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How to verify Hongkong Offshore Company
A late happy Chinese new year to all regular and new visiters of chinawhy.net, wish you a happy and prosperous new year ahead. I went back to South China to celebrate the lunar new year with my parents, brother and nephew during the long vocation. Family reunion, delicious South China food, splendid firework on new year’s eve, New year holiday is always too short…
I guess many of you have come across Hongkong-based companies that have address and contact info in mainland China only(mostly in Shenzhen or somewhere else in Guangdong Province), they are Hongkong-base offshore company.
The reason for people in southern China to set up companies in Hongkong mainly are: 1) Hongkong is tax heaven so many companies set up companies in Hongkong to avoid tax; 2) Hongkong have loose company registration regulation compared with mainland China so it is easy for many individual to set up a shell company there. The cost for setting up an offshore company in Hongkong is around RMB10000.
The danger for dealing with an offshore/shell company in Hongkong is that they don’t have a physical presence there in Hongkong, in that case, if any dispute arises from the transaction, you will have nobody/entity to make remedy against in Hongkong, meanwhile you are also not protected in mainland China as you are dealing with a company in Hongkong.
So how can I tell if a hongkong-based company is an offshore company or a real Hongkong company? Here are some clues:
1)call their telephone number in Hongkong to see if anyone answer it(be awared that the phone might be transferred to some place in China by virtual office service provider in Hongkong);
2)visit their address in Hongkong if you can, that is always the best way to tell the shell company, make sure you visit them secretly as virtual office service provider also provide temporary office for those shell company.
3)Mostly they have a company account(which is positive as I mentioned in other company verification articles), but they open account in small foreign bank. State-run banks like Bank of China, Commercial and Industrial Bank of China, China Construction Bank, Agricultural Bank of China are very strict in opening company account. In mainland China, a company account in state-run banks are way safer if you are going to pursue your rights in mainland China.
4) check the company name with The Cyber Search Centre of the Integrated Companies Registry Information System at http://www.icris.cr.gov.hk/csci/,
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