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Thanks to the pro-business policies and a free-market economy, doing business in Hong Kong is incredibly attractive.

But that doesn’t mean businesses get a free pass to treat their customers — consumer protection regulations ensure customers don’t get the short end of the stick due to unfair business practices.

Whether you are an established business or toying with the idea of registering a company in Hong Kong, it helps to know:

• how consumer protection laws apply to you,
• what are your legal obligations toward customers; and
• the best practices to follow that keep your customers satisfied and sustain your business

This guide simplifies the law for you and offers all the key insights about Hong Kong’s consumer protection regulations. Bonus: you also get a cheat sheet to get a head start with legal compliance. So dig in!

Key Consumer Protection Regulations in Hong Kong

Consumer protection regulations ensure every consumer in Hong Kong is treated fairly and also provide legal protection from businesses taking advantage of them.

Here’s an overview of the important consumer protection laws:

Trade Descriptions Ordinance (TDO)

Trade description is an umbrella term for any information about a good or service that helps a customer’s decision-making process.

TDO makes it punishable for businesses to provide any false, misleading, or incomplete trade description. The Customs and Excise Department enforces TDO.

It applies to:

• all goods and services sold/provided in Hong Kong even if they are manufactured outside Hong Kong;
• traders who operate out of Hong Kong but sell to overseas customers.

As a business owner, you should provide accurate information about anything you sell — whether the price, origin, quality, or features — so that your customers can make an informed decision.

Penalty: A fine of HKD 500,000 and a jail term of 5 years.

Competition Ordinance

Say you want to open a trading company in Hong Kong to sell mobile phone accessories.

But a group of other small businesses selling mobile phone accessories in the same location as yours decide to charge the same price for all the products. This would make it impossible for your business to compete and take off.

The Competition Ordinance prohibits such anti-competitive conduct and ensures that all businesses enjoy a level playing field. It also protects consumers and gives them access to a wide range of goods and services.

In particular, the Ordinance penalizes the following anti-competitive behaviors:

• Restrictive agreements and concerted practicesBusinesses cannot enter into a contract that restricts competition.
• Abuse of market powerIf you enjoy a dominant position in the market, you cannot use it to reduce competition.
• Anti-competitive mergers and acquisitionsYou cannot merge with a business or acquire it if it potentially reduces the competition in the market.

Penalty: Businesses can face fines of up to 10% of their total turnover for every year of violation, with a maximum duration of 3 years. Directors also face disqualification for 5 years. The Competition Tribunal decides the penalty based on the conduct.

Product safety regulations

Two key legislations deal with product safety:

(i) The Sale of Goods Ordinance

SGO gives business owners the right to sell their goods only when they meet the following conditions:

• Merchantable quality

The goods should be free of any defects that would make them unfit for use.

• Fit for purpose

The goods should serve the purpose for which the seller sells them.

• Correspond with the description or sample

The goods should match the description that the business owner provides.

For example, you have a shoe business and advertise that you sell shoes made of nubuck leather. If a buyer orders a pair and receives shoes made out of recycled plastic, the product you sell doesn’t match the description.

Buyers can reject goods that do not fulfill the SGO requirements and sue the seller for damages.

(ii) Consumer Goods Safety Ordinance (CGSO)

CGSO deals with the safety requirements of consumer goods for private use or consumption in Hong Kong.

CGSO does not cover goods such as food, water, electrical products, pharmaceutical products, children’s toys, etc.

As a business owner, you should ensure the following for legal compliance with CGSO:

• Fulfill the safety requirements of consumer goods set out by the Secretary for Commerce and Economic Development
• Inspect all consumer goods for safety prior to supplying them
• Provide relevant safety warnings about potential hazards, whenever necessary, in English and Chinese
• Determine the safety of your goods by testing them in an approved laboratory
• Maintain a record of the consumer goods you supply along with safety warnings

Penalty: CGSO provides both civil and criminal penalties.

First-time offenders face a fine of HKD 100,000 and/or a jail term of 6 months. Subsequent offenders face a fine of HKD 500,000 and/or a jail term of 2 years.

A consumer can also sue a seller of unsafe goods in civil courts and recover damages for pain and suffering.

Apart from SGO and CGSO, Hong Kong also has specific product safety ordinances, such as:

• Toys and Children’s Products Safety Ordinance.
• Public Health and Municipal Services Ordinance for food and drugs sold for human consumption

Data privacy and protection laws

The Personal Data (Privacy) Ordinance (PDPO) protects the privacy of individuals in Hong Kong by regulating the collection and retention of personal data.

Here are the key aspects of PDPO that business owners should comply with:

• Obtain consent before you collect any personal information of customers
• Tell your customers the purpose and use of the data you are collecting
• Use the data only for the purposes for which it was collected
• Retain data only for as long as you need it
• Publish a privacy policy on your website
• Handle data securely and have systems in place to prevent any unauthorized access
• Allow individuals to access their personal data
• Use the personal data of deceased individuals for research or statistical purposes but only if it is in the public interest and you implement appropriate privacy safeguards

Penalty: The Privacy Commissioner for Personal Data can initiate an enforcement action against anyone collecting/using personal data violating PDPO. The severity of the act determines the amount of financial penalties.

For serious offenses, the penalty is HKD 1,000,000.

Understanding Consumer Rights in Hong Kong

Businesses need a clear understanding of consumer rights to ensure legal compliance with consumer protection laws.

Consumers in Hong Kong enjoy the following set of rights:

A. Right to information

Consumers should have full information about the goods and services they buy.

This includes complete transparency about the price, features, warranty, safety warnings, quality, and quantity of the goods or services.

B. Right to choose

Consumers can decide what’s best for them from a range of products and services available. They are free to compare prices, features, and quality before deciding what they want to purchase.

C. Right to fair trade practices

Consumers have a right to be protected against unfair or deceptive trade practices by businesses.

D. Right to safety

Businesses cannot sell goods or services that are hazardous to the health or safety of consumers. Consumers also have a right to privacy of their personal data.

E. Right to redress

Consumers can seek compensation if they suffer any harm or loss due to the goods or services sold.

Fair Trade Practices for Business Owners

Adopting fair trade practices benefits you in numerous ways:

• you gain the trust of your customers
• you comply with legal obligations
• you avoid potential legal disputes that cost both time and money

Implementing fair trade practices isn’t rocket science, though.

You can start with this checklist:

Accurate product descriptions and marketing

Providing accurate information makes it easier for customers to make an informed decision.

So don’t make any misleading claims. Always clearly highlight the benefits and limitations.

Lastly, never influence or pressurize your customer to buy your product.

Transparent pricing and terms

Maintain complete transparency about the pricing of your product. If there are any additional fees payable, be sure to inform consumers.

Ensure that it is easy for a prospective buyer to locate the price of the product or service.

Ethical advertising and promotions

Never promote your product/service using any false advertising.

Your advertising campaign also shouldn’t hurt any culture or religion. Be mindful of using sustainable methods of promotion to reduce your environmental impact.

Quality assurance and product safety

Whatever you sell should be of high quality for your consumer’s safety.

Implement a quality assurance program to test the products and services against your quality standards before launch. You can also set up testing labs to identify whether your product poses any safety concerns to prevent potential accidents.

Don’t skip training your employees about the various safety and quality checks and keep updating the processes regularly.

Ensuring Legal Compliance for Your Hong Kong Business

Complying with Hong Kong consumer regulations is critical for operating your business smoothly and avoiding lawsuits.

Consider these steps for legal compliance:

Familiarizing yourself with relevant regulations

Several organizations in Hong Kong conduct seminars and send newsletters to help business owners understand consumer protection laws.

You can also check government websites like Commerce and Economic Development Bureau to learn more.

Implementing internal policies and procedures

You can also come up with a clear rulebook of do’s and don’ts to minimize the chances of violating any consumer law.

Start by identifying the key risks, such as data privacy, product safety, and marketing strategies. You can implement policies that lay down the industry-standard benchmarks to aim for and provide guidelines to follow when things don’t go as planned.

Regularly monitoring and reviewing business practices

Schedule regular audits and reviews of internal policies and practices to identify gaps. Set up a dedicated team to monitor your business’s compliance with Hong Kong consumer protection regulations.

Train your employees to make them aware of the importance of consumer protection.

Seeking legal advice when necessary

Speaking to a lawyer specializing in consumer law can help you to stay up with legal developments.

Regulations applicable to your business may vary depending on your industry and the products/services you offer. A lawyer can provide inputs to ensure appropriate legal compliance.

Handling Consumer Complaints and Disputes

Failing to manage consumer complaints and disputes can tarnish the reputation of your business. You also run the risk of facing legal action and financial penalties.

Here’s what you can do to avoid running into any legal problems:

Developing a comprehensive customer service policy

A comprehensive customer service policy is the bedrock of every successful business.

89 percent of consumers come back when they experience a positive customer service experience.

A strong customer service policy also increases customer satisfaction and loyalty, boosting sales and improving your bottom line. And the more efficiently you resolve issues your customers face, the better your chances of minimizing negative feedback.

Here’s what can go in your customer service policy:

• your customer service standards and goals
• expected timeline for addressing customer queries/complaints
• how your employees should handle customer complaints and inquiries, particularly when customers are being difficult
• The training and support you will provide to employees for customer service
• your metrics for tracking the success of your company’s customer service

Managing and resolving complaints effectively

Legal problems are unavoidable when business owners fail to resolve customer complaints effectively.

Here’s a cheat sheet for effective complaint management and resolution:

• Start by acknowledging the customer’s concern. You can go a long way when you make someone feel heard.
• Be apologetic about the inconvenience and assure the customer that you will fix it promptly
• Launch an investigation and aim for a speedy resolution
• Ask if the solution is satisfactory or if you can do anything else

Understanding the Role of the Consumer Council

The Consumer Council of Hong Kong is an independent body. A customer who is not satisfied with the resolution offered by a business can approach the council.

It cannot take any legal action against businesses, but it can publicize the names of offending businesses.

It also has powers to order mediation and conciliation for dispute resolution.

Avoiding legal disputes and potential penalties

The best way to insulate your business from potential legal action by customers? Stick to honest marketing practices.

Whether you are selling a product or service, don’t compromise on the quality.

Resist the urge to make any misleading claims to boost your sales. If your customer has a genuine complaint, acknowledge it and resolve it proactively.

The Role of Consumer Education in Protecting Consumers

Customer who is unaware of their legal rights as consumers face a heightened risk of being harmed by unfair trade practices.

Importance of consumer awareness

Awareness of consumer protection regulations helps buyers to make an informed choice and protect themselves from deceptive traders/trade practices.

Customers are aware of their rights and hold businesses accountable when they default in legal compliance. This creates a level playing field and promotes healthy competition in the market.

Educating customers about their rights and responsibilities

Several organizations, such as Consumer Council and Consumer Rights Awareness Network, work toward making customers aware of their rights and responsibilities.

Customers should also know what remedies are available when a trader fails to act as per consumer protection laws.

Promoting ethical consumption

There is a close link between consumer protection and ethical consumption.

Ethical businesses tend to be more accountable to their customers and maintain complete transparency about their trade practices. Customers who purchase from such businesses are less likely to be victims of deceptive practices.

Importance of Ethical Business Practices and Corporate Social Responsibility

Implementing ethical practices such as CSR can help you to gain customers’ trust and increase your market reputation.

The link between ethical business practices and Consumer trust

Ethical business practices are honest and transparent ways of conducting business. It includes:

• treating employees and customers fairly without following any discriminatory practices
• taking accountability for actions
• giving back to the society

Businesses that operate ethically develop a strong bond with their customers and earn their trust. Customers that trust your business stay loyal, refer your business to family and friends and increase the chances of your success.

Ethical business practices also boost brand awareness, increasing conversions and making you more attractive to investors.

Implementing corporate social responsibility initiatives

Businesses that take CSR seriously will likely offer quality products and maintain transparency about their practices. They are also less likely to use deceptive practices or cheat their customers.

Even though CSR initiatives are not mandatory in Hong Kong, implementing them can help you gain more customers.

Balancing Profitability and consumer protection

Of course, the ultimate goal of any business is profit generation.

But that shouldn’t be at the cost of acting against consumer laws. You get happy customers when you conduct business in compliance with consumer protection regulations. And satisfied customers stay loyal and provide referrals, helping you to boost your bottom line.

Conclusion

Even though Hong Kong is a favorable jurisdiction to start your business, you cannot cheat your customers.

Make sure to understand how consumer laws apply to your business and take steps for legal compliance. Business owners who prioritize consumer rights and use fair trade practices have a better chance of surviving in a competitive economy.

Keen to set up a business in Hong Kong but afraid of how to ensure legal compliance with consumer laws? Need someone who can hit the ground running and help you understand consumer protection regulations?

Contact Air Corporate today.

FAQs

1. Are e-commerce transactions protected by Hong Kong consumer protection regulations?

Currently, there are no specific regulations in Hong Kong that safeguard customers of e-commerce transactions. Trade Descriptions Ordinance and Sale of Goods Ordinance provide generic protection against unfair trade practices.

However, the Legislative Council of Hong Kong has emphasized the need for specific legislation for protecting e-consumers.

2. Do the Hong Kong consumer laws provide a right to a refund?

The current legislation doesn’t provide such a right.

3. What happens if a business owner violates Hong Kong consumer protection regulations?

Depending on the nature and severity of the violation, a business owner may face fines or imprisonment.

In some cases, the court may also order the business to shut down.

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Imagine you build a device to simplify cancer diagnosis and start scouting for investors in Hong Kong to market your product. You would be left high and dry if Hong Kong Intellectual Property rights did not exist to stop your competitors from stealing your design!

Simply put, intellectual property protection is essential for a business’s growth in an innovation-fuelled economy.

As a leading international trading centre, Hong Kong is home to several industries that need protection for their intellectual property. Hong Kong IP laws protect the IP assets of Hong Kong businesses from other market players acting in bad faith and trying to cash in on someone’s work.

Unsure how to navigate the landscape of Hong Kong IP laws? This guide is the perfect place to begin. Learn about IP registration, IP licensing, and the best practices for IP management.

Understanding Intellectual Property Rights in Hong Kong

Intellectual property includes everything that is a product of intellect and creativity.

The silhouette of a half-bitten apple on your iPhone, the novels Shakespeare wrote, or even this blog post you are reading are all examples of intellectual property. Whatever your business creates, such as websites, logos, inventions, and designs for particular processes or marketing collaterals, also qualify as intellectual property.

Legal protection for intellectual property stops others from stealing and profiting from your work. The right or protection is automatic for certain types of intellectual property. But for others, you have to apply for protection.

Here are various types of intellectual property rights that Hong Kong IP laws recognize:

Types of intellectual property rights

The most common types of intellectual property rights include:

1. Copyright

It is the right that the owner of any original work holds. The work doesn’t have to be of a certain aesthetic or creative value to receive copyright protection.

You get a copyright when you create any literary or artistic work. Examples include books, musical compositions, drawings, paintings, films, sound recordings, and software. In general, creative industries benefit the most from copyright protection.

2. Patents

Patents exist to protect inventions. A patent holder has the right to prevent others from using their invention for a limited time.

3. Trademarks

A trademark is any sign distinguishing your product or services from others.

Name, logo, design, shape of your product, sound, or smell can all be registered trademarks.

4. Industrial Designs

Industrial design is a shape or pattern that’s important for an industrial process.

The design for creating watches, jewellery, phones etc., are examples of industrial design.

5. Trade Secrets

A trade secret is any information that holds economic value for a business and provides a competitive edge.

Significance of IP rights for businesses and creators

Intellectual property rights are critical because:

• they act as an incentive to promote innovation
• prevent your competitors from benefiting from your hard work
• boost the valuation of your business and brand

What are the Hong Kong IP Laws?

You can protect your intellectual property under the relevant Hong Kong IP laws:

Copyright Ordinance

The ordinance governs copyrights in Hong Kong and grants the following protections to the copyright holders:

• circulate, rent, or lend copies of their work
• communicate their work via an electronic mode
• adapt their work

Term of protection: 50 years after the creator dies.

Patents Ordinance

This ordinance governs the registration and protection of patents. It grants patents to inventions that are:

• new
• demonstrate an inventive step; and
• have industrial application

It also covers inventions which not eligible for patent protection, such as:

• those meant for experimental purposes; or
• public non-commercial use.

Term of protection: 20 years or 8 years, depending on the patent you hold.

Trademarks Ordinance

This ordinance governs the registration and protection of trademarks. To register a trademark in Hong Kong, the sign must:

• distinguish your product from others in the market, and
• be capable of graphical representation.

A registered trademark owner gets the exclusive right to use the trademark. Even though registration is not mandatory, not registering limits your legal protections and makes it harder to prove that you are the legal owner.

There are a few exceptions listed under the ordinance, such as:

• fair use
• using the trademark in a country where it is not registered

Registered Designs Ordinance

The ordinance covers the registration and protection of registered designs.

Only new and original designs receive registration. Registering the design gives you an exclusive right to it during the term of protection.

IP Registration in Hong Kong

Here’s an overview of the IP registration regime in Hong Kong:

Intellectual Property Department (IPD) is a statutory body responsible for registering and protecting trademarks, patents, and industrial designs. The Copyright Licensing Bodies Registry is also part of the IPD.

Here’s how to register different types of intellectual property in Hong Kong:

Copyright registration

Copyright does not need any registration in Hong Kong.

As soon as you create any work, the copyright arises automatically.

Patent registration

Apply to the Patents Registry of the Hong Kong IP Department.

You can register for either:

• standard patent (owner protected for 20 years); or
• short-term patent (owner protected for 8 years).

You can submit the application online or in person, along with a description of the invention, scope, and drawings. Hong Kong also allows the re-registration of Chinese, EU, or UK patents.

Trademark registration

You can apply to the Trade Marks Registry of the IP Department to register a trademark in Hong Kong. Applications can be online or in person.

The application should include a description of the trademark and the goods/services it covers.

The term of protection is 10 years.

Industrial design registration

You can protect your industrial designs by registering them with the Designs Registry of the Intellectual Property Department.

The application should include a description of the design and drawings.

The maximum protection term is 20 years.

Costs and duration of IP registration

Predicting the exact timeline for IP registration in Hong Kong is difficult as it depends on a case-t0-case basis.

Here’s an indicative timeline and costs:

Patents

Cost:

• Standard patent – HKD 345 for an online application and HKD 480 for a paper application.
• Short-term patent – HKD 545 for an online application and HKD 755 for a paper application
• An additional HKD 68 is payable as advertisement fees for standard and short-term patents.

Information as of date. For more details, check the IPD website.

Timeline:

6 to 9 months if there are no objections or deficiencies in the application

Trademarks

Cost:

• HKD 2000 for the application fee and application form.
• HKD 1000 for each additional trademark class in the application.

Information as of date. For more details, check the IPD website.

Timeline:

It can take up to six months for registered trademarks if there are no deficiencies or oppositions.

Otherwise, it can take up to 12 months.

Industrial designs

Cost:

The application fee to register a single design is HKD 785 plus HKD 155 as an advertisement fee.

Fees go up if you wish to register more than one design.

Information as of date. For more details, check the IPD website.

Timeline:

Between 2 to 6 months

IP Licensing and Commercialization in Hong Kong

Commercialization and licensing IP is critical for a knowledge-based economy like Hong Kong. Here’s how you can do it:

IP licensing agreements

You can execute a licensing agreement to allow another person to use your IP in exchange for royalties.

IP licensing agreements in Hong Kong are widely used for technology transfer. Here’s what you can license under an agreement:

• Patents
• Copyright
• Trademarks
• Product designs

You can grant:

• an exclusive license, which means only the licensee can use the IP; or
• a non-exclusive license so that you can continue to use your IP and license other users.

Franchising and technology transfer

Franchising refers to a specific licensing arrangement, typically used for trademarks and trade secrets. It is also a vehicle for technology transfer.

Using a franchising agreement, you allow other businesses to distribute your products or use your trade name to run their business in lieu of franchise/marketing fees.

For example, Burger King US executes franchising agreements that allow its franchisors to set up Burger King outlets in Hong Kong.

Revenue generation

You can monetize your IP assets to generate revenue for the business. Here are some of the common methods:

• Receive royalty as compensation for licensing your intellectual property such as patents, trademarks and copyrights. This practice is particularly common in the pharma and biotech sectors.
• Use IP rights as collateral to borrow loans
• Tie up with another business and pool relevant patents for a common investor

Protecting Intellectual Property Rights in Hong Kong

Here’s an overview of the enforcement options available in Hong Kong to stop IP infringement:

IP enforcement mechanisms

Hong Kong IP laws allow civil and criminal enforcement.

Civil enforcement

The first step of civil enforcement involves writing to the infringer and ordering them to stop the activity.

If the infringer doesn’t stop, you can approach the trial court or high court to enforce your rights. You can approach the Court of Appeal to appeal against the high court’s judgment.

Typically, an enforcement action takes 15 to 30 months.

Criminal enforcement

The Hong Kong Customs and Excise Department (C&E) initiates criminal action against copyright and trademark infringements in the region.

IP owners must prove they own the relevant intellectual property and provide evidence of its registration and infringement in Hong Kong.

Preventing and addressing infringement

IP infringement impacts your business in several ways:

• dilutes your reputation
• minimizes innovation
• results in revenue loss

Taking proactive steps to prevent infringement protects your work and reduces the cost of pursuing legal action.

Legal remedies and dispute resolution

Preferred forums for initiating civil action against IP infringement include district and high courts.

Usually, courts order one of the following remedies:

• direct the offender to pay monetary compensation
• pass an injunction that directs the infringer to stop
• direct the infringer to pay you the profits earned by infringing your IP

You can also resolve IP disputes through arbitration and mediation.

Here’s a break up of penalties for various IP infringements:

• copyright piracy/infringement: jail term of up to four years and a maximum fine of HKD 50,000 for every act of infringement.
• trademark infringement: a fine of up to HKD 500,000 and imprisonment of up to five years.
• infringing registered design: imprisonment of up to five years and payment of damages.
• patent infringement: imprisonment up to three years and payment of damages.

Trade Secrets and Confidential Information

Any information that gives your business a competitive edge is valuable and requires protection. The umbrella term ‘trade secret’ covers all such information.

Definition of trade secrets

Any confidential information of a business known to a limited number of people and holding commercial value counts as a trade secret.

The recipes for KFC chicken and Krispy Kreme doughnuts are some of the world’s most popular trade secrets.

Other examples of trade secrets include:

• marketing and pricing plans
• list of customers
• manufacturing and design processes

Protection strategies for trade secrets

The common law of confidence protects trade secrets Under Hong Kong IP laws.

You can impose an obligation on another person to keep the information confidential. The owner of the trade secret has the following remedies for any breach of confidence:

• injunction
• damages
• delivery of the document/material containing the trade secret

Non-disclosure agreements and confidentiality clauses

Executing a non-disclosure agreement is a strong preventive measure to protect the misappropriation of your trade secrets.

You can execute an NDA with business partners and employees to prevent them from sharing any confidential information about your company.

IP Management Best Practices

A solid plan for managing and protecting your IP assets can go a long way to boost the potential of your business.

Here are some best practices to consider:

Developing an IP strategy

IP strategies are unnecessary for small companies with few employees on the roll.

But if you are running a large organization, create a well-drafted intellectual property strategy that focuses on:

• creating intellectual property assets and identifying specific protection needed;
• identifying any third parties who may be involved with the creation of IP assets;
• reducing unnecessary costs; and
• commercializing IP assets

Monitoring and maintaining IP rights

Maintaining and monitoring intellectual property rights helps you to align the IP strategy with the business’s overall goals.

In particular, you should aim toward:

• establishing dedicated IP management teams responsible for registering and maintaining IP rights;
• increasing awareness about intellectual property rights and company policy; and
• negotiating and administering IP agreements with relevant third parties

Valuation and IP audits

Conduct regular IP audits to unlock the true value of your IP assets.

Audits can also help you uncover loopholes in licensing agreements, assignment agreements, tech transfer agreements, etc., to prevent your rights from getting compromised.

IP portfolio management

Like your investment portfolio, you must manage your intellectual property assets smartly.

There are different aspects of IP portfolio management, such as:

• auditing your existing IP assets,
• identifying new assets that need IP protection, and
• minimizing the risk of IP infringement, including any secondary infringement

You can also make sure that your IP policies cover all products and services you offer to provide a competitive advantage in the market.

Conclusion

Other than copyright, you need to approach relevant registries of IPD to register your intellectual property right and receive legal protection. Hong Kong IP laws also have a strong enforcement mechanism to address infringement issues.

Protecting your IP rights can help you get an edge over your competitors, skyrocket the value of your business, and open floodgates of investment. And being well-versed in Hong Kong’s IP landscape means you know which authority to approach if you need IP registration or wish to initiate enforcement action for infringement.

Are you having difficulty trusting someone to establish your business in Hong Kong while you are on the other end of the world? Need someone with a wealth of experience setting up and running a business in Hong Kong, including compliance with Hong Kong IP laws?

Get in touch with Air Corporate today.

FAQs

1. Can you register a copyright in Hong Kong?

There is no provision to register a copyright in Hong Kong. But you can get proof of copyright in Hong Kong by applying for an affidavit or declaration under the Copyright Ordinance.

2. Do Chinese patents cover Hong Kong inventions?

No. Chinese patents only offer protections in PRC. Inventors in Hong Kong must file Hong Kong Standard Patent Application to receive patent protection in Hong Kong.

3. How do I get a trademark in Hong Kong?

You can file an application online or in person with the Hong Kong government’s Trade Marks Registry, Intellectual Property Department.

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Hong Kong is not only a top-tier financial hub — it is also one of the most expensive places to stay. Anyone working in Hong Kong, especially those who have low-income jobs, needs a minimum wage to keep up with living expenses.

The Minimum Wage Ordinance and Minimum Wage Commission lay down the government-mandated wage that a person employed in Hong Kong should receive and protects them against unduly low pay.

Here is an ultimate guide exploring Hong Kong’s minimum wage landscape. Read through to learn how to calculate your employee’s earnings to ensure compliance with Hong Kong’s minimum wage law.

Understanding the concept of minimum wage

Let’s start with the basics before diving deep into minimum wages in HK.

Definition of minimum wage

The International Labour Organization defines minimum wage as the minimum remuneration a worker should receive for their work.

The minimum wage is usually decided through a minimum wage ordinance/statute, a wage board, industrial and labour courts, or tribunals. Collective agreements between trade unions and employers can also decide the minimum wage payable.

No agreement can reduce the statutory minimum wage payable. Employment contracts agreeing to any reduction are void under the law.

The rationale behind minimum wage policies

The chief objective is the protection of workers against excessively low pay.

Enforcing statutory minimum wages also ensures that workers receive fair wages to access the necessities of life and stay above the poverty line. From the standpoint of welfare economics, the statutory minimum wage is also considered a tool to minimize societal inequality.

Guaranteeing minimum pay incentivizes workers to be more productive and produce better-quality work.

Minimum wage systems around the world

A majority of countries across the globe follow minimum wages.

United Kingdom and New Zealand were some of the earliest countries to pass legislation to guarantee minimum wages.

Some countries follow a national minimum rate for all workers, while others apply different rates based on the sector, geographical region, population, and enterprise size.

Hong Kong’s statutory minimum wage rate

Here’s a brief overview of the statutory minimum wage system in Hong Kong.

Background and implementation

The Minimum Wage Ordinance enforces the Hong Kong minimum wage.

It applies to every employee and their employer, subject to the exceptions below.

Before the ordinance, a 1932 legislation and the Trade Board Ordinance of 1940 gave powers to the governor to establish minimum wages. But the governors did not propose any minimum wage under these legislations.

The Hong Kong government proposed a Minimum Wage Provisional Commission in February 2009 to reduce the widening wealth gap. The Minimum Wage Ordinance was finally passed in 2010 and bought into effect in May 2011.

Eligibility and exceptions

All employees, including those who are disabled, are eligible to receive Hong Kong minimum wage irrespective of their:

• employment contract (whether permanent, continuous, casual, full-time, or part-time)
• wage payment period (whether monthly, weekly, daily, hourly or per piece basis)

No statutory minimum wages are available for :

• live-in domestic workers (including domestic helpers, chauffeurs, gardeners, or other personal helpers) who receive free housing from their employer;
• student interns and work experience students; and
• anyone not covered by the Employment Ordinance. E.g. anyone serving their employment contract outside Hong Kong and apprentices registered under the Apprenticeship Ordinance

Current statutory minimum wage rate in 2023

From 1 May 2023, HK’s statutory minimum wage (SMW) is HKD 40 per hour. This means that regardless of the wage period, no employer should pay below the statutory minimum wage rate.

The monthly monetary cap for employers recording the total hours clocked in by an employee is fixed at HKD 16,300. So if the employer pays an employee less than HKD 16,300 as wages per month, they need to record the total number of hours worked by that employee during a wage period.

Calculation of hourly wage rate

The minimum wage ordinance only provides a wage floor and doesn’t mandate hourly wage payment.

It doesn’t state that each hour’s wage should meet the statutory minimum. The employer’s only obligation is to ensure that the wages paid are not less than the statutory amount when averaged over the total hours clocked in during a wage period.

Here’s the formula to calculate the minimum wages payable by an employer:

Minimum wage = Total working hours in a wage period x Statutory Minimum Wage (currently, HKD 40 per hour)

The Labour Department’s Minimum Wage Reference Calculator is also a handy tool to work the minimum wage your employee is entitled to and whether you are paying above their entitlement based on their current salary.

Wage policy and government regulations

The recommendations of the Minimum Wage Commission influence the policy decisions on minimum wages in HK.

The role of the MWC is to strike a balance between promoting Hong Kong’s economic growth and protecting workers against excessively low wages.

Role of the Minimum Wage Commission

The Minimum Wage Commission (MWC) is an independent statutory body in Hong Kong. It has been established under the Minimum Wage Ordinance.

The job of MWC is to submit recommendations on minimum wages to the Chief Executive at least once every two years. The Legislative Council passes the law on minimum wages based on MWC and Chief Executive’s recommendations.

While reviewing the minimum wage rate, MWC conducts in-depth discussions with various organizations representing employers and employees and analyzes statistical information.

Wage adjustment mechanism

Setting the floor for wages is the most critical part of a minimum wage system.

Workers don’t receive effective protection against poverty when the base is too low. If the base is too high, the unemployment rate goes up.

MWC adopts evidence-based criteria for wage adjustment mechanisms. Apart from taking into account the views of the public and stakeholders, it conducts impact assessments.

Impact assessment includes various SMW test levels to evaluate the potential impact on employees, employers, inflation, and unemployment rate based on different economic assumptions.

Factors considered in determining minimum wage

Some key factors that MWC considers for calculating minimum wage include:

• Prevailing economic conditions
• Demand and supply in the market
• Productivity of labour
• Prevailing wage rates
• Bargaining power of trade unions

Enforcement and penalties for non-compliance

As per the Employment Ordinance, any employer that doesn’t pay minimum wages is liable to pay a fine of HKD 350,000 and face imprisonment for three years.

Economic Impact of Hong Kong’s minimum wage policy

Here’s how the minimum wage policy of Hong Kong may impact the following:

Income inequality

Increasing the minimum wage can reduce poverty and income inequality by minimizing the gap between wages.

Employment rates and labour market

Critics of minimum wages argue that enforcing a wage floor can lead to employers hiring fewer workers. But there is insufficient evidence to support the premise.

The employment rate may reduce in labour-intensive industries where labour costs make up a chunk of the total production cost.

Supporters of minimum wages suggest that the employment rate may increase if minimum wages increase domestic consumption and demand.

Cost of living and inflation

Increasing the minimum wage is unlikely to significantly increase inflation and the cost of living in Hong Kong.

In fact, labour groups in HK argue that the minimum wage revision of May 2023 is still less than the accumulated inflation rate over the last four years.

Businesses and industries

The statutory minimum wage is only the wage floor for employees. It doesn’t mean Hong Kong employers are only liable to pay the minimum wage. They still need to comply with relevant provisions of the Employment Ordinance and also honour other statutory and contractual entitlements such as leaves, meal breaks, and rest days.

Some business owners have also expressed concerns about a ‘knock-on effect‘ due to the periodic increase in minimum wages in HK. They argue that raising the wages of employees who earn well above the minimum is an added burden to preserve the wage hierarchy.

Comparing Hong Kong’s minimum wage to other regions

Learn how Hong Kong’s minimum wages fare compared to the rest of the world:

Minimum wage rates in other countries

Here’s a snapshot of the current minimum wages:

• Mainland China: Each province in China can decide its minimum wage. The highest monthly minimum wage is in Shanghai at RMB 2590. Hunan has the lowest monthly minimum wage at RMB 1220.
• Switzerland: No national minimum wage. Each Canton can determine its minimum wage. At present, Geneva pays the highest hourly minimum wage of CHF 23.
• Australia: Approximately 812.50 Australian dollars per week
• United Kingdom: Employee’s age determines the minimum wage they earn.. The hourly wage is £10.18 for workers aged 21 to 22, £7.49 for workers aged 18 to 20, and £10.42 for workers above 23.

Factors affecting wage rate differences

A number of factors contribute to the variation in minimum wages across countries. These include:

• Regional economic conditions
• Cost of living
• Differences in labour market conditions
• Size of the enterprises
• Population
• Sector-specific economic factors

Lessons from other minimum wage models

Here’s what Hong Kong can consider incorporating:

• Implement an age-based minimum wage system similar to the UK.  A national minimum wage is paid to anyone between 16-22 whereas a national living wage is available for workers aged 23 and above. The national living wage is higher than the national minimum wage.
• Permit specific industries to formulate their minimum wages in HK, depending on their capacity to pay and the skills of the workers
• Annually review the minimum wage to take into account rising living costs and inflation

Navigating Hong Kong’s minimum wage landscape as an employer

Are you looking to register your business in Hong Kong and get employees on the roll? Here’s how to cruise through the statutory minimum wage requirements:

Ensuring compliance with minimum wage regulations

Consult with an employment law lawyer to stay updated about the latest changes to Employment and Minimum Wages ordinances.

Integrating minimum wage policies into payroll management

Outsource your payroll processing to a trusted service provider to keep your accounting system up to date with the latest minimum wage laws.

Strategies for managing labour costs

Investing in training to make employees more productive to counter increases in labour costs due to higher minimum wages.

Moreover, given that higher labour costs may also increase a firm’s tax burden, consult an accountant for efficient corporate tax planning and filing.

Employee engagement and satisfaction

Ensure that the average wages of employees are above the minimum wage limit to promote employee satisfaction and motivation.

Future of minimum wage in Hong Kong

The future of minimum wages in Hong Kong is uncertain as there are multiple actors are at play.

Here’s a look at some of the key aspects:

Potential Changes and Trends in wage policies

Hong Kong’s economy faces significant challenges due to the ongoing global economic crisis in the wake of the COVID-19 pandemic and geopolitical risks.

As MWC noted in its findings, increasing minimum wages in such an economy can force enterprises to reduce headcount, leading to unemployment.

As such, the government may freeze the statutory minimum wage rate until the economy bounces back. Between 2011 and 2018, when the Hong Kong economy was in a better position, the minimum wage rate increased from HKD 28 to HKD 37.5. However, from 2019 until 2023, it has only increased from HKD 37.5 to HKD 40.

Role of Government and Policymakers

Hong Kong’s government faces significant public pressure to reconsider the mechanism of deciding minimum wages in light of the protests and demonstrations.

The government has also pointed out the need to balance the interests of businesses and workers and avoid sharp increases that may potentially impact employment rates.

Advocacy and workers’ rights movements

Labour groups in Hong Kong have been consistently critical of the minimum wage revisions by the government.

They believe employers should pay a living wage, estimated to be HKD 60 currently, to meet the basic needs of employees in an expensive region such as Hong Kong. Worker rights movements have also urged the government to consider minimum wage reviews every year instead of reviewing them once every two years.

Conclusion

To recap, as an employer in HK, you cannot offer wages below the statutory minimum. Failure to pay minimum wages attracts civil and criminal liability.

While minimum wages protect the employees, they also directly impact a business’s bottom line. Given the economic situation of Hong Kong, there is a greater need for closely monitoring the minimum wage policies that create a win-win situation for all.

Running a business in Hong Kong can be challenging when you have to ensure compliance with labour and employment laws. Need help with starting up in Hong Kong and sailing through legal compliances?

Contact Air Corporate today so we can guide you in the right direction.

FAQ

How to calculate Hong Kong minimum wage for my employee?

You need to multiply the hours an employee works by the current statutory minimum wage to work out the monthly minimum wage.

What is the current minimum wage in HK?

From 1 May 2023, the minimum wage in HK is HKD 40 per hour.

Do employers need to pay minimum wage in HK for rest days?

Employers and employees can agree on the payment of minimum wages for rest days and the manner of calculation.

There is no obligation under law to pay minimum wages for rest days.

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In the ever-evolving modern business landscape, embracing a remote workforce is a win-win for all stakeholders, thanks to the flexibility offered. While only a certain section of the global workforce worked from home before the pandemic, the mass transition to remote working became a reality in the post-COVID-19 world.

Being gainfully employed no longer means working out of a physical office.

Your employees can work anywhere in the world and still get their work done. And if experts are to be believed, companies opting for remote workforces to give employees the freedom to work from any location they choose are here to stay. 

The remote working landscape in Hong Kong consists of:

(i) Employees based and employed in Hong Kong and seeking to work remotely within Hong Kong and

(ii) Employees employed and based outside Hong Kong and seeking to work remotely from Hong Kong.

In this guide, we’ll explore the various legal and practical considerations before setting up a remote workforce in Hong Kong along with insights into creating an effective remote work policy for seamlessly managing your employees.

Understanding Remote Workforce in Hong Kong

Remote work refers to a form of employment where the employees do not work from a central office of the employer. Typically, such employees do not commute to any office and can work from anywhere they want as long as they can access the internet and their laptop.

There are various types of remote working arrangements.

Some remote workers are fully remote, which means they never have to walk into an office and can work remotely 100%. Some employers only allow certain employees to be remote workers depending on their geographic location and job function.

Freelancers and independent contractors in specific sectors are also technically remote workers, although they are not bound by any formal employment contract.

Remote working is prevalent in Hong Kong. Hong Kong companies hiring globally prefer having a remote workforce and hiring candidates from countries such as Ukraine, India, the Philippines, the United Kingdom, and the United States. A survey found that in 2022, 89 percent of employment contracts offered by Hong Kong companies were for remote work.

Hong Kong is also a popular destination for digital nomads working remotely as self-employed individuals or under an employment contract for companies in the United States, the UK, Canada, Singapore, and Denmark.

But to become a remote-friendly company doesn’t mean you cannot have a physical office in Hong Kong.

Several companies set up a branch or representative office to establish their business presence.

The advantages and disadvantages of a remote workforce are as follows:

Advantages

• Reduced costs for both employer and remote worker
• Remote workers can set up their schedules and work flexibly
• Remote workers enjoy a better work-life balance
• Employers get access to a diverse and wider pool of candidates with specialized skills
• Reduced absenteeism
• Better productivity of employees

Disadvantages

• Security is a major concern for employers and remote workers, especially those handling sensitive or confidential information
• Unstable internet access can prevent remote employees from performing their tasks on time
• Training remote employees is a challenge

Legal Aspects of Setting Up a Remote Workforce in Hong Kong

Every employee in Hong Kong enjoys several legal rights under Hong Kong laws, which extend to those who are part of a remote workforce. There is also no distinction between employees hired by a non-Hong Kong company and a Hong Kong company.

However, no legal protections are available to independent contractors/freelancers who are remote workers.

Employment Law and Labor Ordinance

Employee Rights and Protections

Key rights and protections available to all employees include:

• Protection from discrimination on any ground, including sex, marital status, disability, and race
• Receiving minimum wages
• Minimum paid holiday entitlement and paid time off for illness or injury for four consecutive days

Continuous employees are also entitled to paid annual leaves, maternity/paternity leave, sickness allowance, rest days, and severance or long service payments. A person must work for 18 or more hours weekly for the same employer for at least four weeks consecutively to qualify as a continuous employee.

Courts have held that even if Hong Kong law doesn’t govern the employment contract, employees working in Hong Kong still enjoy employment protections offered by law, and employers cannot bypass compliance obligations. This also applies to remote workers and entitles them to enjoy employee benefits per Hong Kong law and the foreign law applicable to the employer’s central office.

Employer obligations

Key obligations under the Hong Kong Employment Ordinance include:

• Paying minimum wages
• Enrolling employees in the mandatory provident fund scheme and making a contribution
• Maintaining necessary insurance coverage to cover liabilities for work-related injuries, if any
• Providing annual leave, statutory holidays, maternity and paternity leave, sickness allowance, severance, etc.
• Ensuring a safe work environment
• Providing minimum notice of termination or payment in lieu

But a foreign entity employing remote workers in Hong Kong is unlikely to provide the benefits under the scheme unless it holds a business registration certificate in Hong Kong.

Visas and Work Permits

If an individual is a national or a resident of Hong Kong or has a valid employment visa to work in Hong Kong, they can work remotely from Hong Kong. Persons holding a Hong Kong permanent identity card can also freely take up remote employment in Hong Kong and work for foreign entities.

There is no special visa for individuals who are not Hong Kong nationals but want to relocate as digital nomads and take up remote work opportunities in Hong Kong. But they can apply under the Quality Migrant Admission Scheme or the General Employment Policy.

Under the Quality Migrant Admission Scheme, applicants don’t need any offer of local employment before they enter Hong Kong. However, applicants must have a confirmed employment offer if they apply under the General Employment Policy.

Taxation

Both employers and remote workers have tax obligations in Hong Kong:

Employer tax obligations

Since Hong Kong follows territorial tax laws, profits arising in or derived from Hong Kong are taxable. Employers with a tax presence in HK must file annual tax returns and the most recent audited financial statement.

Any overseas company that employs persons in Hong Kong to carry on its business as part of its remote workforce may be considered a Hong Kong permanent establishment. A Hong Kong PE is subject to local tax laws, subject to a double taxation agreement.

Every employer in Hong Kong also should notify the Inland Revenue Department about the commencement and cessation of employment of its employees in Hong Kong.

Employee tax considerations

A foreign individual who works remotely from Hong Kong is subject to Hong Kong salaries tax, provided their employment income is derived from Hong Kong. This is subject to any double taxation avoidance agreement between Hong Kong and the individual’s country of residence.

If an overseas employer employs a foreign national who works remotely from Hong Kong, they will likely be considered non-Hong Kong employees. They only need to pay salaries tax on income directly from services provided in Hong Kong.

Insurance

Corporate insurance is a crucial aspect of maintaining a remote workforce.

Mandatory insurance requirements

The Hong Kong labor department states that employers must compensate employees for work injuries, occupational diseases, and death.

Employers should purchase and maintain compulsory employee insurance of at least HKD 100 million if employing up to 200 employees and at least HKD 200 million if there are more than 200 employees.

Employers cannot provide insurance coverage through salary deductions.

Additional insurance options

There is no maximum insurance coverage laid down under Hong Kong law. So employers are free to purchase a higher coverage depending on the job function of the remote worker.

Practical Aspects of Setting Up a Remote Workforce in Hong Kong

When you set up a remote team, it’s important to understand the practical aspects that are required.

If you’re opting to get a remote business address in Hong Kong or other options, it’s critical to understand these aspects beforehand.

Here are some things you should consider.

Establishing a Remote Work Policy

A remote work policy clearly outlines employees’ and employers’ expectations when work is done remotely.

Hiring a remote workforce without a formal policy can lead to miscommunication and confusion. Here’s what you should consider while framing one:

Scope and objectives

A remote work policy aims to broadly lay down the scope of work of remote workers, rights and obligations, and how the employer will evaluate their performance.

A well-drafted policy ensures that even though employees may be working remotely in different locations, they know relevant resources and protocols to perform their tasks efficiently.

Eligibility and Expectations

The policy should clearly specify which job functions are allowed to work remotely. It should also clarify whether the policy applies to full-time or part-time employees working remotely.

The availability expectations from remote employees should be clearly stated in the policy and state whether employees have the flexibility to decide their own schedule, or if they should be available from 9 AM to 5 PM on all working days.

Communication guidelines

Remote working requires efficient communication.

The policy should lay down whether employees working remotely are expected to respond to their coworkers immediately on a real-time basis or if an asynchronous mode of communication is acceptable. Including an indicative response time guideline can be useful.

It should also identify a digital workplace platform/communication tool all employees should use for all project-related conversations.

Performance and accountability

The remote working policy should lay down the working hours of everyone working remotely.

It should also lay down what KPIs are taken into account for evaluating the performance of employees.

Technology and Infrastructure

Managing a remote workforce is highly dependent on technology. Here are a few things to keep in mind:

Remote work technology essentials

To allow your employee to work smoothly from a remote location, ensure they have access to relevant hardware such as a laptop with an in-built web camera, other mobile devices, USB or external drives, etc.

Avail the services of a reliable third-party cloud hosting provider to upload all your files, databases, and applications your employees need to access.

Security and data protection

Ensuring compliance with data protection law is a non-negotiable for data security.

Create a comprehensive cybersecurity policy telling employees how to handle sensitive and confidential data. Have virtual training to sensitize remote workers about potential threats. Make it mandatory for the mobile workforce to use virtual private network software for business.

Implement a strong password policy and multi-factor authentication for the mobile workforce as a security measure.

Ensuring seamless collaboration

Working remotely can make collaboration awkward and clunky, resulting in poor productivity.

To overcome obstacles, opt for cloud business communication platforms that support video and voice needs and can be easily integrated into your existing workflow. Establish clear communication protocols to make remote collaboration work smoothly.

Hiring and Onboarding Remote Employees

How do you know if someone will make an excellent remote employee? The process you follow to make a hiring decision can make all the difference.

Sourcing talent

The first step is coming up with a job description. To create a solid JD, provide details of the position and the skills you seek. Add a line or two about your company values and ethos. This will help you to filter candidates who do not fit the bill.

Post the details on popular head-hunting websites as well as the social media accounts of your company.

Remember to share the JD with your existing employees if you have a referral system.

Interviewing and selection

Hiring for a remote role usually involves conducting remote interviews.

Ensure that all interviews are conducted over a video call instead of a phone call, as it helps establish a better connection with the candidates. Have a list of questions to evaluate whether the individual is a right fit for the role. But don’t shy away from asking a few icebreaker questions to make the candidate comfortable.

Effective remote onboarding process

Remote onboarding goes beyond offering logistical or technical support.

Create an intentional onboarding experience by appointing a dedicated onboarding team. Once a candidate accepts the job offer, the team can start the joining formalities, such as giving them access to the digital workplace and sharing employee policies, etc.

The team can also proactively reach out to the remote employees and iron out any practical issues they may face once they start work.

Best Practices for Managing a Remote Workforce in Hong Kong

Here’s what you should put into practice for seamlessly managing a remote team in Hong Kong:

Communication and Collaboration

Ensuring efficient communication and collaboration with individuals working remotely is one of the crucial practical considerations you must consider.

Make sure to establish standardized formats for communication but also make an effort to understand the communication preferences of your teammates. Before starting virtual meetings, set aside some buffer time to allow everyone to catch up and have a virtual water cooler moment.

Lack of team cohesiveness is a challenge managers face when employees work remotely. Since remote working means no physical interaction daily, schedule regular check-ins with members to get an exact idea about where your team is currently at.

Performance Management

Micromanagement is the death knell for remote teams.

For effective performance evaluation, communicate to your employees what’s expected of them and what metrics will be considered for assessment and review.

Set aside time regularly to provide feedback and talk about an employee’s performance in general and also let them know how they are faring against specific objectives.

Employee Engagement and Well-being

As there is no clear separation between home and work, it is far more challenging for remote teams to maintain a healthy work-life balance.

Working remotely shouldn’t be at the cost of sacrificing mental and emotional well-being, and employers should lead by example. It is best not to promote a work culture where everyone puts in ridiculously long hours and stays online round the clock. Except in an emergency, your team members shouldn’t be expected to answer work queries once they log off or are on leave.

Schedule regular check-ins to gauge employee well-being. If you notice any troubling signs, provide the necessary support, such as reimbursing employees for mental health counseling sessions.

Check whether your employees have a proper set-up for home working and as them to contact the technical support team if they are experiencing technical difficulties.

Bottom line

Setting up a remote workforce is a great way to add diverse talent to your company. Besides providing freedom and flexibility to employees, remote working reduces the employer’s cost and increases the workforce’s overall productivity.

Before you take the leap, you must consider all the legal and practical considerations of maintaining a remote workforce in Hong Kong. Complying with various provisions of employment law, tax law, insurance law, and immigration laws is critical to avoid penalties.

Several businesses are proactively embracing the remote work trend and hiring workers from Hong Kong. As the law doesn’t distinguish between remote and regular workers in Hong Kong, ideally, businesses must establish a presence in the region to comply with their statutory obligations.

Setting up virtual offices for remote workers can help businesses manage their remote workforce efficiently. But even in a business-friendly destination like Hong Kong, choosing the correct mode for establishing the presence of your business can be challenging.

Get in touch with Air Corporate — we help businesses across the globe to explore their options in Hong Kong and get their business up and running.

FAQs

As a foreigner, can I work from Hong Kong as part of a remote workforce?

You can become a remote worker in Hong Kong only if you have a necessary work permit.

How easy is it to get a work visa in Hong Kong?

Difficulty in securing a work visa varies on a case-to-case basis.

No one can guarantee a positive outcome of your visa application.

Which industries have the best remote work opportunities in Hong Kong?

Businesses engaged in computer & IT, marketing, project management, medical and health, recruiting, and accounting are more likely to offer remote positions.

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