Developing your Direct Import Program from Asia using Hong Kong

The Direct Import Program is an ideal solution for importers, selling direct to large customers. The Direct Import Program is designed for businesses that:
 

  • Are sourcing from Asia and reselling in their home country or third-party destinations

  • Are selling to large customers who accept direct shipment

  • Want to centralize their sourcing function in Asia

  • Need to have better control over quality

  • Need to have better control over receipts and payments

  • Want to sell on FOB Asia terms
     

If you are sourcing or buying from Asia and selling your products to large customers in your home country or third-party destinations, then the Direct Import Program can help you achieve greater competitiveness and efficiency. The program enables you to centralize your sourcing function in Asia, thereby giving you greater control of the quality standards of your products and create savings from economies of scale.
 

Moreover, since the Direct Import Program can operate through Woodburn’s office in Hong Kong, it means that not only will your business benefit from having a centralized function WITHOUT the fixed costs of running a physical office, but also enjoy all the benefits that Hong Kong has to offer as the leading trade and financial hub in Asia. Through strategic advice and careful structuring of your business in Asia, you can enjoy selling “FOB any Asian Port”, 8.25-16.5% tax on profits and 0% on offshore profits, and the mitigation of risk for your investment in Asia. 
 

Key features of the Direct Import Program

The Direct Import Program is designed to provide full support for your trade function in Asia, without the high fixed costs involved of having a physical office, while minimizing your investment risk.

Woodburn helps its clients to:

  • Sell either FOB Asia or ex-warehouse

  • Manage letters of credit and trade finance

  • Handle trade documentation, and liaise with vendors in Asia

  • Address quality concerns with suppliers

  • Take advantage of Hong Kong’s attractive tax regime of 8.25-16.5% corporate tax rate, and 0% tax on offshore profits.
     

How does it work?

Firstly, Woodburn develops a customized Direct Import Program solution which is specific to your business and requirements. Woodburn then incorporates a Hong Kong company for your Direct Import Program structure and operates it via our Woodburn office, with our staff handling all the day-to-day running of your Hong Kong operation, including:
 

  • Receiving orders directly from your retail customers;

  • Handling all commercial matters, such as receipts, processing of letters of credit, invoicing, accounting and banking; and

  • Helping your parent company manage the supply chain.
     

Having a Hong Kong company provides you with greater flexibility in how you sell your products.  As an “Asian” exporter, the new entity represents an opportunity for the importer to leverage off its existing retail, design and purchasing networks, and to sell into new markets if you choose to do so.  These new markets could be anywhere in the world.  The key is that the sales from the Hong Kong company would be booked on an FOB Asian port basis, and goods can be shipped directly to large customers. Moreover, this frees up capital on inventory that would otherwise be tied up through stocks held in warehouses.
 

Benefits of the Direct Import Program
 

Taxes: Hong Kong’s corporate tax rate is 8.25-16.5%, Woodburn can offer professional advice on how to make your transactions tax-free in Hong Kong based on Hong Kong’s source-based tax regime.
 

Flexibility: Clients can choose to sell either FOB Asia or ex-warehouse, thus reducing the amount of inventory tied up in a warehouse.
 

Free Up Capital: FOB sales are often on letters of credit terms; this frees up significant capital financing in inventory before a payment is made. Hong Kong is one of the great financial hubs of the world - certainly superior to China - local letters of credit and trade financing through Hong Kong banks can be easily sourced and managed. Hong Kong is renowned for its superior turn-around-time in processing financial transactions resulting in a faster availability of cash assets
 

Variable Cost: With most fees being transaction-based, the cost of administering the Hong Kong subsidiary is driven by how much business goes through it rather than a large, fixed overhead.
 

Control: Our trade department will help you liaise with your vendors in Asia, in the same language and time zone to ensure you get what you want.
 

Low Risk: Clients do not have to bear the financial burden of leases, staff or overhead.
 

Growth: Clients can build sales channels to support the development of new product lines for different markets, and to sell to international partners from a Hong Kong base. You would be perceived as being an Asian supplier with the Hong Kong company offering your products to the rest of the world.
 


To learn more about creating your Direct Import Program using Hong Kong, complete our online inquiry form here below.

DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.

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