- A Hong Kong company can trade with Mainland customers and suppliers, but it isn’t automatically licensed to operate on the ground in Mainland China.
- For local staff, premises, domestic invoicing or regulated activity, you will usually need a Mainland foreign-invested enterprise (FIE) or another compliant local structure.
- A Hong Kong parent can own a Mainland subsidiary. The structure often called a WFOE is now governed by China’s Foreign Investment Law and Company Law.
- Mainland market access starts with the 2024 Foreign Investment Negative List. Restricted sectors may impose ownership conditions; prohibited sectors aren’t open to foreign investment.
- Tax and money movement run through both systems. Hong Kong’s open banking doesn’t remove Mainland foreign-exchange, tax or document requirements.
- Cross-border trade: use the Hong Kong company to contract with Mainland customers or suppliers
- Local operations: set up a Mainland FIE, often held by the Hong Kong company
- Market testing: consider a representative office, distributor or service provider
- Before registering: check the Negative List, licences, registered capital, tax and location rules
Doing business in China with a Hong Kong company gives you a cross-border base, not a free pass to operate in the Mainland. That distinction decides whether you can invoice from Hong Kong, need a local subsidiary, or risk creating an unregistered and taxable presence.
The right setup starts with what happens inside Mainland China. Selling goods to a distributor is very different from hiring a Shenzhen team, opening a shop or delivering a regulated service.
In this guide, you’ll learn:
- Which Hong Kong–Mainland structure fits each operating model
- How to register a Mainland company from Hong Kong
- What banking, tax, CEPA and Greater Bay Area rules change
Can a Hong Kong company do business in Mainland China?
A Hong Kong company can trade, invest and enter commercial contracts with Mainland counterparties, subject to Mainland rules for the activity.
You don’t always need a Mainland subsidiary. A Hong Kong company may be enough when it:
- Buys from Mainland manufacturers for export
- Sells cross-border to an independent importer or distributor
- Licenses intellectual property to a Mainland business
- Holds shares in a Mainland company
- Coordinates regional treasury, sourcing or logistics from Hong Kong
You will usually need a local entity or licensed partner when you want to hire staff directly, lease operating premises, issue local VAT invoices, collect domestic revenue or perform an activity that requires a Mainland licence.
Don’t confuse ownership with permission. A Hong Kong company may own a Mainland entity, but its Hong Kong Business Registration Certificate doesn’t authorise Mainland operations.
Which Hong Kong–China business structure should you use?
Choose the lightest structure that lawfully supports your contracts, people, premises, invoicing and licences.
Structure | Best suited to | Main limit |
Hong Kong company trading cross-border | Import/export, sourcing, overseas sales to a Mainland distributor | No general right to operate locally or hire a Mainland workforce |
HK parent → Mainland FIE | Local sales, staff, premises, contracts and long-term operations | Mainland registration, capital, tax, and recurring compliance |
Representative office | Liaison, market research and relationship building | Can’t directly conduct profit-making business |
Joint venture | Partner-led expansion, sector access or shared local assets | Governance, control, and exit terms need careful drafting |
When can you trade with China from your Hong Kong company?
Cross-border trading works when the commercial activity can stay outside the Mainland.
The Hong Kong company signs the purchase or sale contract, invoices the counterparty and uses its Hong Kong bank account. A Mainland importer, distributor or supplier handles the domestic side, including customs and local VAT obligations where applicable.
This works well for:
- Buying from factories and shipping to customers outside China
- Selling equipment or products through a Mainland distributor
- Sourcing, quality control and supply-chain coordination
- Testing demand before committing to a local subsidiary
It stops working cleanly when your people habitually conclude contracts in China, you keep a fixed place of business there, or your activity needs local licensing. Those facts can create registration, permanent-establishment and tax exposure even if every invoice shows a Hong Kong address.
When should your Hong Kong company own a Mainland FIE?
Use a Mainland FIE when the business needs a durable local operating footprint.
How the structure works
Your Hong Kong company becomes the shareholder. The Mainland subsidiary can then, within its registered business scope and subject to sector licences:
- Operate and trade locally
- Employ staff
- Lease premises
- Open local bank accounts
- Issue compliant invoices
One thing to keep clear
The two entities are separate. Revenue, expenses, contracts, and transfer pricing must follow what each company actually does — the Hong Kong parent can’t treat the subsidiary’s cash as its own.
A free-trade zone doesn't bypass the foreign-investment screen. Pilot free-trade zones may use a separate, shorter Negative List, but company registration and sector licences still apply. Choose the location after checking the exact activity, not before.
When does a representative office or joint venture make sense?
A representative office suits non-revenue liaison work. A joint venture suits cases where a partner adds required or practical local capability.
A representative office can research the market, promote its parent and maintain relationships. It can’t operate as a normal sales company or directly earn revenue. It also has registration, tax and staffing rules, so it isn’t a zero-compliance shortcut.
A joint venture can combine the Hong Kong investor’s product, capital or distribution network with a Mainland partner’s licences, assets or market access. In a restricted Negative List sector, foreign equity conditions may determine whether a joint venture is possible or required.
Before you invest, agree the terms that decide control:
- Control rights
- Reserved decisions
- IP ownership
- Funding
- Deadlock resolution
- Exit terms
A 50:50 headline split says little about who can actually run the company, which is exactly why the terms above matter more than the equity ratio.
How do you register a company in China from Hong Kong?
To register a Mainland FIE, file with the local market-regulation authority, complete investment reporting, then activate its seals, bank, tax and operating registrations.
The exact sequence varies by city and industry. A practical route is:
Step 1: Define the Mainland activity and location
Write down what the company will sell, who signs contracts, where staff work, whether goods cross customs and which licences apply. City-level incentives should come after operational fit, not before it.
Step 2: Check foreign-investment access
Review the national Negative List and any sector-specific rules. Activity outside the list generally receives national treatment at the market-access stage, but separate permits may still apply.
Step 3: Prepare the Hong Kong parent documents
Expect the local adviser or registration authority to request the Hong Kong company’s incorporation records, constitutional documents, ownership information and authorising resolutions. Authentication or verification requirements depend on the filing route and location.
Step 4: Set the name, business scope and capital
Choose a compliant Chinese company name, define a precise business scope and set realistic registered capital.
For a new Mainland limited liability company, shareholders generally must pay subscribed capital within five years of establishment. There is no universal statutory minimum for ordinary sectors, but licensed industries can impose specific capital requirements. An inflated figure becomes a real funding obligation.
Step 5: Obtain the business licence
File the establishment registration with the local Administration for Market Regulation. Foreign investment information is reported through the enterprise registration and credit-information systems.
Step 6: Make the company operational
After licensing, complete the required company seals, bank accounts, tax setup and invoice arrangements. Add customs, foreign-exchange, social-insurance and sector registrations where the business model requires them.
Set seal controls before the company chops are released. Decide who holds each seal, which approvals are required and how every use is logged. Weak custody can expose the company to unauthorised contracts or payment instructions.
How do banking and cross-border payments work?
Hong Kong provides multi-currency banking and offshore RMB infrastructure, while Mainland-side transfers remain subject to Mainland rules and bank review.
A Hong Kong account can simplify international receipts, supplier payments and foreign exchange. Hong Kong’s RMB real-time gross settlement system connects with Mainland payment infrastructure.
That doesn’t make funds frictionless. Banks may ask for:
- Signed contracts and commercial invoices
- Customs or shipping records for goods
- Tax filings or payment evidence
- Board and shareholder approvals for capital or dividends
- Proof that the payment matches the registered business activity
Capital contributions, service fees, royalties, trade payments and dividends follow different documentation and tax routes. Build contracts and cross-border payment processes together. Don’t label a transfer after the fact to fit the bank form.
How are Hong Kong and Mainland profits taxed?
Each entity pays tax where it operates. The Hong Kong–Mainland tax arrangement offers relief only when its conditions are met.
On the Mainland
- Resident enterprises generally pay 25% enterprise income tax, unless a preferential treatment applies
- VAT rates remain 13%, 9%, or 6% depending on the supply (under the VAT Law effective 1 January 2026)
In Hong Kong
- Profits are taxed under Hong Kong’s own profits-tax and source rules
- A separate entity in each place means separate books, separate returns, and support for related-party pricing
Withholding tax under the arrangement
For dividends from a Mainland company to a qualifying Hong Kong beneficial owner, Mainland withholding tax is capped at:
- 5% — when the Hong Kong company directly owns at least 25% of the payer
- 10% — in all other cases
Interest and royalties are generally capped at 7%, with a reduced 5% rate for specified aircraft and ship leasing royalties.
The reduced rates aren’t automatic. They depend on tax residence, beneficial ownership, anti-abuse rules, and proper documentation.
Does CEPA make Mainland access easier?
CEPA can give qualifying Hong Kong service suppliers preferential Mainland access, but incorporating a mailbox company in Hong Kong isn’t enough.
Depending on the service sector, preferences can include wholly owned operations, relaxed equity limits or broader business scope. Under CEPA service rules, a Hong Kong legal entity generally needs:
- Incorporation under Hong Kong law
- A valid Business Registration Certificate
- Substantive business operations in Hong Kong
- A Hong Kong Service Supplier certificate from the Trade and Industry Department
CEPA is a qualification route, not an automatic benefit attached to every Hong Kong company. Check the current sector commitments and certificate evidence before building it into the business case.
What is the Greater Bay Area opportunity?
The Greater Bay Area pairs Hong Kong finance and contracts with Mainland manufacturing, technology or distribution.
A common model places regional management, treasury or external sales in Hong Kong and an operating subsidiary, supplier network or logistics base in Shenzhen or another Guangdong city.
Proximity doesn’t merge the legal systems. Employment, customs, tax, data and licensing still follow the rules on each side. Map each activity to the entity performing it.
How do you keep both companies compliant?
Run the Hong Kong parent and Mainland subsidiary as separate companies with connected records.
For Hong Kong, maintain:
- Annual Return and statutory registers
- Business Registration renewal
- Bookkeeping and annual audited financial statements
- Profits Tax Return and employer filings where relevant
- Records supporting related-party transactions and income source
For the Mainland entity, local advisers should manage accounting, VAT and income-tax filings, statutory reporting, payroll and social insurance, licences and foreign-exchange documentation.
Reconcile intercompany invoices, loans, capital and dividends on both sides. A transfer that appears as “management fees” in Hong Kong must have the same contract, substance and tax treatment in the Mainland books.
When is Sleek not the right fit?
Sleek isn’t the right fit if you only need Mainland China incorporation, local licences or Mainland legal and tax advice.
Use a qualified Mainland adviser for:
- FIE or representative-office registration
- Negative List and industry-licence analysis
- Mainland employment, VAT, customs and foreign exchange
- Chinese contracts, joint ventures and data compliance
How Sleek supports your China expansion from Hong Kong
Sleek builds and maintains the Hong Kong company behind your Mainland strategy.
With Sleek, you can:
- Set up the Hong Kong parent: incorporate remotely with government fees and company secretary services included
- Keep the ownership records ready: maintain statutory registers, annual returns and corporate documents for banks and Mainland advisers
- Get business-account introductions: apply through Sleek’s banking partners, subject to the provider’s approval
- Keep the Hong Kong books compliant: handle bookkeeping, annual accounts and Profits Tax filing through Hong Kong accounting services
Sleek handles the Hong Kong foundation. Use a Mainland-qualified team for the FIE registration, local licences, employment, tax and legal work.
450,000
businesses worldwide.
from 4,100+ reviews.
satisfaction rate from
16,000 surveyed clients.
FAQs about doing business in China through Hong Kong
View more
