By Vlad Cuc, specialist in company formation matters
Hong Kong has one of the world’s largest trading economies and its strategic geographic position, along with the free trade economy policy and low taxation regime make Hong Kong an ideal location to base a business that operates in the imports and exports sector. Hong Kong is not only the main gateway to the inland Chinese market but it also handles a large amount of offshore trade.
A company that operates in the trade sector in Hong Kong or in China will need to obtain special permits and licenses for functioning. Our company formation representatives in Hong Kong can help you if you are interested in setting up this type of company in Hong Kong.
Our experts invite you to watch a video on importing and exporting goods in Hong Kong:
Products imported and exported by Hong Kong
The list of products imported by Hong Kong contains machinery and equipment, manufactured goods and articles, chemicals, mineral fuels, and food. Hong Kong’s main import partner countries include China, Singapore and Japan. Others are South Korea and the United States.
The products exported to Hong Kong are electronics, electrical appliances, gold, jewelry, machine parts, textiles, fabrics, toys, watches, and clocks. Hong Kong has an export-oriented economy that is heavily based on shipments coming from re-exports. Its main export partners are China, the United States, and the European Union.
Import and export procedures in Hong Kong
Hong Kong companies that engage in import and/or export activities must follow a set of basic procedures. These concern the exportation method, the pricing and terms for the shipment. At the same time, the exporter must comply with the export regulations and the patent and copyright requirements.
Before shipping the actual products, the buyer and the seller need to conclude the sales contract and confirm the payment terms as well as the insurance for the products, if needed. The items will be packed and labeled as per the agreement and/or according to any international regulations that may apply to that specific category of goods.
Import and export documents needed in Hong Kong
Our agents list the documents commonly needed when importing and/or exporting products in Hong Kong:
- • Invoice: this is the commercial invoice for the products and it is issued as per a sales contract concluded between the two parties; includes details about the goods and their price.
- • Pro Forma invoice: this is provided before the products are shipped and includes information about the type and the amount of goods.
- • Sales contract: the agreement between the buyer and the seller that sets forth the terms for their collaboration; it is legally binding.
- • Inspection certificate: a report issued by an inspection company or the exporter, issues when the country receiving the shipment need further clarifications.
- • Insurance: insurance coverage, stating the type of insurance placed on the goods and how the damages will be covered, if needed.
- • Product testing: a document that states the fact that the shipped goods are in line with certain standards; can also be accompanied by a health certificate for some types of products.
This list contains the common documents. A separate category of documents includes those related to the transport of the goods. For example, the shipping order, the bill of lading, the sea waybill or the air waybill and others, like the shipping guarantee, as needed. The financial documents include the bill of exchange the trust receipt and others. For some products, a certificate of origin may also be needed and this is issued by the Trade and Industry Department in Hong Kong and by the corresponding authorities in other countries.
Apart from the requirements for preparing the aforementioned documents, companies will also need to observe the import and export declaration charged. The import ones are divided into food items an non-food items and taxation is based on the value of the goods. However, there is a cap for each import/export declaration at 200 HK$.
For detailed information, you can reach out to one of our Hong Kong company formation agents who can guide you when setting up a company in Hong Kong.
Controlled and prohibited goods
A number of laws and regulations are used in the case of certain types of products while others are prohibited from shipping. Companies that import or export the goods that are included on the prohibited list must apply for special licenses and permits in advance of engaging in the actual trade.
The list of controlled exports includes the following: controlled and hazardous chemicals, animals and plants, dangerous drugs, explosives, firearms and ammunition as well as other weapons, ozone-depleting substances and pesticides, Chinese herbal medicines and proprietary Chinese medicines, radio transmitting equipment, sand, rice, rough diamonds, waste.
Controlled imports refer to many of the items of the controlled exports list as well as others such as motor vehicles, radioactive substances and irradiating apparatus, frozen or chilled meat and poultry, game, eggs, smokeless tobacco products, and others.
Please reach out to our agents who specialize in company formation in Hong Kong for a complete list of the controlled exports and imports and for further details on the procedure related to obtaining the special permits and licenses needed to trade these items.
The Hong Kong Special Administrative Region implements a comprehensive policy for the control of strategic commodities and enforced stringent control on the import and export of these goods. The Customs and Excise Department is the agency in charge of the examination of the goods as well as the licenses and investigating and prosecuting contraventions. Individuals or companies that import strategic commodities without observing the regulations in force are offenders and the penalties can include the following:
– A summary conviction with a fine of 500,000 $ and imprisonment for 2 years;
– Conviction on indictment with an unlimited fine and imprisonment for 7 years;
– Mandatory forfeiture of all of the seized strategic commodities.
In 2018, the Department checked 3,527 import/export licenses, concluded 285 investigation cases and prosecuted 59 persons and/or companies in 49 cases, with the fine reaching a total value of 940,000 HK$. In the prosecution cases, most of the commodities were integrated circuits, systems, or equipment for information security.
Trade policy and logistics in Hong Kong
Hong Kong has a free trade policy and this means that this Special Administrative Region has no boundaries on trade. There are no customs tariffs on products and goods imported and exported from Hong Kong.
Companies in Hong Kong that engage in international trade activities need to follow certain procedures and observe the existing regulations for doing business in Hong Kong. Import and export activities require special licensing and our company formation agents in Hong Kong can help you obtain all the necessary documents from the Trade and Industry Department in Hong Kong and other relevant authorities.
The agents at our company incorporation firm can help you with the common import and export documents, such as commercial documents, financial documents, transport or insurance documents. All of the trade-related documentation needs to be in order so that the Hong Kong company can perform its activities without any legal impediments.
Hong Kong trade statistics
According to the Census and Statistics Department, the total exports of goods in January 2020 was of 269,396 million HK$. Other statistics are the following:
- – 238,558 million HK$ in exports of goods in February 2020;
- – 299,991 million HK$ imports in January 2020;
- – 277,108 million HK$ imports in February 2020.
Port cargo throughput in Hong Kong had a value of 67,775,000 tones in Q4 2019. This refers to seaborne as well as river cargo.
Travel remains the largest export in services, with a percentage of 32.6% of the value of total exports in 2018. Other services according to their percentage were transport (29.2%), financial services (19.6%) and other business services (13.2%). Mainland China and the United States of America remain the two largest trade partners according to the same source, receiving a percentage of exports of 40.4% for China and 14.2% for the USA of the total exports of services in 2018.
On a year-on-year basis, a report from the Census and Statistics Department reveals that there was a 9.3% increase of the total value of exports of services in 2018 compared to 2017 (to a value of 886.9 billion HK$).
Investors who have inquiries about a specific trade sector can reach out to our agents prior to commencing the process related to open a company in Hong Kong. We can provide complete details about the export of services according to category (transport, travel, financial services or other services). We can provide more data, as it becomes available from relevant sources.
Hong Kong’s services sector is well-positioned and influenced by the development of the Mainland as well as other important Asian economies, destinations that are important as far as the export of different types of services from Hong Kong is concerned. The Government continues to strengthen economic ties with these essential import and export partners as well as with other trading partners, with the purpose of creating a favorable environment for trade services.
If you want to invest in the trade sector in Hong Kong, please contact our company formation specialists in Hong Kong. We can help you open your company and run our business.