Can HK Companies Make ODI Record-filing? Explanation on Cross-border Direct Investment Process & Points to Note

Hong Kong companies can apply for ODI filings. This article will explain the process and key points of cross-border direct investment in detail.

Overseas Direct Investment ODI refers to the activity where domestic enterprises invest capital, technology, or management experience in foreign countries or regions through new establishment, acquisition, or participation in existing enterprises. This helps Chinese enterprises integrate into the global market, acquire advanced technologies, and expand their business scope.

For Hong Kong companies, they can also engage in ODI activities. According to the Notice on Matters Concerning the Administration of Overseas Direct Investment issued by the Ministry of Commerce MOFCOM, Hong Kong companies can make ODI filings as long as they meet certain conditions. For example, they must have legitimate sources of funds and ensure compliance with local laws and regulations.

The process of ODI filing typically involves several steps. First, the applicant company needs to submit an application form to the relevant authorities. The form should include detailed information about the investment project, such as the investment amount, purpose, and expected returns. In addition, the company must provide proof of its legal status and financial capability.

Once the application is submitted, the authorities will conduct a review. This may involve checking the completeness of the documents and verifying the authenticity of the information provided. If the application meets the requirements, the authorities will approve it and issue a confirmation letter. This letter serves as proof that the company has completed the ODI filing process.

It's important for companies to pay attention to several key points during the ODI filing process. Firstly, they need to ensure that their investment projects align with national policies and guidelines. Secondly, they should comply with international trade practices and avoid any actions that could lead to disputes or sanctions. Thirdly, they must keep accurate records of all transactions and maintain transparency in their operations.

Recently, there have been some changes in the regulatory environment for ODI. For instance, the State Administration of Foreign Exchange SAFE has introduced stricter rules regarding the flow of capital across borders. These measures aim to prevent illegal activities such as money laundering and tax evasion while promoting legitimate investments.

Despite these challenges, many Hong Kong companies continue to see opportunities in overseas markets. According to statistics from the Hong Kong Trade Development Council, the value of Hong Kong's outward direct investment reached HKD 846 billion in 2024, representing a growth rate of 15% compared to the previous year. This demonstrates the strong demand for cross-border investment among Hong Kong businesses.

To succeed in overseas markets, Hong Kong companies need to adopt a strategic approach. They should conduct thorough market research before making any investment decisions. It's also crucial to build strong relationships with local partners and stakeholders. By doing so, they can better understand the cultural and legal differences and adapt their strategies accordingly.

In conclusion, Hong Kong companies can indeed apply for ODI filings. However, they must follow the proper procedures and adhere to relevant regulations. By understanding the process and paying attention to key points, they can maximize their chances of success in overseas investments. As the global economy continues to evolve, cross-border direct investment will remain an important avenue for Hong Kong companies to achieve sustainable growth.