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.