Hong Kong Trading Operation
China Sourcing Rep Office with Hong Kong Holding Company
Setting up sales and after sales structure through a Representative Office
Manufacturing WFOE, Hong Kong Holding Company, Trademark Registration
and Recruitment
Waigaoqiao Trading WFOE
Joint Venture in China
Joint Venture with a Local Partner
Optimizing Cost and Restructuring of China Operations
Hong Kong Company - Outsourcing of Trading Operation
Hong Kong - Accounting, Banking and Payroll Outsourcing
China Representative Office - Accounting and Tax Filing
WFOE in China - Recruitment, Regular Review of Accounting and Tax Filing
China Regional Location Cost Analysis
Partner Search and Background Check
Flexible Market Research
Strategy Development - Manufacturing Operation in China
Trade Fair Assistance

Hong Kong Trading Operation
When an overseas importer of consumer goods was being urged by large retail clients to offer FOB Asia prices in addition to ex-warehouse delivery, the company's management contacted Klako Group to evaluate set up options in Hong Kong or China. After analyzing the client's specific requirements, our consultants presented a customized and cost-effective outsourcing solution for their Hong Kong trading company. In order to save rental expenses, the client is using Klako Group's office address as their Registered Office. Due to Klako Group's efficient and proven timesharing concept, the company did not need to transfer expensive expatriates from overseas or hire local staff in Hong Kong. Klako Group provided the importer with an experienced team of professionals - including one expatriate manager to oversee the operation, one shipping manager to handle trade transactions and one finance and administration manager for accounting, tax filing and administration. Klako Group set up the company for the client and assisted with bank accounts and financial structuring.
By offering FOB prices from the Hong Kong company, the client has not only been able to keep and satisfy their existing retail clients, but has also acquired new clients in other parts of the world. The new Hong Kong company regularly exhibits at international trade fairs and offers FOB shipments to anywhere in the world. The client uses Klako Group's warehouse space to store samples and holds regular meetings with buyers and suppliers in the available show rooms.
Hong Kong's favorable taxation system combined with a cost-effective outsourcing solution has increased the client's profits, which they are now using for further investments to expand the business.

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China Sourcing Rep Office with Hong Kong Holding Company
As business increased for an Australian importer, the company decided to set up a Representative Office in the Shanghai area for sourcing and quality inspection purposes. After consulting Klako Group's Shanghai office, management decided to minimize their risk by establishing a Hong Kong Holding company first, which would then hold the China investment. By inserting an additional layer of limited liability, they were able to protect their head office in Australia from any type of liability issues.
In close cooperation with Klako Group's Hong Kong headquarters, the Hong Kong holding company was set up first. Klako Group made sure that all the legal requirements in regards to the mother company of a Representative Office were met and prepared all the necessary documentation. At the same time, the Klako Group Shanghai office assisted the Australian client in finding a suitable office in Shanghai, checked the required landlord licenses as well as the lease contract and prepared the application documents. As soon as all the legal documents of the Hong Kong holding company were available, Klako Group's Shanghai office submitted the Rep Office application to the authorities in Shanghai. After receiving the Registration Certificate, Klako staff in Shanghai handled all the required registration procedures for the client's Rep Office and assisted with opening bank accounts. Klako Group's CPA's worked out a sound taxation strategy for the Rep Office and its employees, and are now handling the accounting and monthly tax filing for the Rep Office.
When the Rep Office was up and running, the client decided to utilize Klako Group's Hong Kong outsourcing services for re-invoicing purposes and is now trading all shipments from China through the Hong Kong company.

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Setting up sales and after sales structure through a Representative Office:

Our client is a successful manufacturer in precision tooling equipment, who is selling to international market leaders. His customers established entities in China, and he was forced to sell to their China based entities. Through this, they saw the opportunity to also approach other China based factories and expand their customer base. One challenge they started to encounter was, that more and more, the customer required experienced engineers for the installing of the equipment and other after sales services.
With the initial intention to set up a Wholly Foreign Owned Enterprise in China, the customer approached Klako.

After discussing the requirements and plans with the customer, Klako tailor made a solution for the customer, which would not only require much less capital injection, but also present a much more tax efficient structure: the set up of a Hong Kong company, completely outsourced to Klako with no fixed cost, and establishment of a Representative Office in Dongguan where Chinese national engineers would be based to conduct the sales negations and after sales services.
Klako’s comprehensive headhunting service identified qualified candidates within the appropriate industry sector by focusing on research, intense sourcing and a targeted approach. Candidates were generated from advertising, in local, regional and international media, as well as Klako’s comprehensive database of candidates, and through an extensive network in the market.
Our customer chose three individuals, who were sent to the head office for training. In the meantime, Klako set up the entity in Hong Kong, and the Representative Office in Dongguan.
To date, the individuals have successfully acquired new customers and provided after sales services to existing customer, adding a demanded additional value to the company. Klako’s professional trade and logistics department handles all trade and logistics administration for the Hong Kong entity, as well as handles money transaction. Klako’s experienced accounting teams  manage the accounting and tax filing in Shenzhen, accounting and tax filing in Hong Kong, as well as consolidating the monthly reporting to the head office.

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Manufacturing WFOE, Hong Kong Holding Company, Trademark Registration
and Recruitment
An overseas manufacturer with clients worldwide planned to expand into China and establish a factory in Southern China. After discussing the advantages of a Hong Kong holding company with Klako Group consultants, management decided to set up a Hong Kong holding company to benefit from the preferential tax treatment and the additional layer of limited liability. While Klako Hong Kong set up the holding company, the Klako team in Southern China performed a location analysis including cost of land, building, labor, utilities, taxation, suppliers, etc. Based on this information, the client chose the location and, with the assistance of Klako, found suitable premises to rent. At the same time, Klako registered the client's trademarks in Hong Kong and China, so that the client's intellectual property would be protected. In order to speed up the incorporation process, Klako experts prepared the application documents for the Wholly Foreign Owned Enterprise in advance, so that the application procedures could start immediately after the Hong Kong company was set up. During the WFOE set up process, Klako recruitment specialists interviewed and shortlisted suitable candidates for the positions of General Manager and Operations Manager - based on the client's specific requirements. By the time the WFOE was set up, the client had a reliable factory management in place. The company's patents and trademarks were transferred to the Hong Kong company, which now receives all license fees and royalties tax free. All shipments to countries outside of China are being invoiced through the Hong Kong entity and only 50% of those profits are taxable in Hong Kong. In order to save on overhead expenses, all administrative and shipping functions in Hong Kong are being managed by Klako professionals. Klako tax experts in Hong Kong and China are handling the accounting, financial reporting and tax filing for both the WFOE and the Hong Kong company. The WFOE in China is preparing to repatriate the first round of dividends to Hong Kong - tax free - and the client has already made plans on how to further invest these profits to expand the business in Asia.

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Waigaoqiao Trading WFOE
After having been present in China with a successful Shanghai Sales Representative Office for almost three years, a Klako client decided to expand their customer base by setting up a trading Wholly Foreign Owned Enterprise able to invoice in local RMB currency.
The Klako team in Shanghai mapped out all the requirements and policies for a trading WFOE. As trading WFOEs may only be set up in specific zones, the client was required to rent office space in the Waigaoqiao Free Trade Zone. In close cooperation with the client, Klako assisted with identifying suitable office space, performed a name check, prepared and submitted all the required application documents including the project proposal, feasibility study, Articles of Association, etc. Klako also made sure that all the WFOE registrations at the various authorities were submitted in a timely and proper manner. In addition, Klako tax experts prepared the application for available finance subsidies from the Waigaoqiao finance bureau to optimize the WFOE's taxation obligations. The Klako tax team also worked out favorable salary packages and employment contracts for local and expatriate staff, and is now handling the accounting, financial reporting and tax filing for the WFOE.

After the closure of the company's Representative Office, the more convenient and presentable downtown location of the Rep Office was used as a liaison office of the WFOE.

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Joint Venture in China
Klako's team in Beijing was greatly involved in the setting up of a Joint Venture between a local Chinese manufacturer and a foreign party. In close cooperation with the overseas client, Klako consultants put together a list of potential Joint Venture partners based on the client's requirements. In order to evaluate the candidates, a bilingual Klako team visited various factories together with representatives of the overseas company. After the visit, Klako provided a full report including a detailed location analysis of the visited regions. In close consultation with Klako consultants, the overseas client was able to narrow the short list down to four candidates. During a second and more profound meeting with the four potential partners specific details of the Joint Venture contract were discussed, including management structure, shareholding, financing, strategy, operations, etc. Based on these meetings and the location analysis, the client chose one of the candidates. Before the final decision was made, Klako Group performed a detailed background check. In close consultation with the client and the Joint Venture partner, Klako assisted with the preparation and submission of all the Joint Venture application documents including Letter of Intent, Project Proposal, Feasibility Study, Joint Venture Contract and other required documents. The business license was issued and the Joint Venture has taken up operations. In order to ensure that the Joint Venture keeps clean books and accurate tax records, the client has retained Klako for handling the accounting and bookkeeping of the new Joint Venture company.

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Joint Venture with a Local Partner

Two entrepreneurs in the textile industry established a good relationship with the product manager of one of their suppliers. They decided that this individual would be a perfect partner for their own manufacturing entity in China.

Klako Group assisted the customer to negotiate the joint venture agreement, draft the contracts and find the right location for the entity. The Chinese partner  at this stage did not own an entity, nor had he the means to set up an entity. Therefore Klako negotiated with the local government of Kunshan, outside Shanghai, where a Joint Venture was allowed to be set up with the Chinese National being an individual shareholder, something not possible in many locations at this particular time.
The next challenge was that most factory locations were too large for the small start up operation planned. Klako’s personnel managed to secure a location already occupied by two other smaller factory operations and negotiated with the officials that the factory buildings could be acceptable as a registered location although the space was to be rented out to three different parties.
Klako then assisted in drafting and submitting all application documents and followed-up with all registration procedures including the bank account opening so operations could begin.
Klako is still involved in regular internal audits, with reporting to the foreign investors.

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Optimizing Cost and Restructuring of China Operations

A leading international manufacturer in the toy industry approached Klako to assist in streamlining their China operations. The company had established a sales office in Hong Kong, as well as a factory in Guangdong Province. The goal was to identify cost saving measures.

Together with Klako’s assistance, the operational office in Hong Kong was closed down, and employees either relocated to the factory in China or contracts terminated. Sales operations were centralized in the factory, and Klako then took over the registered office and operation of the Hong Kong entity. This enabled the customer to save cost by reducing the fixed cost of rent and up keeping of the office in Hong Kong. Klako’s experienced trade and logistics department took over the daily handling of all trade and logistics operation. Klako’s professional accounting department is now not only handling the accounting of the Hong Kong company, but also consolidates the monthly reporting to the head office for both the China factory and the Hong Kong “sales office”.

This structure not only saved the customer operational cost, but in addition, Klako was able to put tax efficient structures in place.

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Hong Kong Company - Outsourcing of Trading Operation

When an overseas importer of consumer goods was being urged by large retail clients to offer FOB Asia prices in addition to ex-warehouse delivery, the company's management contacted Klako Group to evaluate set up options in Hong Kong or China. After analyzing the client's specific requirements, our consultants presented a customized and cost-effective outsourcing solution for their Hong Kong trading company. In order to save rental expenses, the client is using Klako Group's office address as their Registered Office. Due to Klako Group's efficient and proven timesharing concept, the company did not need to transfer expensive expatriates from overseas or hire local staff in Hong Kong. Klako Group provided the importer with an experienced team of professionals - including one expatriate manager to oversee the operation, one shipping manager to handle trade transactions and one finance and administration manager for accounting, tax filing and administration. Klako Group set up the company for the client and assisted with bank accounts and financial structuring.
By offering FOB prices from the Hong Kong company, the client has not only been able to keep and satisfy their existing retail clients, but has also acquired new clients in other parts of the world. The new Hong Kong company regularly exhibits at international trade fairs and offers FOB shipments to anywhere in the world. The client uses Klako Group's warehouse space to store samples and holds regular meetings with buyers and suppliers in the available show rooms.
Hong Kong's favorable taxation system combined with a cost-effective outsourcing solution has increased the client's profits, which they are now using for further investments to expand the business.

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Hong Kong - Accounting, Banking and Payroll Outsourcing
When a large American retailer decided to set up a buying office in Hong Kong, their Asia-Pacific manager contacted Klako Group for advice on how to keep the organization lean and the expenses low. The client's primary concern was that their buying office staff should not spend time on administrative functions, but focus exclusively on merchandising and order follow-up. In order to ensure efficiency, the Asia-Pacific manager decided to utilize Klako Group's outsourcing services for all administrative functions of the buying office. The client has been able to keep the number of staff low, and Klako professionals are cost-effectively handling all corporate secretarial duties, the entire bookkeeping, accounting and tax filing, as well as banking and payroll.

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China Representative Office - Accounting and Tax Filing
When a European importer realized that the bookkeeping and accounting of their Shenzhen Representative Office was increasingly problematic, they called in Klako CPAs from the Klako Shenzhen office to review the entire Rep Office books and tax filing records. As various irregularities were found, Klako professionals are now handling the monthly bookkeeping, reporting and tax filing of the client's Representative Office according the relevant rules and regulations. In close cooperation with the client, Klako professionals collect all the Rep Office receipts on a regular basis, keep the books and file monthly tax returns.

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WFOE in China - Recruitment, Regular Review of Accounting and Tax Filing
The Klako Shanghai office handled the application procedure for an overseas client who set up a factory in the Shanghai area. In addition to setting up the Wholly Foreign Owned Enterprise, the client also asked Klako to recruit a General Manager for the China operation. Benefiting from Klako's extensive network in the Asian market, Klako Recruitment Specialists were able to identify three experienced candidates according to the profile outlined by the client. The US management team conducted interviews with the candidates and selected a highly qualified individual for this position. After the factory was operational, the WFOE management decided to hire their own accounting staff to handle the monthly bookkeeping and tax filing. Klako CPAs, however, come in every three months to conduct a thorough review of the WFOE books and tax records to ensure that the accounts are in order and there are no tax filing discrepancies.

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China Regional Location Cost Analysis

One of our customers, a leading European furniture and accessories components supplier, came to us in order to optimize their structure in Asia. With offices in Hong Kong, Taiwan and in 2 locations in China, the company felt that through hasty set ups and non efficient handling of the operations, the China entities could be located better, and more cost saved. After auditing the existing operations and receiving a full overview of the current structure and cost of operations, a study was performed for the customer to identify potential cost savings.

The study included the research objectives of:

• Office location costs for consolidated operations: Existing and new locations were investigated, rent, safety, infrastructure, available labour and further details
• Labour: Cost of labour (according to relevant position and function) at the equivalent locations including gross pay and employers contribution.
• Warehousing: Including differences and possibilities of a warehouse in Hong Kong, Free Trade Zones in China, Bonded Zones in China and locations in the heart of China
• Logistics: Cost comparison outsourcing versus own structures
• Company Structure options

After our research, we assisted our customer successfully to close one office in China, outsource the Hong Kong operation cost effectively to Klako, and set up a warehouse operation for direct consolidated shipments to their worldwide customers for China. This improved not only the customer’s cost structure, but also their delivery times and services that they were able to offer to their clients.

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Partner Search and Background Check
One of Klako Group's recent projects was to identify suitable distributors in the Shanghai area for a large overseas manufacturer. Based on the client's requirements, our market research team conducted a comprehensive search for suitable partners. Benefiting from Klako Group's extensive network in China, we were able to provide our client with a list of potential candidates within a short period of time.
In close consultation with Klako Group, the client selected three suppliers for a more thorough investigation. Our market research team gathered detailed background information including the companies' financials, credit history, corporate structure as well major suppliers and clients. Based on this report, our European client was able to make an informed decision, and has now taken up close relationships with two of the distributors.

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Flexible Market Research
When an overseas manufacturer considered entering the Chinese Market for distribution, the company's marketing director contacted Klako Group regarding our market research services. After preparing a detailed list of requirements in close cooperation with the client, our market research experts carried out a thorough investigation of the market and entry requirements. This included studying market trends, market size, as well as major distribution and promotion channels. Our team gathered up-to-date information regarding relevant regulations, product standards, and registration requirements. Key competitors were identified and market opportunities explored. Using various research methods, including desk research, discussions with industry experts, distributors, competitors and government officials, Klako Group was able to deliver a detailed and comprehensive market research report to the client. Armed with this information, the company's executives decided that the Chinese market offered excellent opportunities. Assisted by Klako Group, the company is now working on a successful entry strategy.

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Strategy Development - Manufacturing Operation in China
Klako Group recently assisted a US client in developing a strategy for a manufacturing operation in Southern China. The company had been active in China for several years and was planning to set up a manufacturing facility to cater to their Chinese clients. One option was to enter into a Joint Venture with a Chinese partner in the Pearl River Delta, where most clients and suppliers were located. Klako Group consultants sat down with the executives to define objectives and requirements of the project, and assess risks and opportunities.
Developing a strategy for this client included choosing the legal structure for the Chinese operation, performing a location analysis and developing an investment plan.
Klako Group provided the client with a full scale risk analysis, thoroughly evaluating all options for legal structuring of the manufacturing operation. In close cooperation with our market research team, our consultants analyzed various locations in Southern China in regards to proximity to existing or potential suppliers and clients, infrastructure, availability and cost of labor, water, electricity, real estate, etc., as well as living and investment conditions. In line with the results of the risk and location analysis, Klako consultants developed an investment plan for the client, including premises planning, equipment transfer, and investment schedule.
Based on the information provided and in close consultation with Klako Group's consultants, the executives decided to minimize their risk by setting up a Hong Kong Limited company to hold the China investment. They chose not to enter into a Joint Venture in China, but to set up their own Wholly Foreign Owned Enterprise in order to make full use of their opportunities.
Klako Group assisted the client with setting up both the Hong Kong company and the China manufacturing facility. Our accountants in Hong Kong and Shenzhen are now handling the accounting and tax filing of both entities.

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Trade Fair Assistance
A European manufacturer eager to enter the China market was very pleased with Klako Group's Trade Fair Assistance Services. The client planned to attend trade fairs in China to identify suitable distributors, but lacked the experience and resources to maximize the outcome of such visits. After consulting the client regarding product specifications and precise requirements, Klako Group selected appropriate trade fairs in China. Our bilingual and experienced staff attended these events, evaluated suitable candidates, collected relevant information and catalogues, and prepared a comprehensive summary of the findings. The client assessed the information provided and contacted several distributors in order to explore opportunities for cooperation. At a later stage, the client asked Klako Group to perform background checks on some the candidates.