Anyone think about setting up off shore company in China?

[Laowu]

Hello everyone

Last month, the central gov of China released a statement that after 2025, an island called Hainan will operate outside of China Customs' jurisdiction. Customs duties will apply to items entering mainland China from Hainan, while products moving in the opposite direction will count as exports. they said that Hainan will be a Free Trade Port of the world. it is like a China version of Cayman islands or BVI or Singapore, no product restrictions ,no foreign exchange restrictions at all

So as my understanding, China send a message to the world, if you have money, you want protection, and you don't trust the westen countries, you can come to me. but my concern is anyone gonna buy that?

 

[DarkRevoMan]

China already has like 20 free-zones, how is this︂ one different?

Source:

https://www.fdichina.com/blog/fdi-china-exclusive-the-21-free-trade-zones-guide/

 

[Onassis]

Probably not‌ because at the end of the day, they are still commies

 

[Laowu]

There is no official details of Hainan FTP at this moment, but‌ you can read this for more information

https://www.scmp.com/economy/china-...-trade-port-affect-greater-bay-area-and-asean
And, rumor in China says Hainan is‍ an upgrade version of Hongkong, will have all policy benifits which HK have, and Hainan⁠ is much more stable than HK, because Hainan is fullly controlled by Beijing

Not sure⁤ this plan gonna work or not, we'll see

Good point, but what⁢ if the WEST is not safe anymore, what's the next place you plan to go?︀ Dubai or Singapore? they are good but they are small and weak countries, i don't︁ think they can protect your money in all situations, China can say NO to the︂ US, no matter you are FBI or CIA or some other. small countries can't do︃ that, like Swiss, we all know that

 

[Onassis]

That is also a good point. There are options though, especially with substance.

 

[jafo]

Can you tell me more? I go to China︂ a lot.

 

[Mike Forman]

Good luck to set up an offshore in Hainan. Have you ever set up a‌ business in China and lived in China?
If you need to receive money from an‍ outside wire transfer, they require the contract between parties and each time you need to⁠ provide the invoice to the bank to be able to receive funds. Getting money out⁤ of China we wouldn't even consider to try, that's why there is Hong Kong which⁣ is still the financial gateway between China and the world.

Capital control is a serious⁢ headache and although Hong Kong is losing a part of it's charm and rule of︀ law is deteriorating, HK is still unbeatable as a financial hub. For over a decade︁ China already says it will become a financial center and take over Hong Kong. With︂ their capital control it won't happen.

Qianhai and Henqin in the greater bay area are︃ an example and definitely much more financially developed (and integrated with Hong Kong, Macau) compared︄ to Hainan. Setting up something in an economic zones only makes sense if you do︅ business in China and definitely there is a financial development, but only focused on those︆ living in China and keeping the money inside China. Substance is required as you need︇ to rent an office space which can easily cost 2000 usd a month and authorities︈ will check your office space. There are some ways around it but just as in︉ other Asian countries, you can most of the time get away with things, until you︊ aren't lucky anymore and the consequences can be very severe if you are in China︋ as a foreigner. For local Chinese they are more flexible and have less requirements.

Most wealthy Chinese people set up structures and find ways to get their money outside China,︌ this is for a reason.

 

[Laowu]

Yes, that's very true︎ at this moment in mainland China, regulations and rules kill the off shore business here.️ i am Chinese and i know exactly what you talking about

And that's why they‌ need change, Hainan is an revolutionary experiment, China wants get into the business, they want‍ people send their money to China, they want to be the financial center of the⁠ world, but China is so big. they can't open all China, so they decided just⁤ open one province to the world. in this province, you can do business like in⁣ HK or Singapore.

However like i said before, no one knows this plan gonna work⁢ or not, even some local Chinese think this is not gonna work, all we can︀ do is just keep our eye on it and see what will happen then

 

[jafo]

Mike, please‍ don't take the following as an affront...I am just trying to keep things narrowly focused⁠ for me... Are you talking here out of
(1) Personal experience or
(2) hearsay?

When you say "kill the offshore business", what exactly do you⁢ mean?

(1) Selling overseas?

(2) Something else. If something else, could you please explain?

 

[Laowu]

Hello jafo

in mainland China , you need gov approval to do almost every⁣ business, so it is NOT free at all, the bank co-operate with the gov, they⁢ ask you many papers before they can do business with you , and most important︀ is China has foreign exchange control or foreign exchange restrictions, you can NOT exchange money︁ here freely, you need explain why you need exchange and wait for approval.

so basicly,︂ mainland China is not a good place for off shore companies