You may be a citizen of one of the western countries and you would be holding a passport (such as a British passport). Many such passport holders may relocate from time to time, and one of the destinations is Hong Kong. Let’s consider this scenario below.
I have received a job offer from a company operating from Brisbane Australia. The employing company has no problem for me to work remotely i.e. basically any location in the world where I prefer. My employer does not have a Hong Kong office, and does not have any staff working from HK. I have recently arrived in Hong Kong as a visitor with a British Passport. It means according to HK custom, I am a visitor and currently have no permit to work in Hong Kong.
The foreigner is not recommended to risk himself, as the consequences include a fine, a prison sentence, and deportation. The best is for this expatriate to get professional assistance from an immigration consultant (Hong Kong) for the entire visa application process.
The foreigner only needs a local company to sponsor his employment before he can legally work from Hong Kong. Initially, most people would believe this is straight forward and the safest route is to apply for an employment visa right away. But it is not that simple. The main problem is that the employing company is not a HK based entity, and it is ineligible to become a sponsoring company for the foreigner.
The first alternative option is not for everyone. The foreigner may consider marrying a local HK resident who possesses Permanent Residence or Citizenship. Then the foreigner will be eligible to apply for visa as a dependent of the local HK resident.
The second method is to get an investment visa by becoming a person investing a business and actually setting up a new business in Hong Kong. In this case, the expat will need to get himself from upfront cash for the investment and business setup, while he is already paying for living expenses (e.g. rent).
The third method is to formally incorporate a limited company (but not a sole proprietorship) in Hong Kong. The foreigner would use this newly incorporated entity to hire himself and he would become legal to work from HK. Additional benefit to this method is that the relatively low profit tax rate will apply to his case.
Usually the confusing part is with the sponsoring company and the business plan. With a sponsoring entity, the expat essentially works as an employee to the HK locally based company. With a business plan, the foreigner has a plan to invest and open a new company in Hong Kong. This should have clear the confusion.