a simple, fast, and accessible company incorporation process

You only need one director of any nationality, a local company secretary, and a registered address to start.

In most cases, companies can be incorporated within a few working days. This ease of setup reduces administrative burdens and allows businesses to start operating quickly,  saving both time and costs. 

The Hong Kong government provides over 70 funding schemes across different industries, along with a variety of government-supported incentive programs aimed at attracting businesses, promoting innovation, and fostering economic growth. These initiatives are particularly advantageous for startups, small and medium-sized enterprises (SMEs), and companies engaged in research and development in Hong Kong.

Hong Kong also supports foreign companies, offering free business consultation services as well as dedicated support for overseas and Mainland companies through InvestHK.

Hong Kong ranks 9th in IMD’s World Talent Ranking, with a workforce largely focused on finance, trade, logistics, and professional services. 

Chinese and English are the two official languages of Hong Kong, which gives Hongkongers an advantage when conducting business internationally. If you intend to do business with China, the additional advantage of your employees speaking Mandarin/Cantonese is a must.

Hong Kong has strong transportation, communication, and logistics systems. Its airport and seaport rank among the busiest in the world. 

Additionally, Hong Kong features a well-developed banking sector that provides a broad range of financial services. In fact, Hong Kong ranks third globally in the Global Financial Centres Index (GFCI), following New York City and London. The GFCI evaluates financial centres based on factors such as business environment, human capital, infrastructure, and reputation. 

This means businesses benefit from efficient connectivity, easy access to global markets, and reliable financial support.

In terms of immigration policies, compared to other countries, Hong Kong is considered friendly. Citizens of about 170 countries and territories can enter Hong Kong without a visa for stays ranging from 7 to 180 days.

If you’re visiting Hong Kong temporarily, you can sign contracts or conduct business negotiations if you have an entry permit or visitor visa.

If you’re a business owner or are going to set up a new office in Hong Kong and want to move your employees to Hong Kong, the work visa provisions make it easy for you to do so. If you’re thinking about hiring staff here, dependent visas might be something that you’ll be interested in.

Another major benefit of Hong Kong is its access to capital funding. It has a well-developed venture capital and private equity environment that allows startups and entrepreneurs to secure investments to start their businesses or take them to the next level. 

Evidently, according to Reuters, Hong Kong’s equity capital markets experienced a strong rebound in the first half of 2025 following a period of global market volatility, and investment opportunities in the region have expanded. Similarly, the Trade and Industry Department also stated that Hong Kong offers abundant fundraising options and serves as a financial hub for capital raising.

No location is without its drawbacks. While Hong Kong offers many attractive benefits for businesses, it is important to also consider some potential challenges before making the move. Below are some of the key challenges businesses often encounter in Hong Kong.

Although Hong Kong is friendly regarding legally setting up your business, opening a bank account is not as easy as you might expect. This is especially true if you’re opening a bank account with a traditional bank.

The process often involves a lot of paperwork and can be quite time-consuming. Approval is not guaranteed, and many traditional banks require all company directors to be physically present during the application process to get the application moving.

Because of these hurdles, many business owners and startups in Hong Kong are turning toward virtual banks, which tend to offer greater flexibility and faster application processing.

Hong Kong is the third most expensive city after New York and Monaco. According to Mercer’s latest Cost of Living Survey, it also holds the top spot for overseas workers for the third consecutive year, driven largely by soaring housing, transportation, and consumer prices.

According to the South China Morning Post, despite a softer property market since 2020, office rents in Hong Kong remain among the highest in the world in 2025, with Central being the most expensive district. High rents continue to drive up business costs.

The good news is that more supply is entering the market. In response to increased competition, landlords offer incentives such as rent discounts and covering the cost of furnishing and preparing office spaces for use. This year, many businesses are trending toward high-spec buildings with better amenities.

Hong Kong is a competitive and mature market with a high concentration of products and services across many sectors. Coupled with its small geographic size, this makes it challenging for businesses targeting the local market to gain traction, unless they offer something truly new or different. Without a clear value proposition, new companies may find it difficult to stand out or compete with well-established players already serving the same customer base.

While I listed the workforce as an advantage and noted that both Chinese and English are official languages, the reality is more complex. Chinese, particularly Cantonese, is more commonly spoken. Not all individuals or businesses use English in conversation or signage. 

Additionally, many entrepreneurs relocating to Hong Kong may not speak Cantonese, which can create challenges when handling business deals and integrating with local Hongkongers.

While the workforce in Hong Kong is generally skilled and educated, certain industries face shortages of specialised talent. The overall labour shortage is projected to reach 180,000 by 2028, driven in part by a rapidly ageing population.

You may need to compete with other companies to attract the right talent and work hard to keep them.

Hong Kong offers powerful advantages for international entrepreneurs: low taxes, strategic access to China, streamlined company setup, and a business-friendly legal environment. For many, it’s one of the most efficient gateways to expand across Asia.

That said, it’s not without its trade-offs. Challenges such as high rental costs, competitive local markets, and banking hurdles may complicate things for some businesses.

Here’s a quick way to decide:

✅ Yes, if you:

• Plan to do international business and want a strong base
• Plan to do business with China
• Want to benefit from a simple, low-tax system
• Need a fast, reliable company setup
• Value access to professional services, capital, and infrastructure

⚠️ Consider carefully, if you:

• Rely on traditional banks and can’t use alternatives like virtual accounts
• Need to base your operations in Hong Kong and can’t operate from lower-cost locations (you can register in Hong Kong and operate elsewhere)

If you’ve weighed the benefits and challenges and decided Hong Kong is the right move, the next step is making sure you set up your company correctly.

At Statrys, we help entrepreneurs like you register companies in Hong Kong with full transparency, one price that covers all essentials, and expert guidance throughout the process. Whether you’re launching a new venture, relocating, or expanding into Asia, our team is here to support you with:

• End-to-end company incorporation services
• Fast track to multi-currency business accounts application with online onboarding (subject to approval)
• Ongoing support for compliance, bookkeeping, and payments

Everything is done online through our secure digital verification process, so there is no need for a physical presence.

Get started with Statrys and launch your Hong Kong business the right way.