China lawyers
Because of this blog, our China lawyers get a fairly steady stream of China law questions from readers, mostly via emails but occasionally via blog comments or phone calls as well. If we were to conduct research on all the questions we get asked and then comprehensively answer them, we would become overwhelmed. So we usually provide a quick general answer and, when it is easy to do so, a link or two to a blog post that provides some additional guidance. We figure we might as well post some of these on here as well, which we generally do on Fridays, like today.

One of the more common questions our international corporate lawyers often get is whether it makes sense to form a Hong Kong company before going into some other country, such as Mainland China, Thailand, Vietnam, Malaysia, etc. Actually, this oftentimes is not in the form of a question; it’s in the form of a statement, such as, “we plan to do XYZ in Vietnam and we will be forming a Hong Kong company to do so.”

Does it make sense to form a Hong Kong company before going into some other country, usually in Asia? The quick answer is that it sometimes does and sometimes does not. And when it does not make sense to do so, you absolutely do not want to do so because doing so will cost you money initially and over time. I hate to say this, but the extra money to form an extra company is why so many advisors are so quick to recommend it; forming an additional company gets them more money.

Generally, the main reason to set up a separate entity in a place like Hong Kong is to save on/defer taxes. But doing this correctly is expensive and therefore it does not usually make sense to do so unless there are real savings to be had. Oftentimes when people ask about a Hong Kong company there are literally no tax considerations at play and in those instances, having a Hong Kong company rarely makes sense.

With all of Hong Kong’s problems of late, our international corporate lawyers are now nearly always getting an additional question, that goes somewhat like this? Should I form a Hong Kong company or would I be better off forming a Singapore [or a Guernsey or a Jersey or a British Virgin Island or Cayman Island, etc.] company? Again, the answer is “it depends.”

As for Singapore versus Hong Kong, the following are the issues of the day:

Hong Kong
PROS CONS

Easy setup

Relatively cheap

Difficult to get a bank account

Political risk

 

 

Singapore
PROS CONS

Politically stable

Easy setup

Needs a local director

Relatively expensive

 

 

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Photo of Dan Harris Dan Harris

Dan is a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

He primarily represents companies doing business in emerging market countries, having spent years building and maintaining a global, professional network. 

Dan is a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

He primarily represents companies doing business in emerging market countries, having spent years building and maintaining a global, professional network.  His work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

He was named as one of only three Washington State Amazing Lawyers in International Law, is AV rated by Martindale-Hubbell Law Directory (its highest rating), is rated 10.0 by AVVO.com (also its highest rating), and is a recognized SuperLawyer.

Dan is a frequent writer and public speaker on doing business in Asia and constantly travels between the United States and Asia. He most commonly speaks on China law issues and is the lead writer of the award winning China Law Blog. Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed Dan regarding various aspects of his international law practice.

Dan is licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at his firm, Dan focuses on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.