Essential guide to HSIC code for business classification in Hong Kong

What is the HSIC Code?

The Hong Kong Standard Industrial Classification (HSIC) code is a standardised system used by the Hong Kong government to systematically classify economic activities within the territory. Developed and maintained by the Census and Statistics Department (C&SD), the system provides a common framework for collecting, analysing, and disseminating economic statistics. The HSIC code system serves as a structured framework that helps businesses in Hong Kong classify their industry and understand their position within the larger economic environment.

At its core, the HSIC code assigns a specific numerical or alphanumerical identifier to a business based on its primary economic activity—that is, the main activity that generates the most revenue or value-added.

The HSIC code format is hierarchical, divided into multiple levels such as industry sections, divisions, groups, classes, and subclasses, each with specific code ranges and structural formats to organise economic activities in Hong Kong. The system is modelled after the United Nations’ International Standard Industrial Classification of All Economic Activities (ISIC), ensuring that Hong Kong’s economic data is comparable on an international level.

The current version, HSIC Version 2.0 (HSIC V2.0), was implemented in 2009 to align with the updated ISIC Revision 4. This ensures that the classification reflects contemporary economic structures, including the rise of new industries and technological advancements. The C&SD periodically reviews and updates the system to maintain its relevance in a constantly evolving economic landscape.

The HSIC code is essential for statistical and administrative purposes, supporting government regulation and business planning. The system enables the collection and organisation of statistical data on Hong Kong's industries ^2,4,7.

Why is understanding the HSIC Code important?

While it may seem like a minor detail on a registration form, the HSIC code carries significant weight and has far-reaching implications for your business. Selecting the wrong HSIC code can result in compliance issues and operational delays, potentially exposing your company to legal risks.

Understanding its importance is the first step towards ensuring your company is positioned for long-term compliance and growth. A clear grasp of the HSIC code is crucial for effective business operations and strategic business planning, as it helps you navigate industry classifications, regulatory requirements, and market opportunities ².

1. Mandatory for business registration

When you incorporate a company in Hong Kong, the Companies Registry requires you to provide an HSIC code that accurately describes your primary business activities. As part of the registration process, you must select the appropriate HSIC code to ensure your business activities are correctly reflected. This is a non-negotiable part of the incorporation process ^8,9,10.

2. Regulatory compliance and licensing

Many industries in Hong Kong are subject to specific regulations, licensing requirements, and oversight from various government bodies, such as the Customs and Excise Department or the Food and Environmental Hygiene Department. Relevant authorities may provide guidance on selecting the correct HSIC code to ensure regulatory compliance.

An accurate HSIC code helps these agencies identify businesses operating within their jurisdiction, ensuring you meet all legal obligations. Selecting the wrong code could lead to non-compliance, potential penalties, or delays in obtaining necessary operational permits ^2,10.

3. Access to government support and incentives

The Hong Kong government frequently offers grants, funding schemes, and support programmes targeted at specific industries to foster innovation and economic growth. For example, there might be programs for technology startups, green industries, or creative sectors. Eligibility for these valuable resources is almost always determined by the business's HSIC code. An incorrect classification could render your business ineligible for crucial financial support ².

4. Accurate statistical analysis and market insights

The C&SD uses HSIC data to compile vital economic reports, track industry trends, and measure economic performance. This data is invaluable for policymakers. For businesses, these publicly available statistics offer powerful market insights. You can analyse the size and growth of your industry, identify key competitors, and spot emerging market trends, all based on data aggregated through HSIC codes ².

5. Banking and financial services

Financial institutions, including banks and insurance companies, often use HSIC codes as a preliminary step in their risk assessment and due diligence processes. Insurance activities are a distinct category within the HSIC classification system, and selecting the correct code is important for regulatory compliance and licensing. The code gives them a quick understanding of your business’s operational nature. A clear and correct code can facilitate a smoother process when opening a corporate bank account, applying for a business loan, or securing insurance coverage ².

6. Enhancing B2B relationships

The HSIC code acts as a universal language for describing business activities. It allows potential clients, suppliers, and partners to easily identify and understand what your company does, facilitating smoother and more efficient B2B interactions and supply chain management ².

Understanding the HSIC code format

The HSIC system is built on a 5-level hierarchical structure, which is part of a broader set of industry classifications used for business categorisation in Hong Kong. This tiered approach allows for both high-level economic analysis and granular classification. Each level provides a more detailed description than the last ².

Let’s break down the structure with an example for a business that manufactures women’s outerwear 3:

• Level 1: Industry Section: The broadest category, represented by a single letter.
  
  • Example: C - Manufacturing
• Level 2: Industry Division: A more specific sub-category within the section, represented by a 2-digit code. Industry divisions group businesses by their primary business activity within a section.
  
  • Example: 14 - Manufacture of wearing apparel
• Level 3: Industry Group: This further refines the division, represented by a 3-digit code. Industry groups provide a more detailed focus on the specific nature of businesses within a division.
  
  • Example: 141 - Manufacture of wearing apparel, except fur apparel
• Level 4: Industry Class: A detailed classification of the business activity, represented by a 4-digit code. Industry classes specify the main business activity within a broader industry category and are often required for most administrative purposes.
  
  • Example: 1410 - Manufacture of wearing apparel, except fur apparel
• Level 5: Industry Sub-class: The most specific level of detail, represented by a 5-digit code.
  
  • Example: 14101 - Manufacture of outerwear

For example, in the retail trade sector:

• Level 1: Industry Section: G - Wholesale and retail trade
• Level 2: Industry Division: 47 - Retail trade, except for motor vehicles and motorcycles
• Level 3: Industry Group: 472 - Retail sale of food, beverages and tobacco in specialised stores
• Level 4: Industry Class: 4721 - Retail sale of food in specialised stores
• Level 5: Specialised Stores Fifth Level: 47211 - Retail sale of fresh fruits and vegetables in specialised stores

This example demonstrates how the HSIC system uses the specialised stores' fifth level to precisely classify retail sale activities, such as retail sale of specific goods in specialised stores, which is essential for accurate industry classifications and regulatory purposes.

As you can see, the code becomes more specific with each added digit, allowing for a highly precise classification of the business’s primary economic function. The system is designed to classify businesses according to their primary economic activities and primary business activity, which is crucial for business registration, compliance, and sector analysis.

List of HSIC industry sections

The first level of the HSIC code, the Industry Section, divides the entire economy into 21 broad categories. Understanding these sections is the starting point for finding your specific code ^1,2.

• A: Agriculture, forestry and fishing (fishing industry section)
• B: Mining and quarrying
• C: Manufacturing (manufacturing industry section)
• D: Electricity, gas, steam and air conditioning supply (gas supply industry section)
• E: Water supply; sewerage, waste management and remediation activities (remediation activities industry section)
• F: Construction (construction industry section)
• G: Import/export, wholesale and retail trades (retail trades industry section)
• H: Transportation, storage, postal and courier services (courier services industry section)
• I: Accommodation and food services (food service activities)
• J: Information and communications (communications industry section)
• K: Financing and insurance (insurance activities industry section; financial and insurance activities)
• L: Real estate
• M: Professional, scientific and technical activities
• N: Administrative and support service activities
• O: Public administration (public administration industry section)
• P: Education (education industry section)
• Q: Human health and social work activities
• R: Arts, entertainment and recreation (recreation industry section)
• S: Other service activities (service activities industry section)
• T: Activities of households as employers; undifferentiated goods- and services-producing activities of households for own use (domestic households industry section)
• U: Activities of extraterritorial organisations and bodies (extraterritorial organizations)

How to find the right HSIC code for your business

Selecting the correct HSIC code requires careful consideration of your business activities. Understanding industry classifications and industry groups is essential for accurate code selection. Here is a step-by-step guide to help you navigate the process effectively ^1,2,3,10:

1. Identify your primary business activities and match them to the appropriate industry classifications and industry groups as defined in the HSIC system.
2. Use the standard industrial classification code (HSIC) for business registration in Hong Kong to ensure compliance with regulatory requirements.
3. Research similar businesses and review the HSIC V2.0 Manual to verify the most relevant codes.
4. When conducting research and analysis, consider reviewing business trends and performing market analysis to help select the most appropriate industrial classification code hsic for your business.
5. Double-check for any restrictions or conditions associated with your chosen code and stay updated on recent changes to the classification system.

Step 1: Clearly define your primary economic activity

The most critical step is to identify your principal business activity. If your company is involved in multiple activities (e.g., selling coffee beans and operating a café), you must determine which one is expected to generate the most revenue or contribute the most to the value-added process. Your HSIC code should reflect this primary function. Be as specific as possible. Instead of "IT services," consider "custom software development" or "cybersecurity consulting."

Step 2: Utilise official resources from the C&SD

The Census and Statistics Department's website is the most reliable source of information. They provide the complete HSIC V2.0 classification list and a search tool to help you find your code.

• Search Tool: Use the online tool to search with keywords related to your business, such as "marketing," "logistics," or "web design."
• Browse the Manual: You can also download the full HSIC V2.0 manual. Start by identifying the relevant Industry Section (e.g., Section J - Information and communications) and then drill down through the Divisions, Groups, and Classes until you find the most accurate description of your activity.

Step 3: Analyse the detailed descriptions

Do not just rely on the title of the classification. The HSIC manual provides detailed descriptions, including examples of activities that fall under each code and, importantly, activities that are excluded. Reading these details carefully will help you confirm that you have chosen the most appropriate code.

Step 4: Seek professional guidance

If you are uncertain about which code to choose, especially if your business operates in a niche or hybrid industry, it is highly advisable to seek professional help. A corporate services provider, an accountant, or a business consultant experienced in Hong Kong company formation can provide invaluable guidance to ensure your selection is accurate and strategically sound. Getting it right from the start can save you from significant administrative headaches in the future.

What happens if you choose the wrong HSIC code?

Choosing the wrong HSIC code may seem like a minor administrative error, but the consequences can be serious. Here are some of the risks your business may face:

• Regulatory penalties: Certain sectors in Hong Kong require specific licences (for example, finance, education, or food services). If your HSIC code doesn’t match your actual operations, you could be flagged for non-compliance during inspections or licence applications.
• Missed opportunities: Government grants, SME support schemes, and tax incentives are often targeted at specific industries. An incorrect HSIC code could make your company appear ineligible, even if you should qualify.
• Financial issues: Banks and fintech providers use your HSIC code when assessing risk. An inaccurate classification may lead to delays in opening a corporate bank account, additional document requests, or even rejection.
• Data inconsistencies: The HSIC is also used in statistical reporting. Misclassification can lead to errors in official filings, which may draw scrutiny or require time-consuming corrections later.

Practical tip: If your business activities span multiple categories, choose the code that best reflects your primary source of revenue. When in doubt, consult a company secretary or accountant to avoid costly mistakes.

HSIC vs other industry classification systems: key differences

For businesses operating internationally or conducting market research across borders, it's important to understand that different regions use different classification systems. While they are often based on the same UN framework (ISIC), their specific structures and codes can vary.

HSIC (Hong Kong) ^4,7

• Jurisdiction: Hong Kong SAR.
• Basis: Based on the UN's ISIC system but tailored specifically to reflect the unique economic structure of Hong Kong, with detailed classifications in sectors like financing, import/export trade, and real estate.
• Maintained by: Census and Statistics Department of Hong Kong.

NAICS (North American Industry Classification System) ^11,13

• Jurisdiction: United States, Canada, and Mexico.
• Basis: A production-oriented system, meaning it groups businesses that use similar production processes. This is a fundamental difference from ISIC/HSIC's activity-based approach.
• Structure: It uses a 6-digit code, which can sometimes provide more detail than HSIC in sectors prominent in North America, such as specific types of manufacturing.

NACE (Statistical Classification of Economic Activities in the European Community) ^12,14

• Jurisdiction: The European Union and other European countries.
• Basis: NACE is also derived from ISIC, making it very similar to HSIC at the higher levels. However, it includes more detailed breakdowns relevant to the European economy.
• Maintained by: Eurostat, the statistical office of the European Union.

ISIC (International Standard Industrial Classification of All Economic Activities) ^4,7

• Jurisdiction: Global standard provided by the United Nations.
• Basis: It is the parent classification from which HSIC and NACE are derived. It is designed to be globally applicable, which means it is often less detailed than the national versions.
• Purpose: Its primary role is to enable the international comparison of economic statistics.

The key takeaway is that you must use the correct system for the relevant jurisdiction. When registering a business in Hong Kong, the HSIC code is the only one that matters. When analysing the U.S. market, you would use NAICS. Being aware of these differences is crucial for accurate international business strategy and analysis.

Streamline your finances from day one with Aspire

Choosing the correct HSIC code is a foundational step in establishing your business's official identity and ensuring its regulatory compliance. It's about setting up your company for success from the very beginning. Once that structural framework is in place, the next logical step is to establish a robust financial framework to manage your operations and fuel your growth.

From our experience, we’ve seen some Hong Kong companies struggle to manage and control their finances in the early stages. Common challenges include failing to track expenses and receivables in real time, as well as making late payments to suppliers. These issues put pressure on cash flow and can eventually force businesses to shut down. That’s why it’s crucial to establish strong financial management from the very beginning to ensure your business can thrive in the long run.

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Whether you’re just starting out or scaling your business in Hong Kong, Aspire gives you the confidence to manage your finances efficiently so you can focus on growth.