Based in Hong Kong and hoping to get some government support for your developing your businesses marketing and sales efforts? 2020 is the year for you. The Hong Kong government formally approved the BUD fund in December 2019 and further strengthened it again in April 2020 to inject HKD $2 Billion into the local enterprises who are not only selling domestically and to mainland China but also to countries that have signed a FTA (free trade agreement) with Hong Kong. The purpose of this fund is threefold: to improve branding, provide resources for upgrading and restructuring, and to promote sales.
The mainland programme originally aimed to "provide funding support for individual Hong Kong enterprises to undertake projects to develop brands, upgrade and restructure their business operations and promote sales in the Mainland China, so as to enhance their competitiveness and to facilitate their business development." This restriction has since been loosened to include FTA locations as well.
The FTA agreement covers the following locations: Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, Australia, Chile, and the four member states of the European Free Trade Association (i.e. Iceland, Liechtenstein, Norway and Switzerland), Georgia, Macao and New Zealand.
Who's it for?
The BUD fund is for all non-listed enterprises registered in Hong Kong with 'substantive business operations' in Hong Kong who meet the following criteria:
- Registered in Hong Kong under the Business Registration Ordinance (Chapter 310)
- Established for at least one year, and
- At least one principal possessing five years or more practical experience of providing consultancy services related to branding, upgrading and restructuring and/ or domestic sales for enterprises in Hong Kong or the Mainland/ FTA economies who must be involved in the project.
- Having completed at least five projects in branding, upgrading and restructuring and/or domestic sales at the time of application
What can I use the BUD funds on?
The objective of the Programme is to provide funding support for individual non-listed Hong Kong enterprises to undertake projects to develop brands, upgrade and restructure their business operations and promote sales in the FTA markets, so as to enhance their competitiveness and facilitate their business development in these markets.
Below is a quick list of the kinds of activities you're allowed to use the BUD funding on. If you're looking for a more specific list, check out the 52-page application guide on the government website (Annex 1 – page 33).
- Brand Strategy and Positioning – corporate brand visioning, product and service planning.
- Brand Building, Design and Communication – brand identity and personality development, rebranding.
- Brand Management – brand assessment, brand protection.
- Brand Tracking – brand equity research and brand sustainability study.
2. Upgrading and Restructuring
- Business Model Upgrading & Restructuring – from Original Equipment Manufacturing (OEM) to Original Design Manufacturing (ODM) and/or Own Branding & Manufacturing (OBM).
- Product Innovation and Repositioning – product strategy, new product development.
- Material Management – supply chain planning and execution;
- Technology Upgrading – manufacturing technology upgrading, process and business automation;
- Management Upgrading – world-class management system, business process re-engineering, quality improvement.
- Logistics Management – warehouse management, fleet management and distribution management.
3. Promoting Sales
- Sales Strategic Planning – visioning process and strategy formulation.
- Sales Business Operation Management – operation transformation.
- Sales Channel Management – marketing strategy and research, sales and distribution development.
- Sales Team Formation and Management – staff development, and performance management.
What am I not allowed to use BUD funds on?
Good question – as things like 'improving brand strategy' are super general terms and can be applied to many different kinds of services. Here's a quick list of the things you're not allowed to use your BUD funds on (for the full list please see this document):
- Normal business operating expenses of the applicant.
- the cost for procuring/leasing additional machinery/equipment.
How does the fund matching work?
Approved projects will have 50% of the total cost of the project provided by the government and the enterprise must pay the remaining 50% of the project cost in cash (aside from the audit fee). The government will provide full funding for the auditing up to HK $10,000 per audit. Each project has a funding ceiling of HK $1,000,000 and you may have up to 40 projects per enterprise with a total cumulative funding per enterprise of HK $4,000,000. Each project must be completed within 24 months.
Disbursement of grant:
- If initial payment is required: 75% of government funding provided initially and 25% provided on project completion.
- Initial payment not required (under 18 months): 100% of funds released on project completion.
- Initial payment not required (18-24 months): 50% payment made at "project mid-term" subject to progress made and 50% on completion.
How much "red tape" is there?
Expect to spend a lot of time on the application process and in communication with the government office processing your request as there are often extras required or formatting issues with the documentation. Plan to assign a single person to manage the application process , collecting supplier quotes, and the documentation/auditing process after your application is approved.
Some other important points:
- For any costs under HK $2,000 the applicant is not required to provide written quotation.
- For any costs which exceeds HK$2,000 but does not exceed HK$50,000, the applicant shall invite at least two suppliers/service providers/consultants/contractors or lessors for written quotations and accept the lowest bid.
- For any costs which exceeds HK$50,000 but does not exceed HK$300,000, the applicant shall invite at least three suppliers/service providers/consultants/contractors or lessors for written quotations and accept the lowest bid.
- For any costs which exceeds HK$300,000 but does not exceed HK$1.4 million, the applicant shall invite at least five suppliers/service providers/consultants/contractors or lessors for written quotations and accept the lowest bid.
- For every procurement or lease of equipment, goods or services in relation to or for the purposes of the project, the aggregate value of which exceeds HK$1.4 million, the applicant shall use open and competitive tender procedures.
- Note: Full justifications must be given if less than required amount of suppliers/service providers/consultants/contractors or lessors could be identified from the market. If the lowest bid is not selected, prior written consent must be obtained from HKPC and full justifications must be given.
Interested in using the BUD fund but not sure where to start?
Speak with one of our marketing and sales strategists in Hong Kong? Book a free 15-min consultation with a strategist to learn more.