Corporate re-structuring

the following practical example shows how fiducia supports companies who need a strong partner When restructuring their business set-up in China. 

 

The issue: Re-organising a naturally-grown business structure in China and Hong Kong in order to create a sustainable set-up in the market.

 

The case: A European-based industrial supplier of products for the textile industry with different operations across China and Hong Kong (a plant, a trading WFOE and several sales offices in China as well as a dormant Hong Kong company) was looking to re-structure its production and sales set-up in China and Hong Kong in order to maximise effectiveness from a business perspective as well as compliance with all relevant legal and tax regulations.

 

The methodology: In a first step, the actual product and invoice flows between the different operations and their suppliers and customers were identified. Fiducia then analysed all regulatory details impacting the client’s actual and future business structure by conducting extensive secondary research. Based on the previous analyses, a number of optional business models were created, evaluated and compared against the current structure. This resulted in a clear strategic recommendation that Fiducia was able to give to the client.

 

The findings: An identification and comparison of the different tax and regulatory environments in Hong Kong and China as well as the client’s product and document flows led to the conclusion that the most cost effective way to manage all sales operations in the Asian market was via a Hong Kong holding company. Also, by an extensive and thorough analysis of the recently updated employment and tax laws, a clear guideline could be developed for the client as to which regulations to focus on.

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