Company from Hong Kong vs China

People are curious if companies from Hong Kong have the same rights to operate in China as, for example, companies registered in Beijing or Shanghai. The answer is short: No. Hong Kong, even though it is controlled by China, is a SAR (Special Administrative Region), and it has a separate legal, economic, and monetary (Hong Kong Dollar) system.

Why are there Hong Kong-based companies?

Hong Kong has the highest level of economic freedom in the world, which makes registering a company there much simpler than in China (China is barely at position no. 116). Although the difference seems obvious, those who source from China often treat HK and China as one. This is a mistake and can lead to negative consequences. Hong Kong companies are not entitled to transfer goods from mainland China, as well as trade in mainland China.

Hong Kong companies disguised as Chinese

Unfortunately, scammers often set up companies in Hong Kong with the same names as companies from the People’s Republic of China. They also use the same bank accounts as such companies, and they wheedle money out of unsuspecting foreigners (it is even more difficult to get back swindled money from Hong Kong than from ChinHK law will apply if. If you have a dispute with a Hong Kong-based company.

How not to fall into the trap?

If a Chinese company has a subsidiary in HK, then you should investigate actual capital ties between them. It is worth asking the company for both registration licenses. You should also confirm that the company has a valid registration.

Unfortunately, many companies from HK are registered by scammers. Often they declare that they are a large manufacturer on the website (for example, an e-cigarettes supplier from China), but after checking the documents, it turns out that they don’t even have a physical address but only a post office box (this method of registration is popular in HK).

Do not become paranoid when dealing with Hong Kong; just be careful.

In conclusion, if you are dealing with a company from Hong Kong, be aware that this is not a company registered in China. You should also check the links between the company from HK and China (if the company claims such links). You should not become paranoid upon seeing that a company is from Hong Kong, as some companies are registered there for tax or business reasons.

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