Hong Kong as a financial offshore center and home for 1.2 million companies is a vibrant place and a favorable business jurisdiction.
With 38,000 Certified Public Accountants and many Company Service Providers, the selection of a partner is complicated : many of the Hong Kong providers are facing challenges and are transforming their business models due to the numerous changes of laws and regulations happening worldwide.
More than never, you need an experimented team
Opening a bank account became a professional process requiring an experimented team, few banks only are accepting non-residents and they developed a very inquisitive process to be in line with the recent Anti-Money laundering laws and regulations.
Advising foreigners for their Hong Kong establishment pre-suppose a good understanding of their business models and cultural differences, an expertise with the bank account opening process and a good network are a must.
The Hong Kong industry players in front of so much changes firstly reacted with a limitation of services, the due diligence process to accept a nominee director position is a long process and many providers decided to not act anymore as directors or nominee shareholder for their clients.
Two years ago it wasn’t an absolute necessity to prepare a compliance file for a bank account opening, Hong Kong company service providers we merely organizing a bank meeting with a short list of documents, the same are facing Today the rejection of the bank account opening for their clients.
The first line of bank employees is undertrained and mistake worried, their tick in the box process and a total absence of understanding about the business models they come across during their interviews is creating a total mess, now the bank account opening waiting time is often superior to 3 weeks.
The services providers didn’t reacted well to this evolution : instead of hiring and training better team members they remained on a denial phase.
Going out of business instead of adapting, this is quite an Asian way of doing business and you could realize this when factories are closing during Chinese New Year.
European approach in Asia : The perfect mix
In Europe the business approach is totally different, luxury brands are requesting patience, creativity, investments and you have to adapt your products and positioning, right? Give me the name of 3 luxury Chinese’s brands …
So many Hong Kong company service providers are turning to the new Eldorado of the IP protection, registering brands at low cost and abandoning the bank account opening assistance.
Everybody should be happy of this voluntary exodus from the industry, when the low levels of services aren’t sufficient the real professionals are harvesting the results of their continuous investments.
The bank factor is the most important, but tax position should also be considered carefully. In the past, the offshore status wasn’t often challenged this also changed the last two years.
Hong-Kong and low tax impact
All about Hong Kong company services providers. Understanding the pressure of European clients is challenging, bad advices self-centered on Asian solutions are harmful. Hong Kong is still well placed to channel purchases and sales with low tax impact.
To avoid misunderstandings, the tax situation should integrate the specific pressure of an entrepreneur in his tax residence country and as a matter of fact his local tax advisor is often reluctant to support a legitimate internationalization of the business.
It would be incorrect to mention the poor level of competences in Hong Kong without also mentioning the same in Europe where many tax advisors are now considering themselves tax collectors. This European faculty of adaption went a little bit too far.
Business transformation and Hong-Kong advantages
The business transformation is profound and the offshore industry will have to re-invent, in the upcoming few years the tax substance will be the most important factor and this instead of protecting the European economy will achieve to destroy it.
The financial flow should follow the business flow, based on simple principles and with a bit of creativity coupled with a touch of “savoir-faire” the offshore business will remain an efficient way to grow and protect the business.
Obviously such a new approach is requesting highly trained team members spending time on continuously learning about the new laws and regulations, searching for loopholes and asserting their clients positions. We could note the mergers and acquisitions within the offshore services providers.
Although this concentration of forces is inevitable I remain cautious towards the efficiency of such, big is not always beautiful and the pressure is so high that in few groups nobody is willing to agree on a solution for a client.
Independence and freedom of speech, creativity and flexibility should remain the assets of a good advisor.
We are continuously learning for you and your offshore company
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