How Can Domestic Companies Successfully Expand into the Hong Kong Market? Key Requirements and Steps Analysis

How Can Mainland Chinese Companies Successfully Enter the Hong Kong Market? A Comprehensive Guide to Essential Conditions and Steps

In recent years, with China's sustained economic growth and accelerated internationalization, more and more mainland enterprises have begun to look toward overseas markets. As a bridge connecting China and the world, Hong Kong has become the top choice for many companies seeking global expansion due to its unique geographical location, mature financial system, and free, open business environment. Particularly in 2025, amid heightened volatility in global capital markets, many mainland firms are turning to Hong Kong for fundraising and international business development to enhance their competitiveness.

1. Understand the Characteristics and Opportunities of the Hong Kong Market

Hong Kong is one of the most competitive international financial centers globally, boasting a robust legal framework, efficient regulatory systems, and a diversified investment environment. According to data released by the Hong Kong Stock Exchange at the beginning of 2025, by the end of that year, over 1,500 mainland enterprises had listed in Hong Kong, accounting for more than 70% of the total market value of Hong Kong stocks. This trend reflects the high level of reliance and trust mainland companies place on the Hong Kong capital market.

Moreover, Hong Kong serves as a crucial gateway to Southeast Asia and the broader global market. For enterprises aiming to expand internationally, Hong Kong offers not only advanced infrastructure and professional services but also favorable tax policies and talent attraction mechanisms. A deep understanding of Hong Kong’s market dynamics and policy directions is the first step toward successful overseas expansion.

2. Choose the Right Entry Strategy

Mainland companies can enter the Hong Kong market through various approaches establishing a representative office, registering a branch office, setting up a wholly-owned subsidiary, or acquiring a local company. Each method suits businesses at different stages and with different goals.

Representative Office Ideal for initial market research, it involves low costs but does not allow direct profit-making activities.

Branch Office Relatively simple to set up, allowing quick business launch, but the parent company assumes full liability.

Wholly-Owned Subsidiary Offers greater independence and helps build brand reputation, though at a higher operational cost.

Local Acquisition An effective way to gain market share quickly, especially in sectors like technology, retail, and financial services.

For example, a well-known new energy vehicle brand successfully entered the Hong Kong market in mid-2025 by acquiring a local electric vehicle sales company. It then leveraged the acquired company’s distribution network to expand into Southeast Asian countries, achieving excellent results.

3. Ensure Compliance Is the Foundation of Operations

Compliance is critical for any company operating overseas. Although Hong Kong is a Special Administrative Region of China, it operates independently in terms of commercial law, taxation, and intellectual property protection. Enterprises must familiarize themselves in advance with relevant laws such as the Companies Ordinance, Inland Revenue Ordinance, and Employment Ordinance to ensure compliance in areas like registration, taxation, and employment.

Hong Kong maintains a low corporate tax rate of 16.5%, significantly lower than many developed countries. However, the Inland Revenue Department demands strict financial transparency. Companies should either establish a dedicated finance team or engage local accounting firms to handle compliance matters, thereby avoiding legal risks stemming from improper operations.

4. Build a Localized Operation System

Merely investing capital is insufficient to succeed in Hong Kong. A localized operation system is essential

Recruit Local Talent Locally experienced employees help companies adapt faster and reduce cultural friction.

Establish a Local Supply Chain Partnering with local suppliers and logistics providers improves efficiency and reduces costs.

Develop Brand Identity Utilizing local media and social platforms enhances consumer awareness and loyalty.

Offer Tailored Products and Services Adapting product design and marketing strategies to local preferences can significantly boost acceptance.

For instance, a mainland e-commerce platform gained rapid traction among younger consumers in Hong Kong by introducing a Cantonese interface and integrating local payment methods.

5. Strategic Considerations for Financing and Capital Operations

For companies aiming to scale through capital markets, the Hong Kong stock exchange presents an attractive option. The Hong Kong Stock Exchange HKEX offers both the Main Board and the Growth Enterprise Market GEM, providing diverse listing channels for different types of enterprises. Since 2025, HKEX has continuously refined its listing rules, lowering entry barriers for biotech and new economy companies, thus attracting more innovative enterprises to list in Hong Kong.

Besides traditional IPOs, companies can explore alternative financing routes such as private placements, convertible bond issuance, or SPAC mergers. It is advisable for companies preparing for an IPO to hire a professional investment banking advisory team to conduct due diligence, valuation analysis, and develop a sound fundraising plan.

6. Risk Management and Long-Term Strategic Planning

Entering a new market inevitably brings uncertainties. Companies must identify and manage risks associated with currency fluctuations, policy changes, and market competition. At the same time, they should formulate a clear long-term development strategy outlining their goals and pathways for the next three to five years.

Notably, since the second half of 2025, some mainland companies entering Hong Kong have faced short-term performance pressures due to global economic conditions. However, those committed to long-term strategies-continuously investing in RD and brand building-have demonstrated stronger resilience and growth potential.

Conclusion

Expanding into the Hong Kong market is not a one-step process for mainland enterprises. It requires comprehensive preparation across multiple dimensions, including strategic positioning, compliant operations, localized deployment, and capital management. Only by thoroughly understanding Hong Kong’s market characteristics and leveraging their own strengths to chart a scientific and feasible development path can enterprises firmly establish themselves in this global financial hub-and use it as a springboard to access broader international markets.