Registering a Company in China from Hong Kong

Setting up a company in China through a Hong Kong holding company is one of the most efficient and tax-smart ways for foreign businesses to enter the Chinese market. Thanks to low setup costs, 0% tax on offshore income, and CEPA benefits, Hong Kong entities are the preferred vehicle for owning a China WFOE or JV. In this guide, we walk you through the full process, required documents, costs, timelines, tax benefits, and key compliance tips for 2025.

Can a Hong Kong Company Register a Business in China?

A Hong Kong company cannot legally operate in mainland China on its own. It’s considered a foreign entity and has no legal standing to hire local employees, lease office space, or issue local invoices.

To legally do business in China, you’ll need to set up a new company inside China. The two main options are:

• A Wholly Foreign-Owned Enterprise (WFOE) – fully owned and controlled by your foreign (or Hong Kong) company.
• A Joint Venture (JV) – formed with a local Chinese partner, usually required in restricted sectors.

If you're a Hong Kong business planning to expand into China, this step is non-negotiable: you must register a legal entity in mainland China to operate locally.

Why Use a Hong Kong Entity to Register a Company in China?

Setting up a Wholly Foreign-Owned Enterprise (WFOE) in China through a Hong Kong company is one of the smartest and most widely used strategies for foreign businesses.

Why? Because a Hong Kong company is easy to set up, tax-friendly, and well-recognized by Chinese authorities. It acts as the ideal holding company to own your China WFOE, giving you full control while keeping operations lean and compliant.

Here’s why thousands of foreign companies choose this structure:

1. Easier Approval and Compliance with Chinese Authorities

Chinese authorities are familiar with Hong Kong companies. Compared to offshore entities (like BVI or Cayman), a Hong Kong parent company often faces less scrutiny during WFOE registration.

You benefit from:

• Simpler documentation
• Faster company approval
• Better credibility with banks and local partners

2. Lower Taxes with Cross-Border Profit Structuring

Hong Kong’s corporate income tax rate is 16.5%, while China’s is 25%. By running local operations through the China WFOE and selling goods or services to the Hong Kong parent, you can optimize profits legally.

Example:

• WFOE sells at industrial cost + margin to the HK parent
• HK company sells to global customers and keeps most of the profit
• This allows you to retain higher margins in a lower-tax jurisdiction

In practice, this structure can save around USD 0.07 per dollar of goods, depending on your sector and pricing model. 

All transactions must follow proper transfer pricing rules.

3. Safer Trade and Payment Handling (Free On Board - FOB)

This structure works well for businesses that source from China and sell to global buyers.

With your Hong Kong company managing the orders and payments, you avoid:

• Storage costs in China
• Delayed payments from international customers
• Risk of customer non-payment on large custom orders

Goods can be shipped FOB (Free On Board) from China, invoiced by your HK company, making the entire supply chain cleaner and lower risk.

4. Protect Supplier Relationships and Business Confidentiality

Using your Hong Kong company as the trading layer protects your Chinese supplier details from your clients.

• Shipping documents, labels, and invoices are issued from Hong Kong
• Your clients and your suppliers only deal with your HK entity
• Neither party sees the other, avoiding potential disintermediation

This keeps your supply chain and profit structure secure and private.

5. Easier Restructuring, Share Transfers, and Exit Planning

Hong Kong allows fast and flexible business changes.

• Transferring shares or changing ownership in a Hong Kong company: ~1 week
• Doing the same in China: ~2 months, with complex procedures and approvals

By owning your WFOE through a Hong Kong company, you can handle mergers, acquisitions, or investor exits without getting stuck in China’s legal bureaucracy.

This structure gives you a clean buffer that simplifies long-term planning and investment flexibility.

Step-by-Step Process to Register a Company in China from Hong Kong

After determining the right structure — whether it's a WFOE, JV, or RO — here’s what comes next:

Step 1: Choose a Chinese Entity Name

Submit a proposed company name for approval with the local SAMR (State Administration for Market Regulation).

• Name must follow the Chinese format: [City] + [Name] + [Industry] + “Co., Ltd.”
• It should not duplicate existing entities
• You’ll receive a Name Approval Notice once accepted

Step 2: Prepare Corporate Documents in Hong Kong

Your HK company must provide core legal documents to prove its existence and authorize the China setup.

This includes:

• Certificate of Incorporation
• Articles of Association
• Board resolution approving the registration
• ID documents of directors and shareholders

All documents must be notarized in HK, then legalized by the Chinese consulate.

Step 3: Submit to Chinese Authorities

Submit the full application package to local authorities based on your chosen structure:

• WFOE or JV: Apply via SAMR + MOFCOM (if required)
• RO: File directly with SAMR and supporting departments

You’ll also need:

• A lease agreement for your registered China address
• Identification of your China legal rep and supervisor
• Detailed business scope (must match documents)

Step 4: Receive Business License

Once approved, SAMR will issue your Business License — the legal ID of your China entity.

Only after this can you:

• Sign contracts
• Hire staff
• Open local bank accounts

Step 5: Post-Registration Setup

After licensing, you must complete several setup tasks:

• Company seal registration (chop for stamping contracts)
• Tax registration with the local tax bureau
• Social insurance and housing fund accounts (if hiring)
• Bank account opening (explained in a separate section)

These steps are mandatory before operations begin.

Documents Required from Your Hong Kong Company

Here’s a checklist of what your Hong Kong entity needs to submit when registering in China:

Costs and Timeline for Registering a Chinese Company via Hong Kong

Setting up a company in China through a Hong Kong holding company offers long-term tax efficiency—but it also comes with upfront costs and a longer setup timeline. Here’s a breakdown of what to expect in 2025.

Typical Setup Costs

Costs vary depending on the entity type, business needs, and whether you're using nominee services or special zones. Below is the average cost range:

Fees usually include incorporation, document handling, government approvals, and local project management. Payment can often be split into phases.

Timeline to Full Operation

The average timeline for setting up a WFOE via Hong Kong is around 5 to 6 months. Here's how the process breaks down:

Timelines can vary depending on the region, industry, and whether remote setup or in-person verification is required.

Tax Efficiency: Direct vs. HK Holding Company Structure

Here’s how the tax burden compares when investing directly into China versus going through a Hong Kong holding company:

Why lower via Hong Kong?

Because of the China–Hong Kong Double Tax Agreement, dividends from the WFOE to the HK holding company are taxed at 5% (instead of the standard 10%), as long as the HK company owns 25% or more of the China entity. To benefit from the reduced 5% withholding tax rate under the DTA, the Hong Kong company must be the beneficial owner of the dividends. Shell companies or entities lacking substantial business activities in Hong Kong may not qualify.

Hong Kong also has no withholding tax on outbound dividends.

China–Hong Kong Tax Implications and Cross-Border Compliance

When you operate a China WFOE through a Hong Kong holding company, tax compliance becomes cross-border — but also more efficient, if structured properly.

Double Taxation Avoidance Agreement (DTA)

Thanks to the China–Hong Kong DTA, qualified Hong Kong companies benefit from reduced withholding tax on dividends from China. Instead of the standard 10%, the rate drops to 5%—as long as the HK entity holds at least 25% of the China company.

This treaty structure avoids being taxed twice on the same income and lowers your total tax burden.

How Dividends Are Treated

• In China: Dividends to foreign shareholders are subject to a 10% withholding tax (unless treaty-reduced).
• To HK Holding: With DTA relief, only 5% is withheld on dividends to the Hong Kong company.
• In Hong Kong: There is no withholding tax on outbound dividends from HK to the ultimate parent.

This structure makes it tax-efficient to move profits from China → Hong Kong → Global HQ.

Pro tip: To benefit from the DTA, make sure your HK company is considered the Beneficial Owner under Chinese tax rules. Shell companies without substance may be disqualified.

How Air Corporate Can Help You Expand from Hong Kong to China

At Air Corporate, we help foreign entrepreneurs set up and run their businesses in both Hong Kong and Mainland China. Whether you need a Hong Kong holding company or a China WFOE, our team handles the full process—from incorporation to tax and banking.

We make sure your China operations are fully legal, compliant, and tax-optimized.