There are two properties in Hong Kong company, namely it can be offshore operation or onshore operation. Hong Kong company enjoys a high reputation in the world and is the most commonly used tools of offshore trade, finance and holding in Asia. It has a very good credit. Today, what Business China is going to share with you the advantages for mainland enterprises to register in Hong Kong.
To figure this out, we have to know how to register a Hong Kong Company in the first place, after that we will conduct an in-depth analysis from three aspects which is mainly to help you get a more comprehensive understanding and deep impression.
1. The process of registering a company in Hong Kong
1). Search the proposed company names;
2). Submit "power of attorney";
3). Sign agreement;
4). Pay the deposit;
5). Sign the legal documents for registering the Hong Kong company;
6). Get approval from the government;
7). Make green box (green box containing articles of association, stock books, diary books, seals, etc.);
8). Company registration completed (collect the full set of materials and paying the balance after 4 to 7 working days, the green box can be sent directly to the designated place).
2. The advantages for mainland enterprises to register in Hong Kong
1). Customer source will be guaranteed: By doing international trade with company registered in Hong Kong, the company can sign a contract with foreign clients in the name of offshore company, accept L/C with the offshore company as beneficiary. Hence, all of the trade information is controlled by the individual which will preventing trade information from being plagiarized.
2). Avoid the occupation of export collection: Apply the offshore trading ways of the offshore company, surrender document and negotiate payment in the name of the offshore company and in a bank that you have control of, so everything was under you own company’s control until the foreign money is received. By doing this, the company do not have to settle down the foreign trade company and can pay the factory directly in endorsement of cheque, which will entirely avoid the occupation and deduction of the payment will might leads to the serious consequences of unable to pay the factory.
3). Earn the middlemen profits without using the funds: When the foreign buyer opens an L/C to the Hong Kong company, transfer the letter of credit to factory, and you don't even need to spend a dime on the security deposit, but can also hide the confidential information such of the foreign buyers, price, etc.
4). Foreign exchange funds can be allocated freely without foreign exchange control: Doing international trade, no matter its imports or exports, the freedom of foreign exchange receipts and payments is the most crucial thing. Offshore company belongs to foreign company, the foreign exchange account opened in the domestic is deemed as an offshore account. According to the law, its free of exchange controls is recognized by our country, since this kind of offshore account is a freely foreign exchange account. This means its foreign exchange receipts and payment are all freely, no matter its exporting or importing, foreign or domestic, no matter this belongs to the company or an individual, furthermore, it can be cross-used.
5). Register a Hong Kong company is beneficial for enterprises to avoid trade and non-trade barriers: When Chinese domestic enterprises exporting products to the United States, Western Europe and some other developed countries, it generally need to apply for the quota and a series of related procedures, therefore it need to spend more than 1-2 times’ cost. At the same time, in order to protect the interests of their domestic enterprises, these developed countries often impose restrictions on companies in developing countries such as setting tariff barriers, anti-dumping, countervailing, green barriers, technical barriers and other restrictions. But if the company owns an offshore company, the enterprise can export to its own offshore company, and then export to the developed countries by its own offshore company, this can avoid the discriminations and restrictions of these trade and non-trade barriers to a certain extent.
6). Financial operation, reducing costs reasonably and increasing profits：Every enterprise has a business strategy that do not in violation of laws and regulations and avoid or reduce the tax at the same time. The biggest advantage of offshore companies and offshore business is to reduce costs reasonably and increase profits through financial operation.
7). Enhance the image and reputation of the company, facilitate the development of international market or expand the domestic market with international brands.
3. The reasons for enterprise to register a company in Hong Kong
To register a company in Hong Kong has becoming the first choice for mainland companies to enter the international market. Hong Kong, with its excellent geographical location has become the financial center in the Asia-pacific region and in the world, Hong Kong has one of the world's most free trade port with a simple tax system, low tax rate, well-equipped infrastructure and wholesome legal system. All in all, this created a good business environment for the entrepreneurs and investors. At the same time, the Hong Kong government encourages the mainland enterprise to register company and invest in Hong Kong and several preferential policies has been introduced. This is also one of the important reasons why the number of Hong Kong company registration has been increasing sharply in recent years.
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