Hong Kong is a Special Administrative Region of the People’s Republic of China. Since it has the SAR status, its legal system, including company law, differs from mainland China. Establishing a company in Hong Kong is extremely easy, which may be a downside for entrepreneurs looking for a business partner there. How to verify a Hong Kong company?
How to verify a Hong Kong company – differences between a company from Hong Kong and China
Hong Kong is one of the most advanced financial centers in the world, placing second in the Global Financial Centers Index (GFCI) ranking. Shanghai and Beijing are also in the top ten cities.
Hong Kong’s economy characteristics are low taxes, a free market, and nonintervention. Since the company law is simplified, setting up a company in Hong Kong is easier than in China and takes days, not months. In Hong Kong, income tax is up to 16.5%, and in China – up to 25% (net value).
People in mainland China and Hong Kong use different languages on a daily basis. In Hong Kong, Cantonese (written in traditional characters) and English are the most common languages; in China, it is Mandarin (written in simplified characters).
Another important difference is the currency. In Hong Kong, the currency is the Hong Kong dollar (HK$, HKD), and in China – the yuan (CNY or renminbi, RMB).
Note: If you order from China and the supplier’s bank account is registered in Hong Kong, it could be a scam. There are some risks of making transfers to Hong Kong, Vietnam, or Singapore. It may turn out that there is no link between the Hong Kong and Chinese companies, although the supplier says otherwise. In some cases, the address in Hong Kong is not even an apartment but a PO box.
Why does my Chinese supplier ship from Hong Kong?
There are not many factories in Hong Kong – its economy is based on services, not industry. Even if the company claims to be from Hong Kong, it is usually just a front office, and the production takes place outside of the city. For example, if a product is manufactured in Shenzhen and exported to Hong Kong, then the shipment is deconsolidated, and each buyer party gets their consignment. Overall, when the products are shipped from China via Hong Kong, the process is faster than if the products were to be exported directly from mainland China.
In addition, one of the world’s largest sea container ports in Hong Kong has a more extensive maritime trade network than the smaller Chinese ones. So, shipping orders via Hong Kong port is a better option since you can ship to various ports worldwide.
How to find a supplier from Hong Kong?
B2B online selling platforms make it easier for exporters and importers to establish contact and cooperate. Popular Chinese B2B marketplaces are:
HKTDC is a special case here. This platform focuses mainly on Hong Kong companies and is run by an organization promoting trade with Hong Kong. If you are going to Hong Kong to find a manufacturer, we recommend visiting a trade fair such as Global Sources (in AsiaWorld-Expo). You can apply to the Hong Kong Trade Development Council to get financial support for your business trip.
Is it worth it to verify a Hong Kong company?
Supplier verification is a tool that allows you to reduce risk in business. After having the due diligence conducted, you can get answers to questions such as:
- Is the company registered?
- What is the legal entity of the company?
- What is the scope of the company’s activity?
- Are there any legal proceedings pending against the company?
- Who is the owner of the company?
- And more.
Verify a Hong Kong company
Have you found a potential business partner in Hong Kong? Be sure to check if it is legitimate! We will prepare a report about its credibility for you within 48 hours. An expert’s opinion will help you decide whether to work with the supplier. Order your credit report now.
If your supplier from mainland China gave you payment details to an account registered in Hong Kong, check if the Chinese company and the recipient are in Hong Kong. Make sure that the transfer will be wired to a credible bank account.