Business Abroad

China and Hong Kong Create a Unified Work Environment

Every businessman tries to minimize costs and increase profits. Rent, taxes, labor costs before starting, you need to weigh all expenses. And even if the business is doing well in the local reality, do not forget about foreign jurisdictions that offer interesting conditions for development.

One of these territories is Hong Kong. Here, newcomers and experienced businessmen open companies and acquire firms. The vast majority of non-residents are represented by China, Japan, and entrepreneurs from the United States, the United Kingdom, and Singapore.

In Hong Kong, foreigners are attracted by tax incentives and the opportunity to establish an innovative startup. But increasingly, businesses in the autonomy are chosen by those who seek to legalize trade and economic ties with China and gain further access to Asian markets.

Connection to the mainland

China welcomes foreign investment in various sectors of the economy at home and abroad, increasing its influence in the global economy. Now China is an honorable second place in the list of leaders. Transactions with foreign partners amount to hundreds of millions of dollars annually and the lion’s share of this flow passes through Hong Kong.

The Hang Seng index of the Hong Kong stock market in 2019, despite the uncertainties and disappointing forecasts of experts, rose by 9.1%. The trading platform has maintained its leadership in attracting IPO funds.

Last year, there was a record volume of trading on the Stock Connect and Bond Connect platforms, which provide cross-links with mainland China. The stock market is responding positively to the relationship between China and its neighbor, and this dynamic will continue in the future.

The reference point for China

The SAR is a member of the WTO and operates under the terms of international trade agreements. The autonomy has its own currency, trade policy, and financial regulation. Hong Kong is like a bridge that creates market conditions for conservative China and opens the way for capital flows to the Mainland.

A Hong Kong company in the PRC has the status of a foreign legal entity and cannot operate directly wholesale and retail, carry out production activities, etc.

To legalize transactions, a foreign businessman can import goods from representatives of third countries and export them to China, or, on the contrary, take goods from the mainland and sell them on the territory of third countries. At the same time, the cargo does not enter the territory of the autonomy.

Bilateral agreement

In order for cooperation between China and Hong Kong to be more effective in the dynamic development of autonomy, an agreement was signed with the regulation of 3 areas. The cooperation agreement is called step (or SERA) and concerns the following points:

  1. Trading activity
  2. Service sector
  3. Investment

The step allows a foreigner to establish or register a business in Hong Kong in order to work with China on preferential terms in the future.

Professional organizations of the SAR and relevant structures in China have signed agreements on mutual recognition of technical qualifications and professional achievements. On the Mainland, certificates, diplomas, and academic degrees of Hong Kong residents are recognized as valid.

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