Mainland Enterprise Transformation Guide How to Successfully Relocate to a Hong Kong Company?

Mainland Companies' Transformation Journey How to Successfully Migrate to a Hong Kong Registered Company

In recent years, with the global economic landscape shifting and market uncertainty intensifying, an increasing number of mainland Chinese companies are seeking new growth opportunities. Particularly in cross-border trade, financial services, and technological innovation, many businesses have opted to relocate their operations to Hong Kong to benefit from a more flexible business environment, broader international resources, and easier access to capital flows.

This trend became particularly evident in 2025. According to Caixin, over 1,500 mainland enterprises completed registration or established branches in Hong Kong in the first half of that year alone-an increase of nearly 30% compared to the same period in 2025. This surge reflects growing corporate emphasis on diversified business strategies and risk mitigation in the face of complex and volatile market conditions.

So, why are mainland companies choosing to relocate to Hong Kong? And how can they smoothly complete this transformation?

I. Why Choose Hong Kong as the Destination for Transformation?

Firstly, Hong Kong is one of the world’s most competitive financial centers, boasting a mature legal system and favorable tax policies. According to the Inland Revenue Department of Hong Kong, the profits tax rate is 16.5%, significantly lower than in many other jurisdictions. Moreover, there is no value-added tax VAT or capital gains tax, further enhancing its appeal. Hong Kong adopts a territorial principle of taxation-only income derived within Hong Kong is subject to tax-making it especially attractive for companies engaged in cross-border operations.

Secondly, Hong Kong's high level of internationalization-with systems aligned with global standards in language, law, and accounting-facilitates overseas market expansion. For mainland companies eyeing Southeast Asia, Europe, and North America, Hong Kong serves as an ideal gateway.

Thirdly, some mainland firms have encountered challenges in financing and foreign exchange controls. Hong Kong, by contrast, offers a freer financial environment. Companies can raise capital through IPOs on the Hong Kong Stock Exchange or issue bonds, and enjoy greater flexibility in managing cross-border capital flows.

II. Migration Paths and Operational Procedures

While relocating to Hong Kong offers numerous advantages, the process must be carefully planned to ensure full compliance with regulations.

There are typically three main approaches for mainland companies looking to migrate

1. Establishing a Hong Kong Subsidiary or Holding Company

This is the most common method. A mainland parent company can set up a wholly-owned subsidiary or holding company in Hong Kong and gradually transfer existing operations under the new structure. This approach allows for a smooth transition while maintaining the original business base in mainland China.

2. Direct Registration as an Offshore Entity with Headquarters Relocation

Some tech-driven or asset-light companies may choose to directly incorporate in Hong Kong and shift headquarters functions there. This works well for businesses whose operations are not geographically dependent. However, attention must be paid to tax arrangements, employee transfers, and intellectual property rights during the transition.

3. Structural Changes Through Mergers or Acquisitions

Larger enterprises may opt to acquire an existing Hong Kong company or merge with a local firm. This enables quicker access to local credentials and market recognition but involves complex legal reviews and integration efforts.

Regardless of the chosen path, companies should conduct a thorough assessment of their business characteristics, financial status, and long-term strategic goals. Consulting legal advisors, accountants, and other professionals to develop a detailed migration plan is essential.

III. Common Challenges and Practical Solutions

During the relocation process, mainland companies often encounter several key issues

1. Tax Planning and Compliance

Differences in tax systems between mainland China and Hong Kong require careful planning. For example, companies may need to address historical profit distributions and potential transfer taxes. Collaborating with professional tax consultants to design an optimal transaction structure can help minimize unnecessary tax burdens.

2. Capital Outflow and Foreign Exchange Controls

Despite regulatory scrutiny over outbound capital flows from China, companies can still proceed legally by preparing necessary documents such as commercial filings, NDRC approvals, and SAFE registrations in advance.

3. Legal and Contractual Adjustments

Following relocation, the legal identity of the company changes, requiring contracts with clients and suppliers to be renegotiated or supplemented. Intellectual property rights, trademarks, and other intangible assets must also be reassigned to avoid operational disruptions.

4. Human Resource Arrangements

If core teams or management intend to move to Hong Kong, visa applications, salary structures, and social security contributions must comply with local labor laws. Given the strict employment regulations in Hong Kong, HR planning must prioritize legal compliance.

IV. Case Study and Insights

Take the example of a major mainland cross-border e-commerce company that completed its migration to Hong Kong by the end of 2025. The company adopted a strategy involving the establishment of a holding company followed by a gradual transfer of business units. It first set up a holding entity in Hong Kong, then progressively moved its brand, supply chain, and overseas sales divisions into the new framework, eventually achieving its goal of going public.

The entire process took about eight months and involved support from multiple professional firms including law firms, accounting firms, and investment banks. This case demonstrates that successful migration requires not only clear strategic planning but also efficient execution and expert external support.

Conclusion

Against the backdrop of globalization and regional economic integration, the relocation of mainland enterprises to Hong Kong has become a notable trend. This movement represents both a natural step in corporate development and a pragmatic response to global uncertainties. However, migration is not a simple task-it involves comprehensive considerations across legal, tax, financial, and human resource domains.

Only through scientific planning and steady implementation can companies truly achieve a sustainable and successful transformation-from simply going global to staying global.