How to Pay Contractors in Hong Kong
November 4, 2021
When most people think of China, they picture Hong Kong, not Mainland China. This is because Hong Kong is one of the global epicenters for business activity—akin to New York, London, Tokyo and even (relatively) nearby Shanghai. It’s a hub for finance, commerce, retail and everything else you’d find in a burgeoning urban center. It’s such a unique place that in recent years, there’s been tension between Mainland China and Hong Kong over the latter’s identity as a city-state.
Political tensions aside, some of the most skilled and ambitious contractors in the world call Hong Kong home, which has made it a hiring hub for North American companies. Working with Hong Kong contractors gives you access to a booming market of professionals, many of whom understand global commerce and are eager to share their talents with the world.
If you’re interested in working with contractors from Hong Kong, the first thing you’ll need to figure out is how to pay them—which can be tricky. Here’s what you need to know about paying contractors in Hong Kong.
Why hire contractors in Hong Kong?
As a global business epicenter, Hong Kong is a hub for reputable, experienced, eager contractors. Companies looking for a strong talent pool will find it here. And, while it may cost a little bit more to tap into this network of contractors, it’s often well-worth it. There’s a reason Hong Kong is one of the world’s business capitols.
For many North American businesses, Hong Kong is a stepping stone into Asian markets. Hong Kong’s eclectic and diverse population ensures they’re able to find a contractor who’s familiar with Eastern markets and audiences, yet also skilled at translating Western concepts and ideas. Hiring from Hong Kong, there’s a decent chance you’ll find someone who speaks English, follows conventional work habits, uses the same software you do and who is equipped with a strong skillset.
Many businesses look to Hong Kong for value when hiring contractors. While there are definitely cheaper contractors in places like Vietnam or Malaysia, Hong Kong’s talent pool runs deep and offers premium capabilities for competitive rates. The cost of living in Hong Kong is about 20% less than major American cities, which can mean contracting superior talent at a discount.
Currency and transfer considerations
Currency can be a confusing topic when it comes to contracting with professionals in Hong Kong. For starters, Hong Kong has its own currency: the Hong Kong Dollar (HKD). Relative to the United States Dollar (USD), HKD is a weaker currency—the ratio is somewhere around 7.75:1 HKD to USD.
To complicate matters, Hong Kong contractors may prefer different currency depending on where they live in this region. For example, some may prefer payment in Yuan (CHY), which is the currency of Mainland China. The Macau Pataca (MOP) is also widely accepted in certain areas, though it’s a weaker currency. Finally, many contractors will actually prefer USD, since it’s also accepted in Hong Kong.
Ways to pay contractors in Hong Kong
Despite its status as a global financial center, there are sometimes barriers in paying contractors in Hong Kong. Mode of payment matters, and it’s important to understand the pros and cons of each:
- Wire transfer. When dealing with large sums and one-off transactions, wire transfers are ideal. That said, they’re not ideal for recurring transfers or continuous payments. While they’re secure and instant, that convenience comes at a high financial cost to the sender. Use them sparingly.
- Check or money order. Paper forms of payment just aren’t applicable for paying contractors in Hong Kong anymore. It simply takes too long for the funds to land and when they do, there’s a lack of transparency involved. While they’ll do the trick for unbanked contractors, they’re best avoided for better modes of payment.
- Bank transfer. ACH transfers are convenient and safe, but there are several problems that can arise. For starters, currency conversion isn’t always a transparent process, which may mean paying high conversion costs. Moreover, many banks will cancel payments to China without preauthorization, due to high instances of fraud associated with the region.
- Digital payments. Digital payments require that both parties have a digital wallet. That said, there are tremendous benefits for both companies and contractors. Currency conversion is seamless and supports the many currencies accepted in Hong Kong. Transfers are also transparent, so everyone can see where the money is in transit. Contractors also have control of what they do with their money once it’s landed.
Paying contractors in Hong Kong really comes down to understanding their needs and selecting a mode of payment that works best for both parties. That said, more and more businesses are choosing digital payments as the global economy continues to ramp up.
The best way to pay independent contractors in Hong Kong
Ultimately, the best way to pay contractors in Hong Kong is through digital payment channels. Digital payments offer the transparency both parties need to transact with confidence. Moreover, they ensure companies get the prime currency exchange rate and that contractors can manage their funds in whatever currency or capacity they desire. Hong Kong isn’t the easiest market to break into—digital payments make it easier to find a professional and maintain a good-standing relationship with them.