Expansion to Hong Kong: A Complete Guide

If you’re looking to expand your business overseas, Hong Kong is a great place to consider. With its vibrant business environment, strategic location, and favorable tax regime, Hong Kong has become a popular destination for companies looking to establish a presence in Asia. In this article, we will explore the different options available for expanding your business to Hong Kong, including Employer of Record (EOR) and Professional Employer Organization (PEO) services.

Why you need to be interested on expanding into Hong Kong

Hong Kong is a dynamic and thriving business hub that offers many advantages to companies looking to expand their operations overseas. Some of the key benefits of doing business in Hong Kong include:

  • Strategic location: Hong Kong’s location at the crossroads of Asia makes it an ideal gateway to the rest of the region, including China and Southeast Asia.
  • Favorable tax regime: Hong Kong has a simple and low-tax regime, with no VAT, sales tax, or capital gains tax. This makes it an attractive destination for businesses looking to minimize their tax burden.
  • Skilled workforce: Hong Kong has a highly skilled and educated workforce, with a strong focus on innovation and technology.

Employer of Record Hong Kong: What is an Employer of Record?

An Employer of Record (EOR) is a third-party provider that handles all employment-related responsibilities on behalf of a company, including payroll, benefits, and compliance. EORs allow businesses to expand their operations overseas without the need to establish a legal entity in the foreign country. This can be a cost-effective and efficient way to expand into new markets, as it allows businesses to focus on their core activities without being burdened by the administrative and legal complexities of employment law in a foreign country.

Step by step of the EOR process

Engaging an EOR in Hong Kong typically involves the following steps:

  1. Needs assessment: The first step in engaging an EOR is to assess your business needs and determine the services that you require.
  2. Agreement and contract: Once you have chosen an EOR provider, you will need to sign an agreement and contract that outlines the scope of services, fees, and other terms and conditions.
  3. Employee onboarding: The EOR will handle all employee onboarding, including employment contracts, tax registration, and other administrative tasks.
  4. Payroll and benefits: The EOR will handle all payroll and benefits administration, including tax withholding, social security contributions, and health insurance.
  5. Compliance: The EOR will ensure that your business is compliant with all relevant employment laws and regulations in Hong Kong.

Using a Global PEO in Hong Kong

A Professional Employer Organization (PEO) is a service that allows a company to outsource its HR functions, including payroll, benefits, and tax administration, to a third-party provider. The PEO becomes the employer of record for the company’s employees and takes on all the legal and administrative tasks associated with HR management.

Step-by-Step Process for PEO

  1. Signing an agreement: The company and PEO sign a service agreement that outlines the terms and conditions of the service.
  2. Employee onboarding: The company provides the necessary details about its employees, such as salary, benefits, and job descriptions, to the PEO.
  3. Legal compliance: The PEO ensures that the company is compliant with local labor laws and regulations.
  4. Payroll and benefits: The PEO handles payroll and benefits administration, including taxes and social security payments.
  5. Ongoing support: The PEO provides ongoing support for the company’s HR needs, including employee relations, terminations, and compliance.

EOR vs PEO: Their Differences

One of the main differences between EOR and PEO is the legal relationship between the employer and the employee. With EOR, the legal employer of the employees is the EOR, while with PEO, the legal employer is the PEO.

Another difference between EOR and PEO is the level of control that the company has over its employees. With EOR, the company still manages the day-to-day activities of its employees, while with PEO, the PEO manages the day-to-day activities of the employees.

Finally, the cost structure of EOR and PEO is different. EOR services are typically charged on a per-employee basis, while PEO services are charged as a percentage of payroll or a flat fee.


In conclusion, expanding your business to Hong Kong can be a great opportunity to tap into a growing market and establish a presence in the Asia-Pacific region. When considering your options for expanding, it’s important to carefully evaluate your needs and goals to determine whether an Employer of Record or a Professional Employer Organization is the right choice for your business.

If you’re looking for a more hands-off approach to managing your workforce in Hong Kong, then an EOR may be the best option for you. By outsourcing your HR and employment-related tasks to an EOR, you can focus on the core aspects of your business without having to worry about compliance issues or administrative tasks.

On the other hand, if you’re looking for more control over your employees and want to establish your own legal entity in Hong Kong, then a PEO may be the better choice. With a PEO, you can have more flexibility and control over your workforce while still being able to leverage the benefits of a global HR provider.

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