How to Successfully Operate a Hong Kong Company on the Mainland Investment and Operation Guide

How to Operate a Hong Kong Company Smoothly on the Mainland? A Detailed Investment and Operation Guide

In recent years, with the rapid development of the Guangdong-Hong Kong-Macao Greater Bay Area and the continuous deepening of economic cooperation between the mainland and Hong Kong, more and more enterprises have chosen to register companies in Hong Kong and expand their business in the mainland through this international platform. However, it is not easy to successfully operate a Hong Kong company in the mainland. It requires a thorough understanding of the legal, tax, and business environments of both places, as well as mastering certain operational skills. This article will provide readers with a detailed investment and operation guide from the aspects of investment establishment, daily management, and tax compliance.

I. Investment Establishment Phase

First, before deciding whether to conduct business in the mainland, enterprises should clarify their strategic goals and development plans. If it is indeed necessary to enter the mainland market, the following methods can be considered

1. Establishing a representative office or branch This is one of the simplest and fastest ways, but it is limited to non-profit information exchange activities and cannot directly participate in business operations.

2. Registering a branch Compared with a representative office, a branch can independently assume legal responsibility and carry out related business, but its approval process is relatively complex and time-consuming.

3. Setting up a subsidiary For Hong Kong-funded enterprises that hope to take root in the mainland market for the long term, establishing a wholly-owned subsidiary is the optimal choice. Not only can they enjoy tax preferential policies, but they can also better integrate into the local cultural atmosphere.

During the specific execution process, applicants need to prepare complete relevant documents, including but not limited to copies of the company registration certificate, shareholder identity proof, etc., and submit them to the industrial and commercial administrative department for review according to regulations. It is worth noting that after the Foreign Investment Law officially came into effect on January 1, 2025, the case-by-case approval system for foreign investment was abolished and replaced by a negative list management model. This means that eligible enterprises no longer need to go through the cumbersome and complicated approval procedures, greatly simplifying the process.

II. Daily Operations Management

After your Hong Kong company successfully lands in the mainland, the next step is how to efficiently manage and maintain it on a daily basis. Here are some key points to keep in mind

1. Financial Accounting Due to differences in accounting standards between the two places, it is recommended to hire a professional accounting firm to assist in handling financial issues to ensure accurate data; additionally, regular tax declarations must be made to the tax authorities to avoid fines and even more serious consequences due to neglect.

2. Labor Relations Given the relatively low labor costs and abundant human resources in the mainland, many Hong Kong-funded enterprises tend to hire local employees. However, before signing employment contracts, they must fully understand national laws and regulations regarding minimum wage standards and work schedules to avoid unnecessary disputes.

3. Intellectual Property Protection With increasing market competition, the importance of intellectual property becomes more prominent. Therefore, enterprises should establish internal management systems to strengthen protection of intangible assets such as trademarks and patents, and seek legal advice when necessary.

III. Tax Compliance

Tax issues are an important matter that all enterprises must pay close attention to when operating in the mainland. Hong Kong and the mainland implement different tax systems, so enterprises need to fulfill their respective tax obligations in both places. Specifically

1. In terms of Hong Kong, it mainly involves profits tax, salary tax, etc. Among them, the general profit tax rate is 16.5%, but if the company's profits come from offshore trade, a lower preferential tax rate may apply;

2. For the mainland market, value-added tax, corporate income tax, and other taxes need to be paid. It is particularly noteworthy that according to the latest revised Individual Income Tax Law, if an overseas person resides in China for more than 183 days, they will be considered a resident taxpayer and required to pay individual income tax on their global income.

To alleviate the burden on enterprises, a series of supportive measures have been introduced, such as the cross-border RMB settlement pilot project under the Belt and Road Initiative. These policies undoubtedly provide enterprises with more convenient conditions, while also reminding us to always pay attention to the latest dynamic changes in order to adjust strategies in a timely manner.

IV. Conclusion

In summary, to successfully operate a Hong Kong company in the mainland, not only does one need a clear strategic plan, but also solid professional knowledge and keen market insight. Only in this way can one stand firm in the ever-changing competitive environment. Finally, it is once again emphasized that regardless of which link, it cannot do without tight collaboration and communication among team members. Only in this way can the collective wisdom be maximized. I hope the above content can bring inspiration and help to readers!