HK$2000 OFF

when you

 when you register your company with Sleek

and subscribe to our accounting plans.

register your company with Sleek and subscribe to our accounting plans.


Why Should You Have a Company in Hong Kong for Your Mainland Operations

8 minute read

Hong Kong is undoubtedly one of the most attractive business hubs in the world today. This is partly due to the fact that it had been the wealthiest region of China for a long time and it is also considered a tax haven.

Hong Kong, indeed, has a simple and favorable tax system and that is why many foreign entrepreneurs flock there to start a business. Additionally, its multicultural environment and a great standard of living only add to the overall good image of the region.

But what if you wanted to start a business in Hong Kong and operate in Mainland China too? After all, Hong Kong is a part of China, so it would make sense that your company in Hong Kong is considered as a Chinese company?

Well, that is not exactly the case. The relationship between the region of Hong Kong and the rest of the country can still be described as ‘one country – two systems.’ Does that mean you should or shouldn’t set up a company in Hong Kong if you also have the Mainland China market in mind? If you want to find the answer to the question above, take a look below.


What exactly is exactly ‘one country, two systems’?

The ‘one country, two systems’ principle is a constitutional principle of the People’s Republic of China. It describes the governance of Hong Kong and Macau since 1997 and 1999, which are the respective years when they became Special Administrative Regions (SARs) of China.

This system was proposed by Mr Deng Xiaoping during negotiations with the United Kingdom over Hong Kong. He suggested that there would be only one China, but that the regions of Macau and Hong Kong would retain their own administrative and economic systems. The rest of the country would go on to use the standard Chinese communist system.

This principle stipulates that each of the two regions could continue to have their own systems independent of the Mainland China in terms of:

  • The government
  • Legal, economic, and financial affairs
  • Trade relations with foreign countries

China agreed to accept various conditions during the negotiations. One condition was the drafting and adoption of Hong Kong’s Basic Law before its return.

This law ensures that the region shall retain its capitalist economic system and own currency, the legal system, legislative system, and same human rights and freedoms as a SAR for 50 years.

Differences between Hong Kong and China

Both the region of Hong Kong and Mainland China share the same Chinese president as their supreme leader. However, each has its own head of government:

  1. The prime minister is the head of Mainland China.
  2. The chief executive governs the Hong Kong Special Administrative Region.

The chief executive reports to the Central People’s Government. The term of the chief executive lasts for five years and any person can serve for a maximum of two consecutive terms.

Hong Kong also has its own legal and judicial systems, district organizations, and public servants, broadly based on the British common law model.

When it comes to money and taxes, Hong Kong has the freedom to continue with its free-enterprise system. It has independent finances and China does not interfere in its tax laws or levy any taxes on it.

The region also has its own policies related to money, finance, trade, customs, and foreign exchange. In addition, Hong Kong has its own currency – the Hong Kong dollar – as opposed to the Chinese Yuan used in Mainland China.

Finally, the Hong Kong Stock Exchange has been the preferred destination choice for the vast majority of Chinese companies looking to raise capital. The reason for this is that the Mainland Chinese stock markets are more restrictive and have higher financial requirements. Consequently, Hong Kong’s stock market also brings in more overseas investors.

Is Hong Kong good for business?

Many entrepreneurs choose to set up Hong Kong companies and this trend is not showing any signs of weakening. Hong Kong really is one of the most popular jurisdictions for investors and this is mainly due to its efficient tax system.

However, one can also easily enter an international market from the region and enjoy a super-talented local workforce at an affordable price. The region’s location, its political environment, economy, and business-friendly approach – all of this and more make Hong Kong great for business.

Below is a list of the benefits of opening a company in Hong Kong.

Easier business operations

It is not very difficult to set up a business in Hong Kong. Actually, you can do so in about two week’s time. The region is known for its excellent infrastructure facilities and business premises that are easily available.

Additionally, intellectual property protection is taken seriously with strict regulations in place. There are certain dispute resolution channels that businesses can avail of.

Furthermore, the simple and business-friendly tax system draws a lot of foreign money to the city. A work visa is also an option if you want to relocate and set up your business in the region.

Free economy

Hong Kong has one of the most successful economies in the world thanks to one thing – openness. To be precise, its dynamic economy is driven by the principles of free enterprise, free trade, and free markets. This economy has contributed to the GDP growth at an average annual rate of 5% in real terms over the past 20 years. There are practically no restrictions on inward and outward investments, no foreign exchange controls, and no foreign ownership restrictions.

Additionally, there is almost no public debt, plus the banking and legal systems are great. On top of that, the region boasts a strict anti-corruption regimen to strengthen Hong Kong’s position as a business-friendly place.

Moreover, businesses that are set up in Hong Kong can now benefit by gaining preferential access to the Mainland China market from the Closer Economic Partnership Arrangement (CEPA). This is a free trade agreement between the Central People’s Government and the Government of the Hong Kong SAR.

All goods qualified as Hong Kong origin can be exported to the Mainland tariff-free.

Attractive tax regime

Taxes should be among your main concerns as an entrepreneur who aims at setting up a business in Hong Kong. Fortunately, Hong Kong takes pride in its status of being the lowest tax jurisdiction in the world.

Personal income tax starts at only 2% and goes up to 17% for income above HKD 200,000. Furthermore, corporate tax is set at 16.5% of assessable profits for corporations and 15% for unincorporated businesses.

There is no capital gains tax and no withholding tax on dividends and interest or collection of social security benefits. Finally, there is no sales tax or VAT in Hong Kong.

Clean governance

Hong Kong still holds a high degree of autonomy in all matters except for foreign and defense affairs. The region has a semi-democratic system with separate political, economic, and judicial systems.

Hong Kong is believed to be politically stable with pro-business governance and free-market principles. The region is also one of the most corruption-free economies in the world. And, the government even has an anti-corruption body called the Independent Commission Against Corruption (ICAC).

ICAC combats both public and private sector corruption.

Strong legal system

In Hong Kong, every entity is equal before the face of the law. The region’s legal system is different from Mainland China’s system. To this day, the English common law prevails.

In 1985, the International Arbitration Center was established and Hong Kong has become a key destination for arbitration in Asia. This kind of arbitration is now a popular method of dispute resolution in Hong Kong.

The law is committed to the protection of Intellectual Property Rights (IPR) and enforces strict rules for patents, copyrights, trademarks, and registered designs.

The specially established Intellectual Property Department monitors the IP regime in Hong Kong and is known for its extensive experience in handling IP issues.

When it comes to trade and commerce, employment, taxation, and other business-related areas, there are distinct rules and regulations that every single person has to follow.

Wrap Up

As you can see, there are numerous reasons why it would be wise to set up your next business in the region of Hong Kong. The system in the region was designed to help every aspiring entrepreneur succeed and become a prominent name in the world of business.

If you need any help with Hong Kong company incorporation or any other issue related to doing business from Hong Kong, feel free to reach out to Sleek. The entire setup process is incredibly easy when you are working with service providers who are familiar with the business environment of the region and have a proven record of success.

Good luck and enjoy your Hong Kong business endeavour!

Ready to grow your business?

Our expert team is here to help you. Explore our incorporation services or contact our team to get personalised advice today.

Start a business in less than 3 hours with us. Talk to our experts today.

Subscribe to our newsletter

Our jam-packed newsletter covers monthly compliance updates, upcoming events and exclusive offers

Other articles that might interest you

Related content

Contact us

We’d love to help. Share your contact details and we’ll call you back

Start a business in less than 3 hours with us. Talk to our experts today.

WhatsApp Us

Get HK$2000 off on
your first Sleek
service purchase!

Offer valid when you register your company with Sleek and subscribe to our accounting OR audit and tax plans. T&Cs apply. Privacy policy.

Terms and Conditions of the Promotion:

Before participating in this promotion, you must carefully read and agree to abide by the following terms and conditions.

  1. Eligible Users: To enjoy this offer, customers must purchase Incorporation package with registered address and audit and tax/accounting services at the same time. Valid customers will receive a fee waiver of HKD 2,000.
  2. Promotion Period: This promotion is valid from Jun 19-Jul 2, 2023. Sleek reserves the right to end this promotion at any time without prior notice to customers.
  3. Fees and Payment: Customers must pay the service fees according to Sleek’s standard payment terms. The HKD 2,000 waiver will be applied as a discount on the customer’s invoice.
  4. Governing Law and Jurisdiction: These terms and conditions shall be governed and construed in accordance with the laws of Hong Kong. Any dispute arising out of or in connection with these terms and conditions shall be subject to the exclusive jurisdiction of the courts of Hong Kong.
  5. Confidentiality: Sleek shall treat all information provided by the customer as confidential and shall not disclose such information to any third party, except as required by law or with the customer’s consent.
  6. Limitation of Liability: To the extent permitted by law, Sleek shall not be liable for any direct, indirect, or consequential loss or damage arising out of this promotion.
  7. Disclaimer: To the extent permitted by law, Sleek shall not be responsible for any loss or damage arising from the customer’s use of this promotion. Sleek does not guarantee the accuracy, completeness, reliability, timeliness, suitability, or availability of the website and its content. Sleek reserves the right to change the website and its content at any time without prior notice to customers.
  8. Cancellation of Orders: If customers wish to cancel an order, they must contact Sleek’s customer service department within 24 hours of submitting the order. Orders cannot be cancelled if they have already been processed
  9. Links to Third-Party Websites: Sleek’s website may contain links to third-party websites that are not under Sleek’s control. Sleek is not responsible for the content, privacy policies, or practices of third-party websites and does not endorse or recommend them. Customers should carefully read the terms and conditions and privacy policies of any third-party website before using it.
  10. Accuracy of Registration Information: Customers warrant that all registration information provided is accurate, complete, and up-to-date. If a customer’s registration information changes, the customer should update their account information promptly. Sleek shall not be liable for any loss or damage arising from the customer’s provision of inaccurate or incomplete registration information.
whatsapp icon

Chat with us on WhatsApp from your mobile

30 day moneyback guarantee

30 Days Money Back Guarantee

Our refund policy:

We care about you – within 30 days from your purchase, if you’re unhappy with our services, we’ll refund our fee. Email or call us, and we’ll process the refund within five working days.

What it doesn’t cover:

We will not be able to refund Government fees once the application has been submitted, nor any third-party processing fees.

When it applies:

We cannot guarantee any specific legal outcomes when you use our services. For instance, a company registration might be filed correctly but still get rejected by the Company Registry for reasons beyond our control. We can only refund our fees for issues we are directly responsible for. In the case that you purchase a service and later change your mind, we can’t issue a refund.

Our customer support team is at your disposal for any questions or issue you may face.

Need help?

Our sales team is available from Mon - Fri 9am to 7pm (Hong Kong Time)

Let's get in touch

Book a time with our experts to guide you in finding the best solution.