Love a certain product and can’t find it on store shelves in Hong Kong? You and your friends group buying them from America and shipping over for your own use?
You may be onto a new business opportunity!
It is overwhelming deciding where to start to turn this into a business, and today we’ll go through some of the technical tactics for importing it into Hong Kong.
Classifying The Product Into a Category (HTC Code)
First, what kind of product is it? It will be in a certain category, say, supplements. There you should be able to ask an import broker if it has been put into a specific item number for the Hong Kong market
As a pretty open trade zone, Hong Kong deals with products from around the world. We had a fun podcast w/ Mike The Greek on all the international packaging and designs he sees in shops – so you can imagine the Hong Kong customs department has seen it all!
In USA, the system is called HTC – which means Harmonized Tariff Code, and every product has one. This is what the import customs official checks when the large shipment is being mailed or cargo’d into Hong Kong. It will tell the agent a few facts, which we’ll get to now.
Does The Importer Need a Special License?
Once the Hong Kong customs knows what code or category the product falls into, it will determine if a special license needs to be held by the importer of record.
For the most part, Hong Kong is pretty open to allow goods to come in to any buyer and distributor. Yet if it seems like a special case that has risks and dangers for the general public, expect to get a letter requesting you present special certificates in order to claim the shipment.
Import Tax Rate
Hong Kong has low taxes. This is one big reason business owners around the world flock here to use it as an Asia business hub for their product business.
But it is always good to do your research ahead of time and ask a customs broker if this product will have an upfront import duty tax to pay to the government.
Mainland China is much more expensive and strict on paying upfront fees and taxes. Hong Kong, I have a feeling for most of the products readers are looking into, will have 0 to low tax on. But please, ask a logistics company for verification before shipping a large value order in!
Is The Product Banned in Hong Kong?
Certain products may have had a bad history in Hong Kong. Maybe a weight loss drug that put someone in the hospital and caused a public outrage. Or death, or worse.
Hopefully you don’t intend to distribute such harmful goods, but if you didn’t do your product research, and these goods are received are banned, you can say goodbye to that shipment!
One example is e-cigarettes are banned in the Hong Kong market. Even some trade show booths block the factories in China from displaying their goods as it is inside the Hong Kong border.
So just be sure the goods you are looking to sell are allowed in the HK marketplace.
How To Find Out? Ask a Customs Broker
So you’ve been searching tirelessly on Google for a database in English to classify the goods you want to build your business around. Maybe it exists, but a better way is to find a logistics company.
Logistics companies are everywhere in Hong Kong. It is a major port of trade for Asia and the rest of the world. Go to any networking event and one out of ten business cards will be a logistics sales rep!
So give them a chance to get your business! Explain your business idea and that you want to bring this product into the Hong Kong market.
They will ask for more details, and it is best to give them a physical sample to play with. Most of the time they’ll do this upfront work for you for free, in hopes that you use their services once you go ahead with the project.
I hope you appreciate their help, and go ahead with using their services after! But don’t feel bad to still shop around, business is business!
Ship a Few Samples to Hong Kong
As hinted in the last section, it’s best to show this sample around to customs brokers and logistics companies. Having something in your hand to show someone still goes a long way. Even with digital 3D CAD files, youtube videos, and eBooks, nothing compares to having the physical good in your hand.
Bring a few, and be willing to let them go to be handled by logistics companies. Most likely you won’t get them back, so be prepared to have extras to save time when asking multiple service providers.
On top of using the samples for the logistics and import duty matters, don’t forget to SELL! Show these to your potential buyers. Bring them to trade shows and networking meetings. Heck, even try to sell them on the spot to test demand.
So many people I talk to get wrapped up in the logistics and backend, that when they finally get all the approval and licenses they don’t have anything that the end consumer wants!
Leverage these samples for both your business model confirmation as well as confirming all the taxes and shipping fees.
Check Store Shelves and Local Online Retailers
Maybe you don’t think anyone is selling these goods already in Hong Kong but are you 100% sure? Hong Kong is a very “retail shop” oriented place. Check out retailers or grocery stores in the area to see which would be a good opportunity to sell to.
What is a good hint to see if they’re a potential buyer? See if they are selling products in that category or to that target customer. Do they have competing brands on the shelf?
Don’t let the sight of a competitor’s good on the store shelf as a negative signal, it is positive! That means there is a market and people are already buying this kind of product. Don’t try to re-invent the wheel, especially if this is your first business venture. Finding an existing market and making small improvements is a formula for success again and again.
Back to the import taxes, are these competing or similar products imported or local? If imported, collect this information and show it to your customs broker. They can look it up and see.
Check The Labels
Also, try your best to get the barcode from Hong Kong, most of the time the labels have stickers over them for the local market with identification to help you out.
You’re doing your research and being a detective. Ask your close friends to also keep an eye out when shopping, and gather as much information as possible.
More clues are, is this custom packaging for the Hong Kong or China market? Or is it still the original English packaging with a simple sticker over the bar code, UPC area?
If custom packaging, that means this brand has invested a lot into the local market. They are making enough volume to justify printing special packaging and other enhancements of the product just for the Chinese market.
If they just have a sticker over top the English packaging, it can mean a few things. First, it may mean they are just getting started in the market and you’re not too far behind them. Another reason is the brand doesn’t even know they are being sold in Hong Kong, maybe a trading company bought wholesale in USA and imported it on their own. As more “flash stores” like 360 pop up – they discount imported goods as much as possible to get high volume and turnover.
If your target product is the second option and you want to be a reseller, it is worth taking a shot and approaching them. A lot of times because of language and culture the Hong Kong retailer didn’t bother to contact the brand and is simply being a trader. You can take this opportunity to step in and create business value.
A lot can be learned from the labels and packaging of products you are looking to import into Hong Kong and other markets, so take care to gather all the data. I use Evernote mobile app, snapshots when in a shop, and sync immediately to my phone and computer. Start a Google doc and keep a running list of all my research.
Just keep Making Development
Just like any business venture, there will be good days and bad days. At the early stages of deciding to be a distributor of a product in a new market, the more you can test before investing the better.
It is also worth noting that you should try some focus groups. Get on Craigslist or other local classified sites, offer a small cash gift, free samples, or dinner and drinks for a group of your target customers to test the product. Record it, video and audio is ideal, and be a detective. Dig into if they really like it, if they would really pay for it.
I hope today’s guide helped you on getting past your first few steps on determining the import tax rate and feasibility of a new product in the Hong Kong market. This can be applied to any market, it is really just research!
How has your experience been? I’d love to hear your comments and feedback in the comment section below, thanks!