SME Export Marketing Fund: How to Seek Out Opportunities for Expansion Beyond Hong Kong

The SME Export Marketing Fund (“EMF”) provides financial assistance to Hong Kong-based small and medium enterprises (“SMEs”) in their overseas expansion endeavours, specifically in their export promotion activities. To further support companies in local market promotion activities and in taking advantage of both online and offline platforms to conduct such activities, the Hong Kong Special Administrative Region Government (“HKSAR Government”) enlarged the EMF’s funding scope to include select local large-scale exhibitions as well as virtual exhibitions aimed at the local market, which will remain effective until 30 June 2026. As of 4 November 2022, the cumulative number of applications approved stood at 272,017, and the total amount of grants approved was to the tune of HKD4 billion.

The EMF is an embodiment of the HKSAR Government’s commitment to boosting the provision of support for SMEs, which was emphatically reaffirmed in the recent 2022 Policy Address. Since SMEs form the backbone of Hong Kong’s economy, which boasts a rich ecosystem comprising over 340,000 SMEs (as of March 2021), efforts to reinforce Hong Kong’s position as the world’s sixth biggest commodity trading hub can, of course, not do without SMEs’ sizeable contribution. In light of Hong Kong’s likely impending accession to the Regional Comprehensive Economic Partnership (“RCEP”), more and more SMEs are expected to capitalise on the EMF to tap into burgeoning markets on Hong Kong’s doorstep. Spanning 15 countries, including 10 ASEAN member states, as well as accounting for nearly 30% of the world’s population and 30% of the global gross domestic product, the RCEP is the world’s largest free trade agreement.

The guide below seeks to set out the eligibility criteria, funding scope, expenditure items within the ambit of the EMF, the level of funding support and types of application in detail.

Who is eligible to apply?

An eligible enterprise must fulfil all the following criteria:

• It is a non-listed enterprise registered in Hong Kong pursuant to Cap. 310 of the Business Registration Ordinance*.
• At the time of submitting the application, it must have substantive business operations in Hong Kong**.
• For previous recipients of funding support under the EMF, the cumulative amount of funding received shall not exceed the current cumulative funding ceiling***.
• It is not the organiser, co-organiser, service provider or an associated company of the organiser, co-organiser, service provider of the promotion activity and any ancillary services. In other words, the two parties should not be related.

*Effective from 30 April 2021 until 30 June 2026, non-SMEs are also eligible for funding support.

**An enterprise with a shell business registration or whose business operations are primarily based outside Hong Kong will not satisfy the requirement of “substantive business operations”.

***Applicant enterprises with similar business registration details shall be deemed connected enterprises and treated as one single enterprise for the purpose of calculating the cumulative funding ceiling.

Funding scope

The EMF provides funding assistance for a wide range of promotion activities:

• Trade exhibitions held outside Hong Kong aimed at markets outside Hong Kong
• Trade exhibitions held in Hong Kong aimed at markets outside Hong Kong
• Trade exhibitions held in Hong Kong aimed at the local market
• Online trade exhibitions
• Business missions outside Hong Kong
• Online business missions
• Advertisements in trade publications mostly aimed at markets outside Hong Kong
• Export promotion activities mostly aimed at markets outside Hong Kong that take place online, e.g., advertisement placements, online shop set-up or upgrade, keyword search, listing of product information
• Set-up or upgrade of the applicant enterprise’s corporate website or mobile application for the purpose of export promotion primarily aimed at markets outside Hong Kong

It should be noted that these promotion activities or platforms must be organised or operated by entities with a “good” track record. In determining whether this is the case, factors such as the business nature, size of business, years of operation, years of experience in organising, operating or providing the activities, platforms or services, will be taken into consideration.

Additional requirements

After establishing whether the activity in question is a qualified promotion activity under the criteria above, the applicant enterprise must also meet the following conditions to be eligible for funding support:

• In addition to participating in promotion activities as a Hong Kong company, the applicant enterprise must show its full company name and contact details in Hong Kong on the exhibitor’s list, delegation list, advertisements, electronic media, corporate website and mobile application.
• The applicant enterprise must participate as exhibitors in an exhibition and as delegates in a business mission. The applicant enterprise’s proprietors, partners, shareholders and/or Hong Kong-based salaried employees should directly represent the said enterprise at online and physical exhibitions and on business missions for the entire duration of the activity. Participation by proxy, i.e., outsourcing or subcontracting to an authorised third party, is not permitted.
• The activity in question should be linked to the business of the applicant enterprise, and it is only permitted to promote its own products and or services.

Eligible expenditure items under the EMF

Trade exhibitions

• Rental fee for an exhibition booth, or rental fee for the display of exhibits at a fixed location for the entire duration of the activity, including showcase, table-top display and mannequin or garment rack. The full company name and Hong Kong contact details of the applicant enterprise must be shown on the exhibitor’s list.
• Expenses incurred in the set-up and design of the booth, the transportation of components and exhibits for the booth (but excluding goods intended for sale), and booth furniture rental. Purchases of reusable items and costs of operating the booth, including employees’ salaries, are not eligible expenditure items.
• Participation fee for taking part as a speaker at an exhibition.
• Advertisement placement charges to appear in an exhibition’s catalogue, and printing expenses for brochures and leaflets bearing the applicant enterprise’s full company name and the name of the activity.
• On-site advertisement placement charges, including hanging banner, poster, promotional sticker and display on an electronic panel. Such advertisements should clearly display the applicant enterprise’s full company name and Hong Kong contact details.
• Charges incurred in using a mascot at the exhibition venue during the assigned timeslot for the purpose of promoting products and/or services of the applicant enterprise at the activity.
• Travelling expenses of the applicant enterprise’s proprietors, partners, shareholders and/or Hong Kong-based salaried employees that are participating as booth exhibitors in respect of the journey between Hong Kong and the city of the exhibition venue. In-town transportation costs are, however, excluded. Usually, eligibility is limited to five days prior to the start of the activity and five days following the end of the activity*.
• Hotel accommodation expenses of the applicant enterprise’s proprietors, partners, shareholders and/or Hong Kong-based salaried employees that are participating as booth exhibitors. Usually, eligibility is limited to expenses incurred two days prior to the start of the activity and two days following the end of the activity*.

*Only applicable to trade exhibitions held outside Hong Kong

Online trade exhibitions

• Participation fee as an exhibitor in an online exhibition, including joining business matching activities and taking part as a speaker.
• Cost of designing a virtual booth in an online exhibition. The virtual booth should clearly display the applicant enterprise’s full company name and Hong Kong contact details.
• Advertisement placement charges to appear in the online exhibition’s catalogue as well as banners, pop-ups, etc, which should bear the applicant enterprise’s full company name and Hong Kong contact details.

Business missions outside Hong Kong

• Participation fee to join a business mission.
• Travelling expenses of the applicant enterprise’s proprietors, partners, shareholders and/or Hong Kong-based salaried employees that are participating as booth exhibitors in respect of the journey between Hong Kong and the city of the exhibition venue. In-town transportation costs are, however, excluded. Usually, eligibility is limited to five days prior to the start of the activity and five days following the end of the activity.
• Hotel accommodation expenses of the applicant enterprise’s proprietors, partners, shareholders and/or Hong Kong-based salaried employees that are participating as booth exhibitors. Usually, eligibility is limited to expenses incurred two days prior to the start of the activity and two days following the end of the activity.

Online business missions

• Participation fee to join a business mission.

Advertisements on trade publications

• Advertisement placement fee to appear in trade publications primarily aimed at markets outside Hong Kong

Export promotion activities on electronic platforms or media

• Fee for advertisement placement and keyword searching on electronic platforms or media.
• One-off fee for product information listing for sales purposes as well as non-recurrent fee for the set-up, upgrade and promotion of an online shop on electronic platforms or media. Expenses incurred in the daily operation and maintenance of the online shop, including employees’ salaries and commission are not eligible.

Set-up and upgrade of the applicant enterprise’s corporate website or mobile application

• One-off fee for the set-up and upgrade of the applicant enterprise’s corporate website or mobile application. Expenses incurred in the daily operation and maintenance of the online shop, including employees’ salaries and commission are not eligible.

Promotion of the applicant enterprise’s product and/or services through photography or videography – applicable to all eligible promotion activities

• Fee for enlisting video or product shooting and editing services connected to the promotion of the applicant enterprise’s product and/or services at the eligible activity. The media should bear the full company name and information related to the eligible activity.

It is important to note that only fees paid directly by an applicant enterprise to the organiser, co-organiser or service provider of a promotion activity are eligible under the EMF.

Funding ceilings

Funding ceiling per application

Each application should be confined to the expenditure incurred in one single promotion activity. Upon acceptance, the maximum amount of funding given is 50% of the total approved expenditure incurred or HKD100,000 – whichever is less. In addition, the amount of financial support for video or product shooting and editing services shall not exceed the total amount of funding for all other qualified expenditure items in the same application.

Cumulative funding ceiling per enterprise

No limit is imposed on the number of applications that an enterprise can submit under the EMF. This being said, each enterprise can receive up to a cumulative amount of HKD1 million, and a maximum of 50% thereof may be used for the purposes of creating and upgrading the applicant enterprise’s corporate website or mobile application.

Types of application

Reimbursement

An applicant enterprise can choose to apply for reimbursement of eligible expenditure items (listed above) under the EMF upon completion of a promotion activity.

Initial payment to be followed by final payment

Alternatively, an applicant enterprise can choose to apply for an initial payment based on the total estimated cost of qualified expenditure items before the start of the promotion activity. Upon its completion, the applicant enterprise can follow up with a secondary application for the final payment of the balance.

The initial payment can be up to 75% of the total amount of funding support approved on a preliminary basis. The Trade and Industry Department (“TID”) will determine the total amount of funding support on a definitive basis, taking into account its assessment of the secondary application for the final payment. If the initial payment is below the amount of funding support approved by the TID, the remaining balance will be disbursed to the applicant enterprise.

The applicant enterprise is, however, obligated to refund the excess amount or the initial payment as well as any interest payments as required if:

• The initial payment exceeds the final total amount of funding support approved by the TID;
• The application is subsequently found to be non-compliant with the eligibility criteria and other conditions;
• The applicant enterprise fails to conduct the promotion activity in its entirety;
• The applicant enterprise misses the deadline by which it must submit the secondary application for the final payment.

2022 Policy Address update

The cumulative funding ceiling per enterprise under the EMF has been increased from HKD0.8 million to HKD1 million. In addition, the measure to expand its funding scope to cover exhibitions and online exhibitions aimed at the local market will remain in effect until 30 June 2026, and non-SMEs are also welcome to apply.

The information provided above reflects these changes.

It is high time to expand your presence in Asia and unlock further growth opportunities for your Asian business

In May 2022, Hong Kong lodged an application to join the RCEP. In view of Hong Kong’s likely imminent membership, its participation as a preeminent international trade hub will further add to the opportunities arising from the RCEP – the biggest free trade agreement in Asia Pacific. By establishing your regional base in Hong Kong, thriving markets in ASEAN member states as well as Japan and South Korea will be on your doorstep. 

As well as setting up your Hong Kong operation and ensuring ongoing compliance with tax, accounting, auditing and other regulatory requirements, our CW team can help you assess your Asian operations holistically, identify potential restructuring opportunities and establish strategic presence in RCEP member countries via our Allinial Global APAC network.