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The HKTDC turned 50 Years Old during 2016 and Meridian Partners was selected as one of 50 companies to share our thoughts. It was a real honour to be selected and very inspiring to be part of the event.
Click the article on the left to enlarge and read more, and also watch the video below
There are various trading structures available, but is your structure the right one for your business?
This innovative import export trading structure has been largely under-utilized amongst SMEs around the world that conduct international business. Ever wonder why so many large organizations set up a sourcing office in Hong Kong or other parts of Asia?
Not only is it because of its Asian office proximity to suppliers to achieve operational efficiencies, to a large extent, it is due to the fact that one may benefit from significant cost effectiveness.
Say if you are a French SME importing consumer goods from China. By setting up a Hong Kong company, you can use the HK company to purchase goods from China and sell the same to your parent company in France or directly to customers around the world. Goods do not need to come to Hong Kong but remain to be shipped directly from China to France or wherever the customer is. The HK company will be responsible for receiving a purchase order from the parent company/customer and placing order to factories; issuing invoice; receiving payment from the customer and making payment to the vendor and so forth.
With today’s advanced technology where so many businesses are well supported by internet, a foreign business can have their own Hong Kong company without the need to hire local staff or rent a physical office in Hong Kong as all back office functions of the HK company can be fully supported by a local service provider.
So what are the merits of this kind of import export trading structure? To name a few:
Nowadays where even banking can go virtual, why not consider using your own Hong Kong company to conduct international business on virtual basis?
The Federal Reserve left interest rate unchanged after its January 30th, 2019 meeting and there was no mentioning of future rate trend. What does it imply?
Since the global financial crisis back in 2008, I was expecting at least 10 years low interest rate environment but it seems that I am slightly wrong. It is going to be longer. Global economy, very much unlike in the past where it is primarily driven by and predicted via analysis of economic data and fundamentals, nowadays one doesn’t really have to do much serious hard data analysis because much of it is now driven and affected by the country head as to what they “feel” like to do.
Things have changed so much in the recent years. Look at the China/US trade war. The arrest of Huawei CFO Meng Wanzhou. The launch of 5G technology. All these couldn’t be pure coincidence that they all happen around the same time. Politics and business are not independent but are highly interrelated. China in the last two decades have been growing so rapidly that it has attracted a lot of negative attention worldwide. US has been repeatedly blaming China that they have been stealing intellectual property from them. I am not saying that that could not happen but if that is the case, just prove it and bring it to court. The sarcastic thing is, there are so many IP lawsuits going on. The one concluded in the Fuzhou Intermediate People’s Court in China last month ruled in favor of Qualcomm over Apple in two patent infringement lawsuits. We are talking about two US companies!
Nowadays, large businesses are more prone to political and other unforeseen risk in addition to the challenge they have to face in running a viable business in this highly competitive business environment. A few good examples. Major global banks such as HSBC, Standard Chartered, Credit Suisse, Barclays, etc. were sued (some repeatedly) for either facilitating money-laundering or terrorist financing activities or engaged in some form of misconduct such as the sale of residential mortgage-back securities back in the 2008 financial crisis. Many of these lawsuits ended up paying large sum of money to the US authorities for settlement. The thing which puzzles me all the times is that why the hefty settlement money always goes to the same one party? Isn’t the civilian the one who has been suffering as a consequence to all these incidents? Why authorities in other countries rarely receive this kind of compensation?
Conclusion is, if one were to invest nowadays, don’t go for those global companies. The higher profile they have, the riskier they are.