How can easy do business in China ?

Hong kong Company will help to you get best way of you open China Market

Background

A:Mr. Tom is from England with England company "E Ltd"

B:Business nature is about management consulting

C:His business activity with China include

-invest in China to setup Wholly Foreign Owned Enterprise (WFOE)

-sell service to China clients;

New Way

Mr. Tom  Set UP a Hong Kong company "H Ltd";

using H Ltd as investor in China to setup the WFOE

and using H Ltd to sign service contract with China client

Benefit

A setting up WFOE

-Disclosing less information to China government

Originally, need to provide information of England  Ltd to China government;

Now, just need to provide information of H Ltd;

-time to arrange document is shorter

England Ltd documents needs to be translated into Chinese and be certified by China Embassy;

document from H Ltd is more ready for China use, and the certification process is more standard in Hong Kong - time and cost more under control;

E dividend from WFOE

when China company earns profit and need to pay back to investor, withholding tax in China applies;

if paying to England Ltd, the rate is around 10%

if paying to H Ltd, the rate is around 5%

F service fee from China client
            when China client needs to pay service fee to E Ltd, withholding tax of 15% applies

when China client needs to pay service fee to H Ltd, withholding tax of 12% applies;

Example : break-even

-Cost of setting up Hong Kong company = around HK$8,000;

-Cost of annual maintenance of Hong Kong company = around HK$18,000 (including accounting and audit fee);

-If China income is HK$80,000
saving 3% of withholding tax (China related transaction) = HK$24,000

        the cost almost break-even of maintain the Hong Kong company.