International Business Startup: Foreign Registration & Business Incorporation in Hong Kong or Singapore?

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Businesses in Texas that are expanding or starting business in Asia often ask me where they should locate their Asian business startup – Hong Kong or Singapore? The answer requires some practical business considerations and legal considerations you should discuss with an international attorney in Texas. Generally, I’m partial to Singapore because of its culture, law, and governance. However, in some cases, registering a Texas business in Hong Kong, or incorporating a business in Hong Kong can be less expensive and can provide other strategic advantages and business opportunities.

Where to Register a Foreign Business or Corporation in Asia

If a company in Texas will do business in a specific Asian country, it’s best practice (and generally required, legally) to register a Texas business or to incorporate a business in that country. If your Texas business has team members or strategic partners in Hong Kong or Singapore, it may be advantageous to register a Texas company or incorporate a company there. Otherwise the question may turn on language issues, access to resources and markets, political issues, legal and liability considerations, and ultimately, the cost to register a Texas business or incorporate a business in Asia.

Singapore and Hong Kong are both Commonwealth law countries with similar legal foundations and a dominant Chinese culture. However, business and business law in Singapore and Hong Kong are different in important respects, making it important to engage a Texas international lawyer to help you choose between competing values and risks for your business startup.

Pros to Registering or Incorporating a Business in Singapore

Nearly everyone in Singapore speaks English, unlike Hong Kong. It’s hailed as the most efficient place in the world to do business and very welcoming to expats and international business. Singapore is a long established hub and port of Southeast Asia, with ample foreign reserves, and its dollar is tied in 1:1 exchange with the Brunei dollar (the 3rd largest oil producer in Southeast Asia), contributing to the stability of its currency and economy. Additionally, Singapore has some of the best young talent in Asia at a very low cost because of its “brain drain” policy that attracts and retains top individuals from around Asia.

Singapore also has actively modernized its law over the last decades, creating better security and risk management for businesses, and reducing legal costs in many cases (although not necessarily for business startup or business incorporation). Hong Kong, by contrast, still has antiquated laws “on the books” passed down from England long ago. Law doesn’t actually happen from the books in Hong Kong – law in Hong Kong is a living creature that is negotiated between expensive lawyers. If your business faces problems down the road, you’d rather pay lawyers in Singapore to take care of the situation than pay high-dollar Hong Kong lawyers.

Pros for Registering or Incorporating a Business in Hong Kong

In some ways, Hong Kong is more “commoditized” for foreign business registration and business incorporation. Business startup in Honk Kong can be cheaper than forming a corporation or a private limited company in Singapore because you may not have to pay to have local directors and the associated director liability fees that may apply in Singapore. There are also many company incorporation businesses that offer “shelf companies” which are essentially shell corporations that have existed on paper for a number of years, just waiting to be purchased and used.

Hong Kong has the advantage of being the historical bridge between business and finance of the west into and out of China. Thus, while Hong Kong lawyers are relatively expensive, they are very good at navigating a very complex environment, and may offer important strategic or political advantages to your company.

Expanding a Texas business into Asia or starting business in Asia requires strategic business planning and business law strategy. Our Texas international business law firm regularly counsels clients regarding international law issues and international business formation. Contact our Texas law firm today to talk with a Texas international lawyer about your foreign business startup.

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