subject: Grow Your Business In Hong Kong! [print this page] If you think your existing SME business can benefit from a presence in Asia, you probably have already done some on and off market research. However if you are a little lost and do not know where to start, then I suggest the best way to start your research would be to find out:
If similar-sized competitors are planning to or have already set up their Asian operations. If the answer is yes then there is a good chance that a market for your product/service exist and as the Asia and China markets are growing fast there should be more than enough room for your business too. Look for the reasons behind their decision and see if those same reasons can be applied to your business. For example, if you are in the internet security business and you learned that a rival has set up a sales office in HK, the fact that China's internet community is huge at over 420m as at July 2010 (that's more than half of Europe's total population) and still growing strongly should prompt you to also act. If you are among the first firms in your industry to consider setting up in Asia/Hong Kong, then you may have to conduct a more in-depth study. You may consider building a number of client or buyer "personas" and search the net before estimating the number of Asian firms/individuals that would fit into those personas; or you may consider engaging a professional market research firm to do the work for you. Aim to collect sufficient information to facilitate an income forecast with some confidence. Ascertain also if modifications to your existing products need to be made to bring them to a marketable state for your targeted markets. When conducting your research you should preferably also generate appropriate and sufficient data for you to estimate the conversion costs.
Once you have decided that the business potential is there you would want to investigate and find out the most advantageous location and business form for your initial Asian presence. This is largely determined by factors like: Location of your customers/market; costs (including setting up costs, running costs and taxation considerations); legal system and rule of law; efficiency of government and availability of the right human resources. Again the legal form that your venture should take will mostly be determined by tax efficiencies and cost reasons. There are plenty of business service providers, company incorporation and secretarial firms who can advise you on this area for free.
The next step would involve gathering all costs that are relevant to your Asian venture. In order to see how such a venture would perform over an initial period (say two years), you'd need data on
Initial Start-up costs; and
Monthly running costs
There are blogs and websites on the internet that can provide assistance on costs, again it will involve some research. One such blog in Hong Kong aims to provide relevant, up-to-date costs and working out the viability of your venture, but unfortunately if your chosen location is Shanghai for example, then that blog would be of limited use.
To use a financial model to test the feasibility of your venture in terms of cashflow forecast and breakeven points means having enough data to produce a reasonable sales forecast and costs of setting up and running your business/office. Entering these into a financial model will give your an idea of total capital required; the breakeven points of your venture, profit or loss and cash flow situations over the first 24 months of operation under different sales scenarios. Examples of such a model maybe downloaded from various blogs on the internet.
In a perfect world you will find highly encouraging financial results from running the financial model, choose to commit to such a venture, successfully expand your business into the Asian market, make your first pot of Asian gold then maybe branch out to other parts of Asia from here. Many of my clients have done it and I firmly believe that many more SME businesses will find it easy to follow suit. Once you have decided to commit and set your time frame you are ready to take the final step of enlisting the help from an experienced incorporation and business services professional, preferably one that can also help your venture grow with a range of useful services, has strong communication abilities and used to handling overseas clients. One such Hong Kong-based company is the one that I am working for. See Author section for details.
by: J Fung
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