Expand Beyond Hong Kong: Dedicated Fund on Branding, Upgrading and Domestic Sales

Do you own a non-listed company in Hong Kong? You may be eligible to apply for funding under the Dedicated Fund on Branding, Upgrading and Domestic Sales (“BUD Fund”) to support your expansion efforts outside Hong Kong.

The primary aim of the BUD Fund is to empower Hong Kong-based non-listed companies to explore and cultivate new markets. Managed by the Hong Kong Productivity Council, it provides funding support for eligible enterprises in their endeavours to enhance branding, upgrade and restructure operations, and boost sales in markets beyond Hong Kong.

The BUD Fund’s initial focus was on facilitating market entry and development in the mainland Chinese market. However, it quickly evolved to cover other thriving markets elsewhere in the world.

Building upon the BUD Fund’s success, the Hong Kong Special Administrative Region Government enlarged its geographical scope in August 2018. It spans the Association of Southeast Asian Nation (“ASEAN”) markets, such as Indonesia, Malaysia, Singapore, Thailand, and Vietnam. In January 2020, coverage was further expanded to include economies with which Hong Kong has signed Free Trade Agreements (“FTA”). In July 2021, the scheme was enhanced even further. It now extends to economies with which Hong Kong has concluded Investment Promotion and Protection Agreements (“IPPA”).

This article will walk you through the eligibility criteria, funding scope, allocated funding amounts, and a step-by-step guide to navigating the application procedure under the different BUD schemes.

Overview of different streams under BUD Fund

Mainland Programme

The Mainland Programme, for which the BUD Fund was originally set up in June 2012, provides funding support to Hong Kong enterprises for executing projects focused on brand development, business operations upgrading or restructuring and sales promotion in mainland China. The scheme is geared towards enhancing companies’ overall competitiveness and facilitating business expansion into the mainland Chinese market. The total cumulative funding ceiling for each enterprise is HKD 7 million.

FTA and IPPA Programme: Markets in ASEAN and states with which Hong Kong has an FTA or IPP

Structurally, the FTA and IPPA Programme is the same as the Mainland Programme. The total cumulative funding ceiling per enterprise is also HKD 7 million. Its geographical scope spans across 39 economies, encompassing various regions and economic blocs. Besides mainland China, the programme covers Australia, Austria, Bahrain, the Belgo-Luxembourg Economic Union, Canada, Chile, Denmark, Finland, France, Germany, Italy, Japan, Republic of Korea, Kuwait, Macao, Mexico, the Netherlands, New Zealand, Sweden, Türkiye, the United Arab Emirates, the United Kingdom, the ten ASEAN member states (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam), and the four member states of the European Free Trade Association (Iceland, Liechtenstein, Norway, and Switzerland).

Easy BUD

The Easy BUD scheme was launched on a trial basis in the wake of post-pandemic recovery in June 2023. Its aim is to help small and medium-sized enterprises take advantage of opportunities following the pandemic. With a funding limit of HKD 100,000 per application, Easy BUD offers a streamlined and simplified application process. Specifically, requirements for application, documentation, and vetting procedures have been eased. The target application-processing time via this track is 30 days – half of that under the standard BUD scheme.

Who is eligible to apply?

Any non-listed company registered and with substantial business operations in Hong Kong is eligible to apply. This applies regardless of the sector, or whether the company has existing operations on the Mainland, or in FTA and/or IPPA markets. A company primarily operating outside Hong Kong or functioning solely as a shell company is not eligible.

You must furnish documentary proof demonstrating that you have substantial business operations in Hong Kong. Acceptable evidence includes employee records, tax filings, and business transaction documents, such as commercial contracts, invoices, receipts, quotation documents, records of purchase and sale of goods, etc.

In determining whether a company has substantial business operations in Hong Kong, the following factors will be taken into consideration:

Type of business activities conducted in Hong Kong
Scale and size of business operations in Hong Kong
Total value of investment commitments made in Hong Kong
Total number of employees based in Hong Kong
Details regarding customers or clients
Years of operation
Tax status of profits in Hong Kong, i.e., whether your company’s profits are subject to corporate income tax in Hong Kong
Evaluations or reports from relevant financial and professional entities

What is the funding scope under Mainland and FTA and IPPA streams?

Eligible activities

The BUD Fund encompasses three focal areas, namely branding, operations upgrading and restructuring, and domestic sales. Below is a list of activities that fall within scope:

Branding

Brand strategy and positioning
Brand building, design and communication
Brand management
Brand tracking

Upgrading and restructuring

Business model upgrading and restructuring
Product innovation and repositioning
Material management
Technology upgrading
Management upgrading
Logistics management

Promoting sales

Sales strategic planning
Sales business operations management
Sales channel management
Sales team formation and management

Eligible projects

Projects where applicants engage qualified service providers to prepare comprehensive business plans

The focus of such projects must be on branding, upgrading, restructuring, and/or sales promotion. The aim of these efforts should be to boost applicants’ competitiveness and foster business growth on the Mainland, or in FTA and/or IPPA markets.

Projects where applicants or their appointed agents implement targeted measures in branding, upgrading and restructuring, and/or sales promotion

The aim of these measures should be to boost applicants’ competitiveness and foster business growth on the Mainland, or in FTA and/or IPPA markets. This pathway is exclusively for applicants that already have a detailed business plan for developing the Mainland market, or FTA and/or IPPA markets.

Projects that have already started do not generally qualify for funding support unless they satisfy the following conditions:

The remaining portion of the project can be deemed a project on its own with distinct and clear deliverables.
Commencement and completion dates for the remaining portion of the project can be clearly identified.
The budget for the remaining portion of the project can be provided and justified separately.

Eligible expenditure

You must submit a comprehensive budget along with your application. Only costs directly related to the project should be included in the budget. Qualifying expenditure items include the following:

Consultancy fee for engaging a service provider to formulate a business plan under the first type of eligible project listed above
Operating expenses for establishing a new business entity on the Mainland, or in FTA/and/or IPPA markets
Costs involved in recruiting additional manpower for implementing the project
Costs for acquiring or leasing additional machinery or equipment
Advertising costs
Procurement and licensing costs for brands and technology
Direct costs for producing or procuring samples or prototypes for development or demonstration purposes
Travel and accommodation expenses
Patent and trademark registration costs
Costs for undertaking improvements to the company website
External audit fee

What is the funding scope under Easy BUD?

The funding scope under the Easy BUD scheme is limited to the following types of activities:

Participating in exhibitions in target markets, including booth rental, design, and set-up fees as well as related travel and accommodation expenses;
Registering patents, trademarks, designs, utility models, or copyright protection in target markets to support the sales or provision of applicants’ products or services;
Testing and certification services undertaken either in Hong Kong or target markets to assess the feasibility of market access for applicants’ products or services, or of an upgrade in production capabilities in target markets;
Developing or improving mobile applications to promote applicants’ products or services in target markets;
Developing or improving the company website to boost sales in target markets. The total cost for website enhancements is capped at HKD 100,000 per application;
A combination of any of the activities listed above; and
Fee for a single external audit, up to a maximum of HKD 5,000.

How much funding is available?

Mainland, FTA and IPPA Programmes

Funding will be allocated on a matching basis. The funding ceiling in respect of each application is HKD 1 million. The Government will cover up to 50% of the total project cost. The applicant must, on the other hand, contribute a minimum of 50% of the total project cost in cash (except the audit fee). In addition, the Government will fully fund the audit fee, with a cap of HKD 10,000 per audit. This amount will be included in the cumulative funding ceiling for each enterprise – which is HKD 7 million.

Easy BUD

Funding is similarly provided on a matching basis under the Easy BUD scheme. The funding ceiling in respect of each application is HKD 100,000. Additionally, the Government will fully fund the audit fee, with a cap of HKD 5,000 per audit. This amount will be included in the cumulative funding ceiling for each enterprise – which is HKD 7 million under the BUD Fund.

The approved project under Easy BUD must be completed within 12 months.

What is the application procedure?

You can submit an application all year round. Applications, together with the documents below, should be submitted via the BUD Fund’s dedicated website. Register online with your business registration number to create a user account.

Supporting documents include the following:

Copy of your business registration certificate and company registry certificate;
Personal particulars of shareholders holding 30% or more shares (including the natural person(s) who ultimately control your company if it is owned by another company or other companies);
Evidence of substantial business operations in Hong Kong;
Sales turnover documentation for the previous year in Hong Kong and target markets (if applicable);
Evidence of direct investment relationship with entities in target markets that are involved in project implementation;
Promotional materials introducing your business as well as products or services.

There are additional documentation requirements, depending on the nature of the project.

For projects where applicants engage qualified service providers to prepare comprehensive business plans
- Evidence showing that the service provider meets the relevant qualification criteria;
- Information about the service provider;
- Curriculum vitae of the project lead working for the service provider.
For projects where applicants or their appointed agents implement targeted measures in branding, upgrading and restructuring, and/or sales promotion
- Proof of licences, qualifications, or certifications if they are necessary for the successful implementation of your project;
- Copy of the relevant licensing or agency agreement (if applicable);
- Evidence showing that the trademark for your project has not been registered by others in your target markets and you have already initiated the trademark registration process there (if applicable);
- Proof that the brands or technology procured or licensed are solely for your use and have not been obtained prior to the start of your project (if applicable).

For more information, visit the dedicated website for the BUD Fund.

How can CW help you?

Our firm is ready to help you leverage the BUD Fund to expand into the mainland Chinese market and further afield. As Hong Kong gears up for its imminent accession to the Regional Comprehensive Economic Partnership (“RCEP”), it is set to further cement its position as an influential international trade hub. This will open up vast opportunities for you to access thriving markets in ASEAN member states. By establishing your regional headquarters in Hong Kong, you can tap into these vibrant markets more easily and effectively.

With our expertise as a professional super-connector, we can help you take confident strides into these dynamic markets. We offer comprehensive support – from the establishment of operations in Hong Kong and mainland China to ensuring ongoing compliance with the host of different regulations. Moreover, our expertise extends to helping you assess your operations in Asia, pinpoint restructuring opportunities, and establish a strategic foothold in your desired target market via our extensive Allinial Global APAC network.