Introduction

Hey, e-commerce enthusiasts!

If you’re all about hustling those online sales and rocking the drop shipping game from every corner of the globe or diving deep into the world of Chinese drop shippers, then listen up! Hong Kong’s business setup might just be your golden ticket! Today, we’re breaking it all down—business hacks, tools, and whether incorporating your dropship biz in Hong Kong is the right move. So, let’s dive right in!

What Does a Dropship E-Commerce Business Involve?

New to e-commerce? Ever heard of dropshipping?

It’s like this: You sell products on your site, but you don’t keep them in stock. When someone buys, the supplier ships directly to them. You pay the supplier less and pocket the profit.

Why is it interesting? No need for upfront inventory or worrying about unsold goods. It’s all about trying products, finding what clicks, and making bank.

Essential Elements for Every Dropshipper

• Ecommerce website with a checkout cart: The main difference with a drop shipper and an affiliate (next week’s blog covers affiliate marketing from Hong Kong, check the blog for updates ) is that the customer pays you first in this model. Then you need to payout to the supplier.
• Dropshipping Sources: You’ll need to have at least 1 place you get your products from! Or you’ll have nothing to sell. You may leverage Mainland China factories or wholesalers and they may also have a Hong Kong company, to make things super easy and smooth.
• Online Marketing Sources: This is online, so you’ll need some kind of channels to sell the products. Maybe content marketing, maybe paid advertising on Google or Facebook.
• Marketplace Stores: Similar to marketing channels above, but I’ll call this marketplaces. Tons of people are making a good living off Amazon these days. So you’ll need to establish an account with them in order to access the massive amount of buyers in their network. eBay is still there, but less and less relevant.
• Paying out Suppliers: Once you start selling the goods, you’ll need to pay back the suppliers for those orders. Each relationship can vary, some are willing to give you credit terms and invoice you monthly. That is pretty sweet. Others want you to pay immediately for the goods in order for them to ship out. You may pay them by credit card, or by bank transfer. Sometimes even Paypal. Anything goes here, and if you’re a big enough drop shipper, you may be able to negotiate better terms and payment methods with the supplier. It’s all about volume in this though.

So essentially the main idea is, you find a source who will ship on-demand to your end buyer, and then you sell those goods, get paid from the buyer, and pay back the supplier (immediately or on terms).

Benefits of Dropship E-Commerce in Hong Kong

So now, why Hong Kong? Here are some cases:

• Proximity to Mainland China: If your dropship suppliers are in Mainland China, having a Hong Kong company brings you closer to the e-commerce hub. Being a Hong Kong client can make transactions with your suppliers more seamless, allowing for fast and free payments. Even if your suppliers don’t have a Hong Kong company, paying into Mainland China remains straightforward, and you can opt to use Chinese Yuan for transactions.
• Operate in Chinese Yuan (RMB): Hong Kong is a unique hub allowed to hold Chinese currency (RMB), besides Mainland China. This advantage enables you to keep RMB in your business bank account and pay suppliers in their home currency. While some suppliers may prefer this arrangement, others may not want to deal with currency exchange hassles in their Chinese bank.
• Gateway to Southeast Asia: As Southeast Asia experiences a boom in product sourcing, Hong Kong becomes a strategic gateway. Quick and easy payments can be made to suppliers in countries like Vietnam, the Philippines, and Thailand. Some of these factories and suppliers may also have a Hong Kong company and bank, streamlining the business process.
• Enhanced Brand Image: Depending on your branding strategy, leveraging Hong Kong can position your business as more “direct” to customers. If you aim to be perceived as “Factory direct” and compete on price, highlighting Hong Kong as the best place for low prices can be advantageous. Dropshipping Chinese goods often allows for better prices, and strategically presenting your company’s commitment to offering the best prices can be a valuable marketing tool.
• Favorable Tax Rates: Taking advantage of Hong Kong’s corporate tax rates can significantly benefit your business. With a base tax rate of 16.5%, you may even qualify for a 0% rate with offshore election. While being mindful of meeting the physical presence test for tax benefits, even at the 16.5% tax rate, Hong Kong offers a more favorable tax environment compared to many other global locations.

What You’ll Need to kick off your business

So Hong Kong sounds promising? Let’s see what you’ll need.

• Business Banking: Apply for a business bank account to manage your company’s operations, sales income, and expenses efficiently.
• Payment Methods: For online sales, offering Paypal, Wise or Stripe is a convenient payment method for customers. Additionally, if you operate a shopping cart and want to accept credit card payments, explore various merchant account options on our comparison page.
• Currency Considerations: When getting a bank account, ensure it allows transactions in Chinese Yuan (RMB) if you deal with Chinese suppliers. This can lead to better deals and establish a more local presence.
• Sales Revenue Handling: If you sell on Amazon, you may need Payoneer to transfer sales revenue into your Hong Kong bank account. Listen to this podcast with Wilson Blues for insights on selling on Amazon from overseas.
• Credit Management: Maintain a credit card for paying online services and potential supplier transactions. Consider using bank transfers for supplier payments as your transaction volume increases for smoother operations.
  
  

Operating Dropshipping Business

To illustrate let’s imagine you’ve set up all your accounts. Here’s what your daily routine might look like:

Your e-commerce site is buzzing with products from your dropship supplier. After a customer buys using PayPal, you order the product from your supplier, pocketing the price difference. Hence as sales grow, you strike deals with Chinese wholesalers for better prices, paying every two weeks. You transfer payments via PayPal and credit card, with low transfer fees. Discovering more Chinese dropship wholesalers, you expand your product range, negotiate better prices, and extend credit terms. Business booms, and the best part? No need to store products!

Ready to seize this golden opportunity? Take the next step and become our dropship partner today! Head to our registration page to get started and unlock the potential for success in your business.