Setting up a company and immigrating to HK

Closed Thread
Page 1 of 3 1 2 3 LastLast
  1. #1

    Join Date
    Aug 2009
    Posts
    8

    Cool Setting up a company and immigrating to HK

    Hi everybody,

    I plan to set up a company in HK. This company would take advantage of the low cost of China R&D to develop electronic products for european companies.

    I have a lot of experience in R&D and contacts in european industry and really think there is an opportunity there.

    Questions for you:

    1. Any comments on the idea itself?
    2. Is it a good idea to set up a company in HK to supervise development work in Shenzhen? (I would rather live in HK!)
    3. I hear setting up a company is quite easy, any recommendation on the type of company for this service?
    4. I've read some service companies need to have operated for three years or more to have tax advanges with mainland business. Not really important, 'cause my business would be targeted to european companies, but...
    5. I have a valid multiple entry visa to China, but no work permit. What should I do? I'm not rich, so the Capital Invesment Scheme is not an option.
    6. Any good MBA school there? May be a good starter point...

    Thank you guys,

    - Huanco


  2. #2

    Join Date
    Jun 2009
    Location
    Darkside
    Posts
    1,589

    I know very little about electronics so these comments are general based upon my experience in products in the industries I operate in & I have companies in HK and China:

    1) Not sure but I know there are several companies already doing this. In my experience Chinese R&D is copying and derivatives of existing technology.
    2) Have you any experience at all of managing / directing Chinese staff or doing business with Chinese companies? Any trusted partners in China you would risk your shirt dealing with?
    3) It is very easy to set up a company in HK - I used a local solicitor to do it for me and the costs were a couple of grand HK$.
    4) You need to get specialist Chinese tax advice - HK TDC is a usual place to start chatting imho.
    5) But I thought you wanted to live in HK so why be bothered about a work permit in China?
    6) Now you are talking about an MBA school - what's that to do with R&D sourcing electronic products for Europe?

    I haven't a clue what your experience in even sourcing products from China is but personally if you are 'not rich' as you say then you are taking a big risk as suppliers in China aren't going to do R&D for free so what's going to fund that?


  3. #3

    Join Date
    Aug 2009
    Posts
    8

    Hi Load Toad,

    Thanks for the insights. I'll try to give some more info...

    1. Yes, of course, in a quick search I found a few and I'm sure there are more. Doesn't it mean that it is a good idea? The question is, can I deliver something different and more value than everybody else I've seen? I think I can, at least in my field of expertise.
    2. Really little experience with Chinese staff, I'm trying to fix that right now and I'm sure I'll need good local staff to help me out. But the point is, most European companies don't have it either, at least I'll be much closer and learning fast. I'm sure there are big and sophisticated Chinese companies that don't need somebody like me in the middle, but I do know there are thousands of extremely capable Chinese companies that just don't have a way to reach that market convincingly just yet. I can help there. Question: is a local partner needed in HK? I heard it is a must in China.
    5. Sorry, a misunderstanding here, I want to set up a company in HK and live in HK. The work permit should be for HK. How do I get it? Any experience doing it this way? Is it hard?
    6. Well, some business management knowledge might come handy while trying to make money. I know a lot about electronics, managing R&D people, product managment, marketing, the works... and I'm pretty sure I can handle a company (cocky, I know), but I believe in learning from somebody else's experience...

    My business would not be to fund the product development. Somebody else should be willing to do that. I would help finding the right Chinese company and managing the project. "Let's make it happen" will be my motto. Sounds good? Why would somebody do that? Well, I could help them cut product development costs an whooping 80% and they will be seeing a face they know (and I hope trust).

    I do have enough money to fund my own product development, but i don't have a commercial network to sell it, so why bother? I might do it if I see a chance and find a network to distribute it, but that would be another story. However, by 'not rich' I mean I don't have the 600.000+ USD in capital investment required for a capital investment scheme visa. In another thread I read about a different possibility that required a business plan, will this apply here?

    Thanks again.


  4. #4

    Join Date
    Apr 2004
    Location
    hong kong
    Posts
    3,484

    1) Naive but a usual thought.
    Its achievable but only after a great deal of understanding and research by yourself, a GREAT legal team, A GREAT and trustworthy partner in China, a complete expectation in getting ripped off and the have the financial security to expect to lose ALL your investment and still be able to live comfortably.

    If you can handle all that --- then proceed to 2.

    2) Good to set up a base here as its easy to come and go.
    FYI - Southern China is expensive and you should look at ALL China.
    Do not think you can sit in HK and have a nice little man do what you want in Shenzhen. Invariably won't happen. The ONLY effective R&D is done through universities or multi nationals with their own teams in place to oversee. China is not recognised for its ability to be inventive or innovative. They will always tell you " no problem " as there really is no direct Chinese word for " NO " . Rather it translates " not yes " which of course is wooly, as are China companies promising everything and invariably falling short of reasonable expectations. UNLESS instructed by Asian experienced management.

    If it was me I would search out HK companies that have existing ops in China and have a chance of achieving what you need, in some manner. It will not be as cheap but will give you valuable experience and a toe in the door. Also expenses are down to them and you can manage your budget more effectively. In addition a contract written here has a meaning. Over the border - not so much.


    3) Yes - Ltd

    4) Your not in that position yet and things change month by month here as HKG and Beijing engage more in knee jerk management rather than thoughtful forward planning. You should not concern yourself with it.

    5) You would not need a Z visa unless you where going to be resident in China. an F visa of two years multi entry would be more than sufficient BUT get it in your passport before you come here.

    6) Not my area of expertise.


    As I have set up businesses myself in China would be glad to help anytime if I can after you get here. Trading experience is different from factory management and is NOT for the faint hearted OR for anyone that believes China will act in the same " civilised " way as US or European countries.

    The basic understanding here is China for the Chinese and they will strip an unwary soul quicker than a shoal of Amazonian Piranha.


    Quote Originally Posted by huanco:
    Hi everybody,

    I plan to set up a company in HK. This company would take advantage of the low cost of China R&D to develop electronic products for european companies.

    I have a lot of experience in R&D and contacts in european industry and really think there is an opportunity there.

    Questions for you:

    1. Any comments on the idea itself?
    2. Is it a good idea to set up a company in HK to supervise development work in Shenzhen? (I would rather live in HK!)
    3. I hear setting up a company is quite easy, any recommendation on the type of company for this service?
    4. I've read some service companies need to have operated for three years or more to have tax advanges with mainland business. Not really important, 'cause my business would be targeted to european companies, but...
    5. I have a valid multiple entry visa to China, but no work permit. What should I do? I'm not rich, so the Capital Invesment Scheme is not an option.
    6. Any good MBA school there? May be a good starter point...

    Thank you guys,

    - Huanco

  5. #5

    Join Date
    Jun 2009
    Location
    Darkside
    Posts
    1,589

    Huanco,
    If you don't have a distribution route for the product, don't have a Chinese partner you can trust, don't have enough money to fund the R&D you say will be your unique selling point then no motto in the world mate is going to be enough.
    At the moment I don't understand how your idea is going to make money - and if I don't understand then you can bet that you need to think things through a lot more before you proceed.

    This 'saving 80%' and the thought that you have a 'good idea' I'd say:
    - You are going to have to explain why you are saving 80% and quantify it. Where does that come from?
    - Your idea as I understand it is very common - don't underestimate how hard it is to differentiate your idea especially when you are Billy-No-Name and a pretty much a one man band. Good EU customers don't take risks - so you need to know who your customers are going to be.


    If you are not already in HK - or anyway if you are - I think you need to first take some of your ideas to an existing HK company and get some experience working in HK and especially working with Chinese in China.


  6. #6

    Join Date
    Apr 2004
    Location
    hong kong
    Posts
    3,484
    My business would not be to fund the product development. Somebody else should be willing to do that. I would help finding the right Chinese company and managing the project. "Let's make it happen" will be my motto. Sounds good? Why would somebody do that? Well, I could help them cut product development costs an whooping 80% and they will be seeing a face they know (and I hope trust).

    Man goes into a casino. Picks a person at random and say " I want to win at roulette . Give me your money and I will play it for you ". If you where that man -- would you give him the money ?

    On the part of cutting costs by 80%.
    That just shows how naive you are. Yes there are cost savings in China but 80% on the product development side based on an statement by someone with acknowledged ZERO experience ?

    There are people here, who would help others get through the problems here, based upon real experiences. We have no time for dreamers I'm afraid and someone would states he would NOT fund their own products development, even though he has the ability to do so, is going to get shown the door VERY quickly.

    My advise, based upon the extra info you give. Save your money, book an expensive hotel on some desert island and tell your story to the barman. Barmen show sympathy to anyone. Its not the same here.

  7. #7

    Join Date
    Jun 2009
    Posts
    107

    All the best starting your business. I did it here in HK and it was very very easy. As long as you have a good lawyer and accountant you will be fine. Tax is exceptionally low here and due to no import/export tax you are pretty much in good hands here.

    I know alot of people who have their factories in China and frequently visit 1-2 a week. if you are just starting out, alot of factories will offer their services. There is a massive expo at Asia World expo usually round Sept that does IT products and they are great to deal with.

    Personally - set it up in HK, get the products made in China, and send them from HK.


  8. #8

    Join Date
    May 2005
    Location
    Sai Kung
    Posts
    4,151

    Some great advice here from Load Toad and Boris - I'll chip in as I am involved in this area myself. But a little true story to give you something to think about.

    A western designer / engineer is involved in development in US and part of his brief is to work with factories in China for production. He talks many times with an HK owned factory and together they decide to set up a company in HK to do innovative R&D. The HK company has been in business over 50 years and in China for 25, is a cash cow and runs well. So the financials are there BUT part of this will mean using designers and engineers in China for development. This is where it starts to fall apart. The westerner sees himself as god and can't understand why the Chinese counterparts work how they do. He frequently shouts and screams - not wanting to understand how things are done. A few years later the company has put out only 2 products (fee for service as you are looking at) and is still running at a huge loss.

    My own company as two main areas, product development and sourcing. Product development we do for customers but there is no way you will ever save 80%. Longer development times, lack of innovation and a different culture add costs. Good EE's are thin on the ground. You want good engineers then you have to pay more. You have to adapt, people will not adapt for you! Good development in China costs money - it's not cheap or as cheap as you think.

    Sourcing is not as easy as it sounds. For every good factory in China there are 5 bad. I sometimes get asked to source a particular product or to search for a factory for OEM production. This is time consuming and sometimes frustrating. Finding new products and putting them to market is not easy either due to a lack of innovation. Occasionally you find a diamond in the rough.

    So for PD, well everyone comes here thinking they can give the market something it doesn't have. Usually this translates into giving the market something it doesn't want! Remember your business management knowledge works where you are and is not directly transferable to China. China is harsh, you have to be a person who can easily adapt and be willing to change your mindset.

    One final point, and one that Boris made well. Don't think you'll be able to sit in HK and just let things happen in China. Don't think that you can live in HK and just be fine popping over the border to SZ. You will need to look all over China. I used to cross to SZ weekly, now most of my trips into China are by air to some far off place. Factor this in as a cost as well as it's not cheap.


  9. #9

    Join Date
    Jun 2009
    Location
    Darkside
    Posts
    1,589

    The other things is the idea of saving some company (in EU) R&D cost. If they have R&D and you offer to do it for them - even if they are interested they still have an R&D dept and even if you were f' brilliant they'd still be left with the cost of that dept and the costs of shutting it down. And then there is the intellectual property rights issues. And as other posters have said - at the moment you are asking people to fund your big adventure with no guarantee of anything working.
    Then - you actually have to develop products which will shift off shelves. That isn't the same as actually doing R&D.
    There are many people sourcing from China - I travel into China a couple of times a week to S.China and every couple of weeks or so into other areas for several days - and that is with me having a trusted partner and staff in China. Most of the people I know who work sourcing from China for western markets live in China all the time and travel extensively (and complain bitterly about their lot).

    Having a company in HK and buying tat to sell through and established distribution chain is easier - but everyone is doing that so once again - you have be good.


  10. #10

    Join Date
    Aug 2009
    Posts
    8

    Wow, thanks everybody for the advice and healthy criticism (keep it coming, please). I will certainly have it in mind. One further question, if you would bear with me:

    I'm actually beginning to do this job for my current employer. After looking for a European design house, the development costs drove me away and got me to Shenzhen, where I located a company with experience in the product and willing to do it for 10 to 20 times less. This company was located through a Chinese friend of a friend, who is more than willing to be the interface. He seems to have the experience to handle it too and we have been dealing with him for a few months with great results. The design job is not easy and the time schedule is quite short actually.

    How would you handle this? Anything I should be aware working with a small Chinese design company?

    Thanks again for taking your time to help.


Closed Thread
Page 1 of 3 1 2 3 LastLast