Hong Kong has long been recognized as one of the world’s most significant business hubs, and its appeal as a location for jewelry trading is no exception. With a robust market, strategic geographic position, and favorable economic conditions, Hong Kong provides an optimal environment for entrepreneurs and businesses in the jewelry industry. In this blog post, we will explore the reasons why Hong Kong is a top destination for jewelry trading businesses, supported by key data and insights.
1. Strategic Location and Connectivity
One of the primary reasons Hong Kong stands out as a hub for jewelry trading is its strategic location. Situated at the crossroads of Asia, it offers easy access to both Western and Eastern markets. This position has cemented Hong Kong as a critical gateway for international trade, particularly between China and the rest of the world. For businesses dealing in jewelry, proximity to manufacturing hubs in China and established trading routes across the globe ensures smooth import and export processes, making it an ideal location for global trade.
2. A Robust Jewelry Market
Hong Kong is home to a thriving jewelry market, boasting impressive trade volumes. In 2019, the total import value of jewelry in Hong Kong (HS Code 71) exceeded USD 50 billion, with diamonds making up 50% of this total, and precious jewels comprising 31% of the import value. This highlights the significant role Hong Kong plays as a trading hub for high-value jewelry products (Source: ICE IT).
Looking at more recent figures, in 2023, the total value of Hong Kong’s jewelry exports rose by 10.4%, reaching HKD 59.1 billion, underscoring the resilience and growth of the sector. These statistics are a testament to the ongoing demand for jewelry products and the strength of the jewelry trade in Hong Kong (Source: HKJM).
3. A High Number of Registered Jewelry Dealers
Hong Kong’s jewelry industry is also supported by a substantial number of registered dealers. As of March 31, 2018, over 300 jewelry retailers and wholesalers were operating in Hong Kong, with the majority being small and medium-sized enterprises (SMEs). This network provides significant opportunities for networking, collaboration, and business expansion. The volume of registered dealers also signifies a thriving, competitive, and well-established industry that can provide a supportive environment for new entrants (Source: HKEX).
4. Favorable Trade Policies and Taxation
Hong Kong’s business-friendly environment is a major draw for entrepreneurs. As a free port, Hong Kong imposes no sales tax or Value Added Tax (VAT), simplifying the process for businesses and making it easier to manage cash flow. This tax system allows businesses to focus more on growth rather than on tax-related challenges.
Furthermore, the Closer Economic Partnership Arrangement (CEPA) between Hong Kong and Mainland China allows jewelry businesses to export products to Mainland China without incurring tariffs, provided the products meet specific criteria. This policy provides significant trade advantages for businesses operating in Hong Kong, particularly those aiming to access the vast Mainland Chinese market.
5. Business Registration and Licensing
Setting up a jewelry trading business in Hong Kong is a straightforward process. As a first step, businesses must register with the Hong Kong Companies Registry. This process typically involves choosing a business structure, such as a private limited company, which is the most common structure for trading businesses due to its liability protection. A company must have at least one director, one shareholder, and a local registered office address in Hong Kong.
For businesses specifically involved in the jewelry trade, additional licensing is required. According to the Trade Descriptions Ordinance and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, businesses dealing in precious metals, stones, and jewelry must register with the Customs and Excise Department under the Register of Precious Metals and Stones Dealers. This license ensures that jewelry traders comply with anti-money laundering (AML) regulations and helps maintain the integrity of the market.
To apply for the Register of Precious Metals and Stones Dealers license, businesses must submit the necessary documentation to the Customs and Excise Department, including proof of business registration, details of business activities, and information about key personnel. The department will review the application and, if everything is in order, issue the required license. Once granted, businesses must comply with record-keeping and reporting requirements, ensuring that all transactions involving precious metals and stones are properly documented and accessible for inspection by authorities.
6. Tax and Accounting for Jewelry Trading Businesses
Hong Kong’s simple tax system is one of the key advantages for businesses, including those in the jewelry trade. The corporate tax rate in Hong Kong is 16.5% on assessable profits, with a preferential rate of 8.25% for profits not exceeding HKD 2 million. This competitive tax regime allows jewelry businesses to retain more of their earnings for reinvestment and growth.
Jewelry businesses must file an annual profits tax return with the Inland Revenue Department (IRD), even if they make no profits. It’s essential for businesses to maintain accurate financial records, as they will need to substantiate their tax returns. Hong Kong also does not impose VAT or sales tax, simplifying the accounting process for jewelry businesses.
Accounting and financial reporting are also crucial in Hong Kong. Businesses are required to prepare annual financial statements in accordance with Hong Kong Financial Reporting Standards (HKFRS). These statements include the balance sheet, profit and loss account, and cash flow statement. All financial statements must be audited by a certified public accountant (CPA) in Hong Kong to ensure compliance with local regulations.
7. World-Class Infrastructure and Financial Services
Hong Kong offers world-class infrastructure, including efficient logistics systems, cutting-edge financial services, and a skilled labor force. The city’s modern transport and logistics facilities ensure smooth operations for importing and exporting jewelry, while its financial sector is renowned for offering robust services, including banking, trading, and investment options. Hong Kong’s business environment supports companies with high service standards, efficient processes, and access to capital, making it easier to establish and grow a jewelry trading business.
8. Growing Industry Prospects
The future outlook for the jewelry trading industry in Hong Kong remains bright. The city continues to be one of the leading global markets for jewelry trade, supported by strong consumer demand and a well-regulated environment. With consistent trade volume growth and increasing export figures, Hong Kong remains a key player in the global jewelry market.
Conclusion
Establishing a jewelry trading business in Hong Kong offers a multitude of advantages. The city’s strategic location, large and growing jewelry market, favorable trade policies, and world-class infrastructure make it an ideal environment for businesses. Hong Kong’s thriving jewelry sector, supported by a strong network of registered dealers, ensures that new entrants can tap into a dynamic market with excellent growth prospects.
By completing the necessary steps for business registration, obtaining the Register of Precious Metals and Stones Dealers license, and complying with tax and accounting regulations, your jewelry business will be well-positioned to succeed in one of the world’s most dynamic markets.
If you are considering starting a jewelry trading business in Hong Kong, feel free to reach out to our consultancy services for tailored advice on company formation, licensing, tax, and compliance. Let us guide you through the process and help your business thrive in this vibrant market.
