While “Made in Hong Kong” is a thing of the past, this city is still going strong – especially for consumer products and electronics. Hong Kong is home to a huge number of small and big Trading Companies and dealing with them is often a lot easier than their counterparts in Mainland China. That alone is a reason why you should consider making a stopover in Hong Kong on your way to China. Keep reading and I explain why.
Why you should consider purchasing from a Hong Kong supplier
Hong Kong used to be the manufacturing powerhouse in Greater China. Today the city is known for its low taxes and service industry. There are basically no manufacturers left in Hong Kong, but brilliant Trading Companies are plenty in the former British colony. While some importers would consider purchasing from a Trading Company a waste of money, my own experience tells me that it’s often the opposite.
Buying from a Hong Kong based supplier certainly do come with a set of benefits that is not to be expected when purchasing from suppliers in Mainland China. To begin with they are much easier to communicate with and the product knowledge is often much deeper than their Mainland counterparts. Any old “China hand” knows that a supplier’s product knowledge and communication are the key to a successful importing business.
Chinese manufacturers are still focusing on a “make to order” business model. This means that they don’t have an ongoing mass production but rely on their customers to provide them with clear (and realistic) product specifications. This includes, but is not limited to, print, dimensions, materials, components and certification standards. Failing to provide the supplier with clear product specifications can result in receiving products that are so bad that they are not sale able on western markets.
This is where the Hong Kong trader comes in. They are in general much more likely to ask the right questions and understand your instructions than a supplier based on the Mainland. It would be fair to assume that better service comes with a higher price, but I cannot say that this is a pattern I’ve seen among Hong Kong suppliers.
There are basically no factories in Hong Kong, but…
This fact doesn’t prevent Hong Kong companies to own and operate factories in Mainland China. It’s very common that HK suppliers run factories in the neighboring Guangdong province. Besides, it’s really not that important whether a supplier is a Trading Company rather than a manufacturer. Personally I rather work with a well organized Trading Company rather than the average Chinese manufacturer.
Beware of offshore companies and scammers
Hong Kong is ranked as the 2nd most free economy in the world. Setting up a company is not exclusive to locals but open to the world. Nor is it expensive and time consuming, a limited company can be set up by a non-resident in roughly 20 days for less than US$1000. Does it sound like an entrepreneur’s dream? It certainly is!
The drawback is that it makes it easier for scammers to open short lived shell companies. Payment fraud has been increasingly common in the last few years and Hong Kong companies are often used as fronts for these operations. When a scammer has received overseas funds he or she can simply withdraw the money in cash (often from another country) and hide all traces before the victim (the importer) understands what actually happened. By the time the victim informs the bank the money is far away and long gone.
However, payment frauds can be avoided as long as you only source suppliers that are actually based in Hong Kong. Below I specify what this actually means:
1.) The supplier operates from a physical office in Hong Kong, not a post box! (Also called “Virtual office”)
2.) The owners are Hong Kong citizens/permanent residents and/or based in Hong Kong.
Where you can find and meet suppliers in Hong Kong
Sourcing Hong Kong based suppliers can be quite hard on Alibaba.com and Globalsources.com. These online platforms are certainly better for sourcing suppliers in Mainland China and Southeast Asia. Instead, I prefer to use HKTDC.com when sourcing Hong Kong suppliers. HKDTC.com is very similar to Alibaba.com, albeit the former is not providing as much supplier information as the latter.
Unlike Mainland China, most nationalities can enter Hong Kong without a visa. Europeans and Americans get three month entry stamp on arrival while Brits are even more privileged – if you are lucky enough to hold a UK passport you can enjoy 6 months of visa free stay in Hong Kong.
Flights to Hong Kong are also plenty and in general cheaper than flights to cities in Mainland China. If you would like to cross into Hong Kong you should be aware that a visa is required. The good news is that you can apply for a Chinese visa while in Hong Kong. If you’re sourcing electronics you’ll probably end up in neighboring Shenzhen. The two cities had merged into one and you can get there within 30 minutes by subway or taxi.
If you plan to visit Eastern or Northern China you better catch a flight. If you’re on a low budget I can recommend China Spring Airlines. You can often buy a return flight from Hong Kong to Shanghai for less than 1000 RMB (US$165).
We help startups & brands get quality products made in China & Vietnam
Co-founder of Asiaimportal (HK) Limited and based in Hong Kong. He has been quoted in and contributed to Bloomberg, SCMP, Alibaba Insights, Globalsources.com, China Chief Executive, Quartz Magazine and more.
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