Manufacturing Service Companies – The Future Lies in Their Hands!

December 22, 2020


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There are a lot of reasons why people choose to set up a company in Hong Kong. The company will probably be conducting trade in China and Mainland China, and this makes it a very convenient location for doing business, and that is why so many companies have their registration offices in the Chinese region. However, the benefits of Hong Kong offshore company formation are many.

First, there is the issue of tax. While it is true that all tax rules in mainland China are different, most countries of origin allow for some taxation of foreign firms doing business in China. Hong Kong has some special rules on this. For example, companies in Hong Kong that employ more than a hundred employees and reside in China for at least ninety days must register with the Chinese government and pay several taxes, such as the equivalent of the annual corporate tax in Hong Kong. It is also necessary to set up company in HK to provide a large portion of their payroll and some quota payment.

Most foreign currency business companies in Hong Kong must register with the PRC’s Department of Internal Administration and Supervision. Registration is a must before they can transact transactions with mainland banks. Obtaining a business license is the next step, and this process varies from one location to another. Most companies prefer to set up a nominee office in Hong Kong to accept PRC government orders. Most companies also set up a company registry in Hong Kong to comply with the rules and policies set out by the Securities and Exchange Commission of the PRC.

Companies wanting to open an offshore branch in Hong Kong need to apply for a registration form with the Companies Registry of Hong Kong. This form is available online from the Companies Registry’s website. It is essential to state all the details of your business, including its nature, purpose, share and capital structure, and its intention to trade on the open market. Failure to comply with these requirements may result in your company being closed by the Companies Registry.

The next step in how to set up a company in Hong Kong is to decide on the legal name of the company, or ‘head office’ and register it at the Companies Registry. In general, the business name should be unique and not a variant of the company’s name in a foreign language. The next step in the process is to select the company’s trade or profession. A company in Hong Kong can be composed of any number of entrepreneurs who might constitute the business’ management team. The next document is the Memorandum and Articles of Association, duly approved by the shareholders or by a qualified majority of the members of the Board of Directors.

The next document is the Profit and Loss Statement, registered with the Thailand Bureau of Registration of Public Offices (BRO). The Profit and Loss Statement of any company must be prepared according to the rules and regulations of the Company House. It must be signed by the company’s director or its managing supervisor. A company must also prepare its financial forecasts for the next five years and present them to the Board of Directors. The company should submit reports to the government bureaus regularly.

Upon approval, the company will be registered in Hong Kong, and its registered office is at the Commercial and Trade Registry of Hong Kong. The supervisor of the company must exercise the powers conferred upon him by the Basic Function Law, the Companies Act, the Corporate Charter, and the rules and regulations under the Companies Act. He must undertake such activities as he may deem necessary for the maintenance of the company’s standard of working and for the fulfilment of its liability and obligations to its shareholders. A company secretary also must report continuously to the Board of Directors and the officers of the company. He may also be required to give reports to shareholders, or anyone interested in the company’s affairs.

The company secretary-general and supervisors take care of the proper functioning of the company. He must make sure that all the necessary documents are in place, that all the personnel are presentable, and that no conflicting business is transacted. His role is more organizational than anything else, and he is usually called the supervisor. The Fiduciary Standard requires him to exercise sound judgment, prudence, and good faith in all his dealings with the other officers of the company.

When setting up a whole site from the mainland, you must keep in mind what your main objectives are. Are you establishing a service area or a sales area? If you aim to sell services, then it will make far more sense to set up a holding company in Hong Kong, rather than a parent company elsewhere. On the other hand, if you want to establish a manufacturing unit, then it will make far more economic sense to set up the production facilities within the same company that you run the service units out of it. In either case, you need to ensure that the operations are well synchronized and that they all share the same vision for success. Otherwise, they will be wasting their time and resources, as well as costing them money.


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