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This is an important question on the business investment visa for Hong Kong….

Experience suggests that the Hong Kong Immigration Department do tend to look favourably upon such business plans, but the applicant absolutely does not have it all his or her own way, as you will learn in my PodCast answer. (Please note the subject matter of the business in this question is just an ersatz surrogate. I have changed it to ‘fear of flying’ to protect the identity of the service nature and maintain the confidences of the person planning to establish this very unique enterprise.)

QUESTION

“I, an American citizen, have been planning on beginning a stress-management therapy business in Hong Kong for adults who suffer from a fear of flying.

The market is a whole lot bigger than you might imagine given that intrinsically Hong Kong is a small, far flung place that is typically accessed by commercial flights.

Consequently there is hardly anything in Hong Kong and the rest of Asia generally which offers this type of private therapy course, plus post-therapy support, for adults who simply can’t  summon up the courage to get into an airplane.

Each intensive therapy course will run over a 3 day period, 12 hours per day. The objectives of the therapy are not just to allow participants to control and overcome their fears, but become incredibly self-confident in the process.

I personally have 8 years of first-hand experience in this very successful therapy. I have been through the same programme as a student, now a graduate, coach and course instructor.

I don’t hold any tertiary qualifications except for a Diploma at college.

My girlfriend, who is also a coach and course instructor on the programme, holds a bachelors degree.

The start-up costs are very low. I envision I can start employing 1 person full-time after 7 months and 2 people in part-time employment after 10 months.

The business is basically a franchise in many respects. The programme is already a worldwide business (the America’s, UK, Australia, South Africa, Europe, NZ, etc) so this will be the Asian branch.

In that case, is there a possibility the owner/inventor of the programme could help fund the start-up in HK or would that relegate myself to an ’employee’ status in the eyes of the HK officials rather than a ‘Business Owner’?

With only US$6,000 in capital available to me at the moment, I believe my best route is to try to register the business over in mainland China first.

I have not looked into the hurdles one must pass to start a business over here (I’m in Guangzhou) but it may be easier than HK.

If I can do it, I have the prospect of having around US$25,000-US$40,000 come April-June next year.

With that money available, and the proof of income making already from the business in mainland China, that may be a better time to apply for the Investment Visa in HK?

I expect business to be operating full throttle after 14-18 months from start up in Hong Kong bringing in around US$40,000 a month from then on.

I also plan to keep studying Mandarin and Cantonese language classes so I can eventually teach the courses in native Chinese language which will increase my market.

Do I have a good chance of obtaining an Investment Visa?”

ANSWER

The fact of the matter is that the Immigration Department do place significance on the nature of an enterprise that’s going to be supporting an application for an investment visa by a foreign national, and if the space that the foreign national is going to be establishing a business in can be said to be advantageous to society more generally than just the contribution that it makes to the economy of Hong Kong, experience tells me that the Immigration Department do factor that in quite heavily.

That having been said, there is still a requirement for the enterprise itself to be credible on every front. So sort of dealing with the general themes that you raise in your question in no particular order, but will all tie properly together at the end.

I believe I’ll start off by saying that the USD6,000 that you’ve got to invest in the business will not work for the Immigration Department. I mean, quite apart from the fact that the visa calls for an active investment, USD6,000 really isn’t sufficient capital to actually get the business off the ground, and the Immigration Department do know that typically any business that is going to be relying upon revenues to be earned to finance itself tend to be a stew by the department.

So you’re going to have to have a decent wedge of capital under your belt to persuade the department that you’ve got the necessary resources to give effect to your plan because, as we know, just because you’ve got a really good business idea doesn’t mean that it’s going to be successful by mere fact that it is an idea and it’s a good idea, you’re going to have to invest money into taking it to market and bringing it to the attention of people who are going to be providing you with the revenues to ensure that it’s successful. So USD6,000 isn’t going to cut the mustard, I’m afraid.  On the other hand, if the franchisor took an equity stake and provided a bulk of the capital, that would significantly improve your chances of success. But as a business with you owning a piece of the action, the Immigration Department would apply the investment visa aprovability test to your application, rather than the employment visa provability test, and they are two different animals: one focuses on the individual skills of the applicant – that’s the employment visa probability test, whereas the investment visa aprovability test focuses squarely on what the business is all about and how it can make a substantial contribution to the economy of Hong Kong. But in a strange way, if your franchisor came in and effectively took the bulk of the equity this could be advantageous, because unless you’ve got specific qualifications in the fear of flying space, as it were, I suspect the Immigration Department would conclude that you’re not actually qualified to undertake this work as an employee. Therefore, by going down the investment visa route, it puts the focus on the chances of success as a business, not how qualified you are as an employee; and once you get to a point where you’re really sort of ten to 15% shareholder in a company, the Immigration Department, they’re going to be applying investment visa approvability test here in any event. So that definitely could be a way for you to fast track your plans to come into Hong Kong if you’re prepared to go into business with these people.

In terms of the turnover at USD40,000 a month, I mean, this is a half a million dollars a year and that will definitely pass muster with the Immigration Department. So your revenue numbers are absolutely on the money for an approval in terms of you potentially being able to take your limited capital pool to China first and starting your business there before you bring it to Hong Kong.

Like you, I’m not really in a position to understand what will pass muster in China, whether or not you can get immigration status in the way that you envisage. But I can tell you that if you use China as a proving ground and establish this practise there first, it will definitely be a good idea, because what that will mean is the Immigration Department will be able to access the documentation that shows that it has worked.

In fact, it is working under your stewardship in China and it becomes de risked from the Immigration Department’s perspective, particularly if you’re going to wait until another eight or nine months down the road when you do anticipate that you’re going to come into funds of up to say, USD40,000. That level of financing together with a track record in China, together with your experience in this space, together with the creation of local jobs in the first twelve months, together with a projected half a million USD in revenues turnover in the first twelve months, I believe the Immigration Department would give you an investment visa on that kind of story with those kind of resources in place. So, from that perspective, I think, you’re onto a pretty good opportunity if it all falls into play in the way that you’re hoping it to.

Now, the only other question that you’ve raised that I need to address relates to this question of your girlfriend and who is ostensibly qualified to perform this work.

I think implied in that inclusion in the question is the idea that you’re going to have your girlfriend come and work in the business for you, which, on the basis that she doesn’t have immigration status for Hong Kong, will mean that this business is going to have to serve as an employment visa sponsor for her, which, as a new business, is going to raise a lot of questions with the department having said that if you can fold her into the story in such a way to suggest that the business is going to grow with her contribution, together with your contribution, to the extent that the two of you on the books, as it were, your ability to sell more is going to be increased, and that will then, by extension, allow you to create a bigger business, and the creation of local employment opportunities is going to be improved over and above the numbers that you’ve mentioned in your question. So don’t take it for granted that just because the Immigration Department partner buying into the idea that you will get an investment visa, but it’s assuming that your girlfriend, under the sponsorship of this new vehicle, will be able to get approved accordingly. That’s a separate challenge that will need to be examined in light of where you are in your business at the time that you make your application. It is not impossible, but you certainly need to think about that as a separate application exercise; don’t factor it into your own application mix, as it were.

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