Doing Business in Asia
Discussions about China’s economy becoming the biggest in the world are now focusing on when rather then if. Of course, these predictions about ‘when’ vary significantly from IMF’s 2016 to the early 2020’s from international banks Citibank & HSBC to the World Banks conservative estimate that the ‘largest economy’ title will go to China by 2030.
The combined forces of shifting investments to Asia, strength of the Asia economies, the size of Mainland China’s population and technological advancements have contributed to the success, and potential, of China. But achieving the potential will require continued reform, workforce development and incentive programs to attract foreign investment.
One of China’s advantages is its proximity to Hong Kong. This Special Administrative Region (SAR) of the Peoples Republic of China has established itself as a leading hub for international business. Since January 2004, when Mainland China and Hong Kong signed their first free trade agreement, economic cooperation between the two jurisdictions has drastically improved. The Closer Economic Partnership Agreement (CEPA) helped save Hong Kong from economic crisis and also helped open up lucrative markets for Hong Kong goods and services.
Hong Kong provides entrepreneurs a number of options as to what kind of company to set up depending on their business objectives. Liberal government laws in Hong Kong and its central location with North Asia make it the jurisdiction of choice to incorporate a company for startups and multi-nationals.
Most entrepreneurs prefer to set up a Hong Kong company as a Limited company. This form of business entity provides limited liability from a legal standpoint. The liabilities of the shareholders and proprietors are limited to the value of the shares they hold. So the director or shareholders do not bare any personal liability to the debts of the company.
Hong Kong law allows for a company to be registered by one or more persons and one single legal or natural entity can act as a shareholder, a director, a proprietor, an investor and also a company secretary simultaneously. There are no restrictions to the nationality of the secretary being appointed, however they must reside in Hong Kong.
A fast, alternative route to Hong Kong company registration is to acquire a readymade shelf company. Shelf companies are companies that have not commenced any business activity in the market. A shelf company hence has no liabilities or debts at the time of purchase. This form of entity is still subject to HK company law and costs are comparable to registering a new company in Hong Kong. The ease of doing business in Hong Kong is one factor that appeals to so many entrepreneurs and business leaders in western markets. It is consistently amongst the top ranked business jurisdictions in global surveys such as the World Banks Doing Business survey.
As an experienced corporate services firm, Healy Consultants has assisted entrepreneurs around the world to set up new businesses and expand established companies by developing the most efficient corporate structure to suit their business objectives. According to Aidan Healy, Managing Director of Healy Consultants, “a HK offshore company is the one of the most effective corporate structures for conducting international business. It can act as an ideal gateway to Mainland China and other regions of North Asia, income sourced from outside of HK is legally tax exempt, it is one of the top 3 financial centres in the world along with other incentives”.
As an Asia business hub, a tax efficient city, and one of the freest economies in the world, a company incorporated in Hong Kong provides an excellent image for potential clients, investors and financial institutions. For any startup or established business wanting to contribute to, and benefit from, the potential of the North Asia region (especially China) over the next 5-20 years then setting up a Hong Kong corporate structure could be an ideal strategy. The CEPA has certainly granted greater business freedom for entrepreneurs wanting to undertake business in China.