Setup Company SHA or HKG

Hi, I have worked in 3pl for many many years and have recently been asked to setupmy own company to handle one of my old clients within the airline industry.

This does seem to be the break i have wanted for many years but I am unsure of the following:

1) Is it better to create a company in HKG or Shanghai

2) What is the process and costs expected

3) Visa?


I have a work visa for HKG and would plan to continue working for the HKG company while i established my own facility and buisness.


Any advice would be useful

Hong Kong is one of the most simple places in the world to do business and China is one of the most difficult. Setting up in HK is the only choice

We always advise our client that HK is a better place to startup a new business than Shanghai.



First of all, you should be aware that the profit/income tax rate in HK is lower than that in the PRC. With the new PRC Company Law coming into effect in Jan 2008, many advantages and benefits now available to foreign investors in the PRC will be waived. An increase in profit tax rate is expected.



Secondly, the costs and procedure of setting up a company are also different. You may expect that the costs of setting up a limited company in HK including Government registration fees and agent's fees will be around HK$8,000 and the procedure is simple and straightforward. While doing the same in Shanghai, it will cost you around HK$30,000 due to additional attestation fees and the complicated approval process.



Thirdly, the capital requirement in the PRC is higher. Although the PRC Company Law stated that the minimum registered capital is RMB$30,000, we have never seen any proposed company with such a small capital being approved by the authority.



Moreover, the signing of CEPA between the PRC and the HK Government has reinforced HK's role as a gateway to the mainland market. A HK company which has operated its business in HK for over 3 years (4 years for some sectors) is eligible to apply for a Certificate of service provider / manufacturer. With this certificate, they can enjoy various preferential treatments when they set up their business in China.



For the above reasons, we advise you to set up the business in Hong Kong first and consider setting up a Representative Office or a Wholly Foreign Owned Enterprise (WFOE) in China later.



If you are interested in setting up a business or need more details on this topic, we are pleased to offer an initial interview at HK$2,500.


Weir & Associates

Solicitors & Notaries

2108 Gloucester Tower

The Landmark

15 Queens Road Central

Hong Kong

Tel : 2526-1767

Fax : 2868-3568

email : weirlaw@hongkonglaw.com

www.HongKongLaw.com/weirlaw