The “Dedicated Fund on Branding, Upgrading and Domestic Sales” (the BUD Fund) provides funding support to local companies who want to develop their brands, upgrade and restructure their operations and promote domestic sales to other places. The BUD Fund covers multiple markets and can help expand business footprint. Moreover, The Budget 2023 announced the launch of "BUD Easy" to expedite the processing of applications. Want to get funding up front? What is basic eligibility of the BUD Fund? Let’s read on to get to know the details of the funding and grasp the business opportunities. Policy Address 2023/24: Launching "E-commerce Easy"
In the Policy Address 2023, the government is proposed to launch "E-commerce Easy" under the BUD Fund, to enable enterprises to make use of $1 million for the implementation of e-commerce projects within the cumulative funding ceiling of $7 million. Moreover, the government will expedite the rollout of the "Single E-lock Scheme" and the "Trade Single Window", etc. to enhance efficiency in customs clearance and e-commerce delivery.
Also the government is establishing the inter-departmental E-commerce Development Task Force to implement policies assisting Hong Kong's SMEs in developing e-commerce business on the Mainland, including organising Hong Kong Shopping Festivals on e-commerce platforms to promote awareness of Hong Kong brands for developing the nation-wide domestic consumption market.
If you wish to know more about other government support to SMEs and corporates, please read: Government SME Funding Scheme 2023: Overview and Application Eligibility
Budget 2023: setting up “BUD Easy”
After increasing the funding ceiling of the BUD Fund, the Budget 2023 announced an extra injection of HKD 500 million to assist SMEs to expand their businesses. Meanwhile, the “BUD Easy” will be launched to speed up the application approval time. Details will be announced shortly.
The BUD Fund: up to HKD 7 million per company?
The BUD Fund accepts applications throughout the year. Each company can be approved for a maximum of 70 projects, funded with a maximum of HKD 1 million per project, and the cumulative funding ceiling is a maximum of HKD 7 million for each company. The funding will be allocated on a matching basis, i.e. the government covers up to 50% of the total approved project cost, with the remaining 50% to be borne by the applicant. Various projects can be carried out at the same time, but each project must be completed in 2 years or less.
What businesses are eligible for the BUD Fund?
The BUD Fund is mainly divided into "Mainland Programme" and "FTA and IPPA Programme". The two programmes target different markets, the former is for companies that intend to expand into mainland China, while the latter is for companies that intend to expand overseas. Other than that, the application process and eligibility of the two programmes are similar. Below are the details.
Basic requirements
Companies must first meet the following basic requirements before applying for the BUD Fund:
All non-listed companies registered in Hong Kong under the Business Registration Ordinance (Chapter 310) with substantive business operations in Hong Kong
With substantive business operations means that the applicants have actual operations and business transactions. Consideration factors include whether the company hires employees, pay taxes or conduct products / services transactions in Hong Kong. A shell company or a company having most of its main business operations outside Hong Kong will not be regarded as having substantive business operations in Hong Kong. The applicant has to submit the application form together with relevant documentary proof of substantive business operations in Hong Kong as below:
a. Employees' records
b. Financial records
c. Business transactions/operations information
Application eligibilities
The BUD Fund aims to help Hong Kong companies to enhance competitiveness and develop mainland China/overseas markets. Therefore, each company is eligible to apply for up to 70 projects with a cap of HKD 1 million per project. Such projects shall be in line with the development of a brand, upgrading and transformation or the domestic market expansion, while there is no restriction on the industry type as long as the applicant meets the aforementioned requirements.
According to The BUD Fund Guide, qualified projects are mainly divided into two categories, namely Holistic Business Plans and Implementation of Specific Measures. The tables below explain the requirements of both applications and examples of some common applications:
Type 1: Holistic business plan
Projects that involve the engagement of qualified service providers by the applicants to develop holistic business plans in the areas of branding, upgrading and restructuring and/or promoting sales for the applicants to enhance their competitiveness and facilitate their business development in the mainland China.
Type 2: Implementation of specific measures
Projects that involve the implementation of specific measures in the areas of branding, upgrading and restructuring and/or promoting sales by the applicants themselves.
Examples |
|
Exhibitions/promotion al events (including virtual exhibition) | Not to exceed 50% of the total project expenditure |
Design and establish online sales platform | Not to exceed 50% of the total project expenditure |
Develop/enhance mobile applications (for promotional purpose only) | Not to exceed 50% of the total project expenditure |
Design and produce promotional materials (flyers, pamphlets, posters or other relevant expenses) | Not to exceed 50% of the total project expenditure |
Patent/trademark registration (patent/ trademark/design/ utility model registration directly related to the project(s)) | Maximum cumulative funding amount HKD 600,000 per company |
*For reference only, the actual proportion of funding varies from case to case |
Be aware that the above two types of application cannot be applied in one project or submitted at the same time, while applications for Type 2 should not include market research, formulation of domestic sales plan and other research/planning measures. If the company does not have full knowledge on the market demand, applicants may consider carrying out relevant research/planning work before formulating the content of the project, otherwise the application for Type 1 works better.
In addition, the project also needs to meet below requirements:
Not a project in progress (unless part of the project can be applied for as another separate project)
Project cannot be executed for more than two years
If the project involves the sales activities of mainland China, the FTA or the IPPA markets, the company shall obtain the sales license/certificate/approval of relevant local products before commencing the project. If the product to be promoted/sold is an agent of other brand products, the company must first obtain the agency right of the product locally
For projects that create a brand, the company generally needs to start the application for trademark registration of the local brand and complete the searches for planned brand trademark registration to ensure that the relevant brand trademark has not been registered by other authorities
Spending on promotional activities in Hong Kong such as advertisements and exhibitions can generally be considered. However, companies should establish the direct relationship between the promotional activities in Hong Kong and the development of business in mainland China, the FTA and the IPPA markets. Companies should also pay attention to whether the proportion of investment in relevant markets is reasonable
How long does the approval take?
The BUD Fund accepts application at any time and The HKPC will also process the application throughout the year. Companies may be required to submit additional documents in between the review process.
The approval time depends on the number of applications received, the complexity of the application and the completeness and clarity of the information submitted. HKPC normally can complete the approval process within 60 working days from the date of receipt of a complete application accompanied by all necessary documents and clarifications.
For companies who have submitted a full application, you can check the status of the submitted application via website and HKPC will inform the applicants of the outcome in written format.
Funding distribution methods
For the method of funding approval, you can choose to receive one lump sum final installment after the project is completed or choose to receive two installments with either the first or interim installment, then the final installment. Details as follow:
Reimbursement methods | Project progress | First installment | Interim installment | Final installment |
First installment | Within 24 months | 75% | / | Remaining balance |
Without first installment | Below 18 months | / | / | Remaining balance |
Over 18 months and 24 months | / | Up to 50% of the total government approved funding (subject to project progress and actual expenditure) actual expenditure) | Remaining balance |
The BUD Fund first installment application requirements and distribution method
Only the approved projects can be applied for the first installment, but bear in mind that only those who have selected the first installment during the application are eligible to receive such funding when the project starts. You are required to fulfill below requirements for the application of the first installment:
The first installment is capped at 75% of the total approved funding and will be returned to the government if it exceeds the actual funding amount
Company must provide a guarantee for the amount exceeding HKD 1 million if the first installment of the application is approved
The first installment will only be arranged after two parties have signed the funding agreement and a separate guarantee agreement (if applicable)
The ongoing and approved projects may also apply for the first installment
If you apply for the first installment, you can only obtain the remaining balance after the project is completed, and no interim installment will be obtained
The BUD Fund FAQs
Q: Can non-listed Hong Kong or overseas companies that are the subsidiaries of a listed parent company apply for the BUD Fund?
A: Yes, despite the parent company is listed in or outside Hong Kong, its subsidiary companies are eligible for this funding support as long as they are non-listed companies in and outside Hong Kong, registered in Hong Kong under the Business Registration Ordinance and have substantive business operations in Hong Kong.
Q: Can a company submit another funding application before the completion of an ongoing project being funded?
A: Yes, but the applicant is required to provide relevant information of the approved projects and other applications being processed on the application form. The applicant should note that the project progress or performance of the previously approved projects may affect the review results of their new applications.
Q: Funding is provided on a matching basis and the applicant shall bear 50% of the total approved project cost. Can the applicant pay in the form of physical sponsorship for its part?
A: No, the applicant has to contribute no less than 50% of the total approved project cost in cash.
Q: Do the approved projects have to be monitored? What are the monitoring measures?
A: In order to ensure effective implementation of the funded project, the company has to comply with the requirements of the Programme during implementation of the project, including:
The applicant has to sign a designated agreement with the BUD Fund Implementer.
If the applicant opts to receive first installment, the company has to open a separate bank account for processing all receipts and payments of the project, and related statement of income and expenditure has to be audited by the third party.
The company has to submit the progress/final reports and the audited accounts as required according to the project duration.
The BUD Fund Implementer will arrange consultants to perform on-site checking (approx. one day) for the selected projects in order to monitor the project progress and results.
“Technology Voucher Programme (TVP)” is another popular funding among companies. It aims to provide funding to assist companies during technology adoption. For more details, please visit: [HKD 600,000 Max.] TVP Application: Eligibility, Approval Time and Considerations
