Corporate Services in Hong Kong

 

China Market Entry Services

Hong Kong is the gateway to China (PRC). Although the markets in China (PRC) are for the most part open to foreign investment,Hong Kong still serves as an important gateway and gatekeeper.

In 1997, Hong Kong became a part of China (PRC). However, Hong Kong has secured its economic and judicial independence under the “One Country , Two Systems” principle. The Closer Economic Partnership Arrangement / CEPA which is a series of bilateral trade and economic agreements between Hong Kong and China (PRC) the market access to China (PRC) via Hong Kong is made more efficient. The Closer Economic Partnership Arrangement / CEPA further includes a favourable comprehensive double tax agreement / arrangement (CDTA).

Mühler McKay, based in Hong Kong can assist you with China market entry services. There are different corporate forms available in China (PRC).

Corporate Form

Advantages

Disadvantages

Wholly Foreign Owned Enterprise (WFOE)
  • Control as all managing powers are with the foreign investor
  • Can send experienced managers for heading the business
  • Can employ staff without restrictions
  • Can convert RMB profits into US dollars
  • Greatest level of Intellectual Property / IP and know how protection as full control is with the foreign investor
  • (Used most commonly by foreign investors)
  • Incorporation costs and documentation requirement higher than Joint Venture (JV) or Representative Office
  • Relatively long incorporation period
  • Registered capital requirements
  • Some industry limitations
  • Requirement in regard of minimum number of staff
Joint Venture (JV)
  • Access to joint venture partner’s existing resources, on customer, contacts and sales side
  • Access to joint venture partner’s existing resources, on production, procurement side
  • By use of joint venture partner for management tasks, lower costs
  • Less control
  • Trust – the right and especially trustworthy joint venture partner is hard to find
  • Potential risk to Intellectual Property / IP and know how
Representative Office
  • Ideal for marketing and business development
  • Easiest to set up / low cost
  • No registered capital required
  • Unable to enter into contracts and agreements, therefore unable to do business
  • Limits on number of staff

 

If you intend to establish a Chinese corporation a Hong Kong Limited Company can be utilised to facilitate the investment acting both as a gateway allowing for simplified procedure to establish the Chinese corporation and profiting from Chinese returns and a gatekeeper containing business risks from the China (PRC). Our China market entry services include advise on how to structure the investment, either as a direct foreign investment or as an indirect foreign investment. Apart from international tax questions, in our China market entry services, we also include important advise in regard of a potential exit from your China business. If a Hong Kong Limited Company is used to invest into China (PRC), then an exit can be done within Hong Kong (by selling the Hong Kong Limited Company) instead of China (PRC). An exit in China (PRC) will require acceptance and confirmation by authorities, making a deal much more challenging. Our China market entry services are not to be understood solely as tax or structuring advise, our goal is to see the bigger picture and to advise you for long run success.

China (PRC) compared to free markets has strict capital controls that restrict the repatriation of business profits. The Closer Economic Partnership Arrangement / CEPA provides the assumption that a Hong Kong Limited Company qualifies for reduced withholding tax rates without further tax certification.

At Mühler McKay our China market entry services generally include:

  • China market entry services – cross-border business

We provide tax structuring advise to develop appropriate tax strategies to cross-border transactions. We particularly assist you in setting up operations or joint ventures in China (PRC) and advise on tax structuring in regard of entering into, or exiting from, the Chinese market.

  • China market entry services – tax efficient structuring of your direct or indirect foreign investment

We can help you with structuring your China (PRC) business. Our China market entry services include advise on how to structure the investment, either as a direct foreign investment or as an indirect foreign investment, especially keeping Chinese tax laws and regulations, e.g. Circular No. 601 in mind.

  • China market entry services – tax efficient structuring of profit repatriation

Apart from general structuring of your investment, we are particularly keen on profit repatriation. Our China market entry services include sophisticated advise on this highly important topic.

  • China market entry services – tax efficient Intellectual Property structures

The security of your Intellectual Property is extremely important for your business success, especially when it comes to China (PRC) as the relevant laws mights differ from your home jurisdiction. However, with the careful and intelligent structuring of your intangible assets, your business can further maximise profits and outperform the competition.

  • China market entry services – transfer pricing

We will work out a strategy for your transfer pricing needs a part of our China market entry services.

  • International commercial contracts and agreements for your corporate operation and transactions

Our China market entry services include assistance with your international Distribution Agreements, your international Standard Terms and Conditions, your international Non-Disclosure Agreements, among others.

  • International intra-group commercial contracts and agreements and cross-border transactions

Also our China market entry services include assistance with international Licensing Agreements in order to structure your Intellectual Property (IP) rights in a secure and tax efficient manner, your international Franchising Agreements among others as well as help you with necessary intra-group contracts and agreements for structuring of your supply chain and your cash flow streams in a tax efficient manner.

  • Supporting services

Mühler McKay also provides supporting services for business operations such as assistance with incorporation services / company formation services, advising on tax efficient legal structures for (groups of) companies (corporations, for instance a Hong Kong Limited Company, partnerships, branches, representative offices), bookkeeping and accounting (according to Hong Kong principles) as well as audit arrangement, general corporate compliance like provision of company secretary services (in Hong Kong) as well as providing a registered address or virtual office in Hong Kong, obtaining obligatory registrations, permits and licenses, as well as employment advice, including Hong Kong work visa application and China market entry services.

Mühler McKay offers comprehensive China market entry services which include arranging businesses and operations in a tax efficient manner in order to bring down your effective global tax rate, satisfy international tax compliance obligations and mitigate taxation risks.

Please contact us or visit us in Hong Kong for your first consultation for our China market entry services.

Mühler McKay based in Hong Kong is a business advisory firm with worldwide reach and renders, among others, China market entry services to a diversified international client base from various industries and sizes.