Why is It So Hard to Send Money to Hong Kong?
After experiencing marginally lower growth in 2015-2016, Hong Kong’s exports have already begun to rise in 2017. More and more U.S. small businesses today send money to Hong Kong each year, many sending bigger and more frequent global payments to Hong Kong all the while, which can be a complex, error-prone process.
Veem was launched to help small businesses more simply and effectively move money around the globe. Here are several key things small businesses should consider when they send, or are considering sending money to their Hong Kong suppliers.
Hong Kong: World Class Infrastructure, Free Flow of Information
The Hong Kong economy expanded 4.3% in real terms, and merchandise exports grew 9.4% in a first quarter year-to-year comparison. Hong Kong exported $7.4 billion dollars of good to the US in 2016, making it America’s 35th largest supplier of import goods. The region’s volume of exports has in fact increased by 8.7% since 2015. Known for its electric machinery, plastics, agricultural products, and certain travel and financial services, Hong Kong’s exports are set to continue expansion into US markets in 2017 and beyond.
Even with global economic markets remaining uneven, Hong Kong has proven to be a stable trading partner with American small and medium-sized businesses. Due to its world-class infrastructure, free flow of information, and lack of restrictions on inward or outward investment, Hong Kong continues to be a productive choice for American import partners.
However, international business in Hong Kong, like so many other countries, is not without its challenges. Small businesses must navigate the unique distinctions that come from Hong Kong’s status as a Special Autonomous Region with its own legal system, taxation policy, and currency. If businesses want to send money to Hong Kong, there are specific protocols to be followed and challenges involved.
The Ins and Outs of Sending Money to Hong Kong
To send money to Hong Kong using a traditional bank to bank transfer process, you’ll need the following basic information:
- Bank name and address
- Swift/BIC code
- Account number
- Receiver’s complete name
And then it might get complicated.
As an autonomous region, Hong Kong uses its own currency, the Hong Kong dollar. It has its own corporate law regulations, which make registering a company fairly easy in the region. Additionally, Hong Kong doesn’t employ the same Capital Flow restrictions, meaning that companies can send or receive as much money from abroad as they like, without restriction.
Looser structure, more relaxed laws, money laundering concerns
Because business regulation is looser, however, there can be less stable popup organizations, selling products from Chinese factories through a PO Box in Hong Kong, while not actually being based there. As such, sending money through a Hong Kong bank may be connecting buyers to more fraudulent businesses. Also, there are concerns of money laundering practices in the region.
In fact, the U.S. State Department listed Hong Kong as a “jurisdiction of primary concern” because of the sheer amount of money laundered through the region. Hackers are also able to transfer money through Hong Kong banks. Hackers clone business accounts to get unsuspecting companies to wire money to Hong Kong through international wire transfers to an outside bank account.
Complex wire transfer processes
Even after thinking through the problems of Hong Kong’s loosely regulated system, there are the challenges of finding reasonable exchange rates when businesses send money to Hong Kong. While banks can of course transfer money internationally, their fees are often higher and they may impose specific transfer limits, even if one isn’t required through Hong Kong’s regulatory bodies. If a banker offers a reasonable exchange rate, there may be higher transfer fees or “third party” fees that aren’t readily visible during the process.
How to send money to Hong Kong and bypass the banks
With the Veem international payments platform, transferring money to Hong Kong is far easier and much more cost-effective than traditional bank wires. Veem is an end-to-end global payment platform that directly connects money senders and receivers. While bank wire transfers go through intermediate banks, racking up “third party” fees and lengthy processing times, Veem swiftly transfers funds from one country to another.
Here is a list of further references to consult when sending money to Hong Kong: