Hong Kong's Legal Services Help Buttress Mainland Enterprises' Sustaining Efforts to “Go Out”
For mainland enterprises engaging in overseas business, on top of seeking international funding, it is also vital for them to consider leveraging professional services to negotiate with foreign partners, as well as taking appropriate risk control measures.
Heidi Chui, Council Member and Member of Greater China Legal Affairs Committee of The Law Society of Hong Kong, believes that Hong Kong, with its comprehensive legal professional services, is well positioned to make the best arrangements for mainland enterprises aiming to “go out” for business expansion. Hong Kong also boasts a stable business environment, where local practices are in line with global standards. As foreign companies are more familiar with the common law system practised in Hong Kong, they favour handling mainland business through the city and its various business facilitation measures and platforms.
In the event that commercial disputes arise, the parties concerned can also take advantage of Hong Kong’s well‑established regulations and dispute resolution services, greatly enhancing certainty in any business co‑operation. All these services are of critical importance to mainland enterprises in their efforts to link up with overseas partners and engage in cross‑border investment and trade.
Enhancing certainty in “going out”
Outlining Hong Kong's strengths in an interview with HKTDC Research [1], Chui said: “There is no lack of professional service providers on the mainland, and many of them are partnering with their peers in Hong Kong to handle mainland enterprises' global business through the city. Without doubt, Hong Kong commands a number of advantages as a service platform – Hong Kong’s service providers have a wealth of international experience, and are well‑versed with both the overseas markets and mainland enterprises’ needs and culture. They can readily offer help to mainland enterprises in dealing with overseas matters and ‘going out’ to the global market.
“More importantly, business arrangements made in Hong Kong carry greater certainty, giving both mainland enterprises and their overseas partners a sense of security in their collaboration to explore business opportunities.”
Other advantages in Hong Kong, Chui added, include the city's s free flow of capital, stable business environment and good track records in the rule of law, which are held in high regard by mainland and overseas companies alike.
In case commercial disputes arise, Hong Kong can provide arbitration services to enterprises in relation to their international trade and cross‑border investment. A robust arbitration regime is in place in the city, whose experienced arbitrators are well‑acquainted with international business practices. Parties to arbitration can also freely negotiate and pick the arbitrators for their case.
Additionally, arbitration outcomes in Hong Kong can be executed in the more than 170 contracting states to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). For mainland enterprises ‘going out’ to the global market, working through Hong Kong as a service platform will therefore minimise uncertainties and boost their confidence.
Explaining the opportunities ahead, Chui said: “In face of profound changes, such as the evolving global geopolitical situation, US‑China trade friction, and implementation of preferential policies under the RCEP agreement, a number of mainland enterprises are actively exploring ‘going out’ to tap opportunities in RCEP markets such as ASEAN, and to carry out production and sourcing there. They need to consider establishing regional supply chains and ensuring their products meet the import requirements in target markets.
“Moreover, their overseas investment has to comply with local laws and regulations, including restrictions on foreign investment and sale and purchase of land, as well as labour standards and environmental protection laws, and so on. In going through these processes, enterprises need advice from professional service providers for effective solutions to be devised.
“Mainland enterprises can of course deploy their internal resources to handle such matters. Yet, as they are faced with a different business environment in an overseas country and dealing with matters in a different legal jurisdiction, much effort has to be expended to set up the most appropriate corporate structures and to carry out equity investment or transfer, tax planning and fund procurement, and so on. In fact, the professional knowledge, time and costs required may well go beyond the enterprises' expectation and capability.
“On the other hand, Hong Kong possesses talents who are biliterate and trilingual and have extensive international networks and connections. They can readily lead the way for mainland enterprises wishing to ‘go out’, by identifying reliable and experienced partners in the Asian and other overseas markets, while providing well‑rounded services, such as undertaking due diligence and risk assessment, and so on.
“Mainland enterprises require professional legal services to help them draft investment agreements, sale and purchase agreements, shareholders’ agreements and so on, as well as put in appropriate clauses to handle matters like e‑commerce and cross‑border data transfers, uphold their intellectual property rights including trademarks and patents, protect their business interests and control risks. A contract with proper safeguards is a good starting point for enterprises ‘going out’, whereby uncontrollable legal risks in the future may be averted and enterprises’ development can be better assured and protected.”
[1] HKTDC Research interviewed Heidi Chui, Council Member and Member of Greater China Legal Affairs Committee of The Law Society of Hong Kong in the third quarter of 2023. Chui is also an arbitrator and mediator in many arbitration bodies and a China‑Appointed Attesting officer.
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