How Can Mainland Enterprises Achieve International Expansion Through Controlling Hong Kong Companies?

How Can Mainland Companies Achieve Internationalization by Holding Shares in Hong Kong Companies?

In the context of global economic integration, an increasing number of mainland Chinese enterprises are pursuing an outward-looking strategy, aiming to expand their business footprint in international markets, enhance brand visibility, and access broader resources. As one of the world's leading financial centers, Hong Kong offers a unique geographical location, a free and open economic system, and internationally aligned legal and financial frameworks-making it a crucial springboard for mainland companies seeking global expansion. In recent years, many mainland enterprises have achieved more efficient cross-border resource allocation and international presence by holding shares in or establishing subsidiaries in Hong Kong.

I. The Unique Advantages of Hong Kong in the Internationalization of Mainland Enterprises

Hong Kong boasts a globally competitive financial market system and serves as a vital bridge connecting China with the rest of the world. According to the latest data from 2025, Hong Kong has been ranked as the freest economy in the world for the 11th consecutive year by the Heritage Foundation. With a low profits tax rate of only 16.5%, free capital flow, and no foreign exchange controls, Hong Kong provides favorable conditions for mainland enterprises to invest overseas. Additionally, its well-established legal framework and transparent regulatory environment support the creation of stable international operational structures.

For example, at the end of 2025, Xiaomi Group further expanded into the European market through its Hong Kong-based holding platform. Leveraging Hong Kong’s flexible financing mechanisms and mature capital markets, Xiaomi successfully completed multiple rounds of offshore financing, providing strong momentum for its overseas operations.

II. Specific Approaches and Strategies for Mainland Enterprises to Hold Shares in Hong Kong Companies

For mainland companies seeking to go global, holding shares in or setting up a company in Hong Kong is a common and effective method. Commonly adopted models include

1. Establishing a Wholly-Owned Holding Company

Mainland parent companies can set up wholly-owned subsidiaries in Hong Kong to serve as platforms for overseas investment. This structure facilitates centralized management of foreign assets and enables companies to take advantage of Hong Kong’s extensive network of tax treaties to reduce cross-border tax costs. For instance, Huawei used this model early on to establish branches across multiple regions globally, effectively avoiding multiple layers of taxation.

2. Utilizing a Red-Chip Structure for Offshore Financing

A red-chip structure involves transferring mainland assets to an offshore company-typically registered in Hong Kong or the Cayman Islands-and then using that entity to raise funds via overseas listings. This approach has been widely adopted by technology and internet companies such as Tencent and Alibaba, enabling them to grow rapidly.

3. Merging with or Acquiring Local Firms for Resource Integration

Some mainland companies choose to enter international markets by acquiring local Hong Kong firms or forming joint ventures. This not only allows rapid access to established brands and customer bases but also mitigates operational risks arising from cultural differences. In early 2025, Geely Auto announced plans to acquire a Hong Kong-based new energy technology firm to strengthen its presence in Southeast Asia.

III. Recent Case Study TikTok Expands Globally Through Hong Kong

Taking TikTok, owned by ByteDance, as an example, despite its core business being primarily outside mainland China, its headquarters was briefly based in Beijing before relocating to Singapore. However, much of its critical decision-making and capital operations continue to be conducted through entities based in Hong Kong. TikTok uses its Hong Kong subsidiary to manage overseas investments, intellectual property licensing, and part of its financial settlements, significantly enhancing both operational efficiency and investor confidence. This case illustrates that even non-Hong Kong-based companies can build global operational systems by strategically leveraging Hong Kong’s institutional advantages. Especially in light of increasingly stringent scrutiny in Western markets, structuring operations through third-party jurisdictions like Hong Kong helps mitigate direct regulatory pressures originating from mainland China.

IV. How Should Mainland Enterprises Optimize Their Internationalization Strategy?

Despite Hong Kong’s many advantages, enterprises must still pay attention to several key factors when using it as a gateway to global markets

1. Strengthen Compliance Awareness and Risk Management

As international regulations become stricter-particularly in areas such as data security and anti-money laundering-mainland companies must deepen their understanding of host-country laws to ensure compliance.

2. Optimize Tax Planning

By utilizing Hong Kong’s network of double-taxation avoidance agreements with various countries and regions, companies can scientifically design cross-border capital flows and profit distribution structures to minimize overall tax burdens.

3. Leverage Professional Service Providers

Hong Kong hosts numerous top-tier international accounting firms, law firms, and consulting agencies. Engaging local professional teams can greatly enhance the professionalism and efficiency of cross-border operations.

4. Focus on Brand Building and Localization

Successful internationalization goes beyond capital exports-it is about spreading brand value. Mainland enterprises should prioritize building brand images tailored to local cultures and consumer habits and gradually implement localized management strategies.

Conclusion

In summary, by holding shares in or establishing Hong Kong companies, mainland enterprises can more easily access international markets and improve their global resource allocation capabilities. Looking ahead, as the Guangdong-Hong Kong-Macao Greater Bay Area continues to develop, the synergies between Hong Kong and the mainland will grow stronger, offering more robust support for enterprises going global. With proper planning and steady execution, mainland companies can fully leverage Hong Kong as an international platform to achieve genuine global development.