CASE STUDY: HOW WE CHOSE HONG KONG FOR A CHINESE IMPORT COMPANY

INITIAL SITUATION

We were approached by a client, an entrepreneur, planning to import goods from China to the CIS and Europe. The main objective was to select the optimal jurisdiction for company registration, allowing them to work with Chinese suppliers, receive payments from international buyers, and minimize tax and reporting costs. The client initially planned to establish a company in mainland China, believing this would provide direct access to Chinese counterparties and banks. However, after detailed analysis, it became clear that a mainland structure is not always advantageous for trading operations where the goods are not sold in China’s domestic market. As a result, we came to the following conclusion: a Hong Kong company, which combines legal reliability, a low tax burden, and flexibility in international transactions, was the optimal solution.

STAGE 1. ANALYSIS OF THE CHINESE COMPANY

What we covered:

• Taxes and administrative costs in mainland China;
• Registration process and requirements for founders;
• Accounting and tax reporting.

Key points:

• Corporate tax: 25% (may be reduced to 15% for small businesses, but not always applicable);
• VAT: 13% – even if the goods are exported, VAT refunds require complex procedures and export licenses;
• Dividend tax upon repatriation: 10%
• Accounting and auditing: mandatory monthly reporting, tax returns, annual audit, local accounting standards.
• Foreign director: requires notarized documents, registration with the Chamber of Commerce and Industry, and a local address.
• Currency control regulations – exporting profits abroad requires permits and approvals.

Conclusion: For a company that buys goods in China but does not sell them on the domestic market, maintaining a Chinese company is excessively expensive and bureaucratic.

STAGE 2. ANALYSIS OF SUPPLY ROUTE AND TAX RISKS

The client purchases products from Chinese factories, but the goods are shipped directly abroad, bypassing the Chinese domestic market. We’ve clarified the logistics:

• The goods are shipped from a warehouse in Shenzhen or Guangzhou;
• then they are shipped directly to Europe;
• they don’t physically cross the border in Hong Kong (i.e., they aren’t stored or cleared through customs).

This allowed Hong Kong to be considered a trading jurisdiction, since in this case, according to Hong Kong tax legislation, profits received from sources outside Hong Kong are not taxed (offshore tax exemption).

STEP 3. CHOOSING A HONG KONG STRUCTURE

Advantages of a Hong Kong company:

• Profit tax: 8.25% (up to HKD 2 million), then 16.5%, but only on income from Hong Kong sources;
• Offshore status option: upon confirmation that operations are conducted outside of Hong Kong, profit tax is 0%;
• When exporting goods, the tax is 0%;
• No VAT, import/export taxes, dividend or capital gains taxes, or export duties;
• Transparent corporate law; auditing is mandatory, but the procedure is simple;
• Ease of interaction with international counterparties.

Legal and business advantages:

• International reputation, English law.
• Simple reporting (once per year).
• Quick registration – 3–5 business days.
• Ability to work in dollars, euros, and yuan.

Registration:

• Founder – a foreign individual or legal entity;
• Secretary required (nominee service is possible);
• Share capital from 1 HKD.

Thus, the company’s source of income is outside Hong Kong. Based on the Inland Revenue Ordinance (IRD) and Offshore Tax Exemption regulations, such activities are not subject to taxation in Hong Kong.

For the client, a Hong Kong company is recognized as tax-exempt, subject to documentary evidence of the offshore nature of its transactions (contracts, logistics, invoices, and correspondence with suppliers and customers). This ensures a zero corporate tax rate and exemption from profit taxation.

STAGE 4. BANKING SOLUTIONS: OCBC WING HANG AND CHINA CONSTRUCTION BANK

After registering the company in Hong Kong and determining its offshore status, we began selecting banking instruments. The goal was to establish a convenient payment system between Chinese suppliers and international clients with minimal fees and no tax risks.

4.1. Main decision: Hong Kong company + OCBC Wing Hang Bank (OCBC)

OCBC Wing Hang Bank (Oversea-Chinese Banking Corporation) is one of Hong Kong’s most accommodating banks for foreign traders, especially those working with China.

Advantages:

• Corporate accounts can be opened for companies without a Hong Kong office (subject to contracts and logistics).
• Payments in HKD, USD, EUR, and CNY are supported.
• Compatibility with fintech services (Airwallex, Statrys, Currenxie).
• Simplified compliance for companies registered in Hong Kong but operating outside the country.

Account opening procedure:

• Preliminary application online through the OCBC Wing Hang corporate portal.
• Submission of the following documents:

1. Certificate of Incorporation and Business Registration;
2. Passport and proof of address of the director/founder;
3. Contracts with Chinese factories and foreign buyers;
4. Confirmation of delivery route (logistics plan, invoices).
5. Interview with a bank manager (online or in person).

• Application review — 7-10 business days.

OCBC Wing Hang Fees (as of 2025):

• Account Opening: Free
• Monthly Maintenance: HKD 150 (0 for average balances > HKD 50,000)
• Outgoing SWIFT Transfer: HKD 120–200
• Incoming International Payment: HKD 0–50
• Currency Conversion: 0.25–0.35% of the amount
• CNY Service: Yes, directly through the CN system (CNAPS)

Feature: OCBC Wing Hang allows you to make payments in yuan without opening a mainland account, which is especially convenient for imports from China.

4.2. Additional solution: China Construction Bank (Asia) + subsidiary account in mainland China

China Construction Bank (CCB) is one of the largest banks in China, represented in Hong Kong as CCB (Asia). For companies working with Chinese suppliers, the bank offers linked accounts, a main account in Hong Kong (for international payments) and a subsidiary account in CCB’s mainland branch (for renminbi payments).

Advantages:

• Fast transfers between the mainland and Hong Kong (CCB’s domestic network, no SWIFT fees).
• Ability to pay suppliers directly in RMB.
• High reliability and support for large international trade transactions.
• English-language online banking interface.

Opening procedure:

• Submit an online application to CCB Asia.
• Preliminary approval of the business model (confirmation that the company is registered in Hong Kong and has Chinese suppliers).
• Submit a similar set of documents to OCBC Wing Hang. Interview (Zoom or in the Hong Kong/Shenzhen office).

Processing time: 10–14 business days.

CCB Fees (Asia):

• Monthly service: 150 HKD (free for active transactions)
• Transfers to China via CCB Mainland: 0–30 HKD
• SWIFT transfers 120–160 HKD
• Currency exchange: 0.3%
• HKD ⇄ CNY conversion: instant, at the domestic exchange rate

Feature: CCB offers the option of opening a subsidiary account on the mainland for settlements with Chinese partners. This solves the problem of Chinese suppliers only accepting payments from local banks.

4.3. Recommended calculation structure 

Hong Kong Company: Legal entity for international contracts. Offshore status, 0% tax.

OCBC Wing Hang Bank (HK):

• Main current account in HKD/USD: International transfers, convenient online banking.
• China Construction Bank (China): Sub-account for paying Chinese suppliers, direct RMB payments without SWIFT.

Airwallex: Online payment system for receiving funds, multi-currency accounts, minimal fees.

4.4 Practical logic of the scheme

International clients pay invoices to a multi-currency account with Airwallex or OCBC Wing Hang.

They have multi-currency accounts and accept payments in dollars, euros, and yuan.

Suppliers in China receive payments in local currency without delays or exchange rate restrictions.

Profits are accumulated in a Hong Kong account and, as offshore, are tax-exempt.

4.5. Summary of the banking decision

The “Hong Kong Company + OCBC Wing Hang (HK) + CCB (China) + Airwallex” model provides:

• Flexibility and reliability of payments,
• minimal fees,
• direct integration with Chinese banks,
• maintaining offshore tax status.

Result: the client has complete control over financial flows, while the company’s profits are not taxed in Hong Kong, and suppliers in China receive payments through local channels without restrictions.

AIRWALLEX – FINANCIAL TECHNOLOGICAL ADDITION

After reviewing all options, the client was offered the option to additionally connect to the Airwallex payment service. This fintech service is registered in Hong Kong and holds financial activity licenses, supporting multi-currency accounts and virtual IBANs in over 30 countries.

Airwallex advantages:

• Accounts can be held in USD, EUR, GBP, CNY, and HKD;
• Accept payments from customers in Europe, the US, and Asia;
• Direct transfers to suppliers in China in RMB;
• Commission for international transfers starts at 0.2%;
• Integration with Shopify, Amazon, Payoneer, and others;
• Full online support and account setup in 2–3 business days.

STAGE 5. RESULTS AND RECOMMENDATIONS

Chinese company: direct work with local suppliers, high taxes, complex reporting, long VAT refund process

Hong Kong company: zero tax with offshore status, easy registration, international recognition, difficulties opening a bank account

Hybrid model (Hong Kong + fintech): flexibility, transparency, tax optimization, ease of maintenance; requires setting up document flow between accounts.

STAGE 6.  RESULTS

Three weeks after the project’s launch:

• The company was registered in Hong Kong.
• A business registration certificate and IRD tax identification number were obtained.
• An Airwallex fintech account was connected (HKD, USD, CNY).
• Direct payments to Chinese factories were established.
• Contracts with Chinese suppliers have been signed and trading activities have begun.
• The client receives payments from overseas buyers to an account held in a Hong Kong company and pays suppliers in yuan without incurring tax losses.
• Compared to the Chinese model, savings are approximately 15–20% of annual costs. Tax burden is 0% (offshore income), reporting is done once a year, and banking is completely online.

Conclusion.  For businesses purchasing goods in China and selling abroad, a Hong Kong company is the optimal solution due to its minimal tax burden, simple reporting, and flexible payments through modern fintech services. However, it’s important to work out the banking and compliance aspects in advance to avoid delays in opening accounts.

COMMENT OF LOCMAN CONSULTING

“In 2025, Hong Kong remains one of the most convenient jurisdictions for foreign economic activity with China, especially for those who don’t conduct domestic sales. The key is to properly structure the flows and confirm offshore status.”

LOCMAN CONSULTING RECOMMENDS

Before registering a company, it is important to:

• A legal and tax analysis of the product route and cash flows.
• Selecting a suitable banking infrastructure (bank or fintech).
• Preparing documents—a business plan, contracts, and logistics descriptions.

Our experience shows that a properly structured case with Hong Kong allows for legal, profitable, and efficient international trade.

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