A mainland China company, a Hong Kong company, a US company: which layers do you need, what does each do, and how do you save tax while staying compliant? Answer 5 questions to see your structure, then request the full implementation plan.
The real question for most cross-border sellers isn't "should I register an offshore company". It's which layer handles sourcing, shipping, customs and export VAT refunds; which layer collects payments and holds profit; and whether the target market needs its own sales and compliance entity. This diagnostic uses your markets, channels, size, existing entities and goals to split out the three usual layers: a mainland operating entity, a Hong Kong payment/holding company, and a US sales entity (LLC / C-Corp).
Almost everyone needs the mainland layer. Sourcing, domestic logistics, customs declarations and export VAT refunds naturally sit in a Chinese company; without it, refunds, supply contracts and local employment are hard to put in place. The Hong Kong layer typically handles payment collection, holding and retained profit: money moves in and out more easily, and under the two-tiered profits tax rates a corporation's first HK$2 million of profit is taxed at 8.25%. As you grow it often moves from "recommended" to "essential". The US layer depends on whether the US is your main market and whether you sell through platforms such as Amazon. With platform compliance and sales tax in play, a US entity often goes from optional to required.
This is not the same as a bare offshore shell or a complex VIE. VIEs mostly appear on red-chip listing paths in restricted industries; ODI is the filing/approval channel for outbound investment by Chinese companies; and individuals setting up offshore special purpose vehicles also run into SAFE registration under Circular 37. Most product-selling e-commerce businesses combine an operating layer, a payment/holding layer and a target-market sales layer, rather than starting with a Cayman VIE. Money flows also need to line up with goods and service flows: goods leave the mainland, payments land in Hong Kong, profit is reinvested in US warehousing. Contract pricing and banking routes must make sense at every step, or CRS, transfer pricing and withholding tax on repatriation will all come knocking together.
Not necessarily. If sales are still small, markets undecided and you're mainly testing, get the mainland operation and compliance solid first. Once you scale and need steady payment collection and profit routing, the Hong Kong layer becomes much better value. That is why the tool treats "RMB 5β20 million" and "Over RMB 20 million" as the bands where a Hong Kong layer is more needed.
A VIE is a contractual control structure, mostly used for listings and industries with foreign investment restrictions. ODI is the compliant route for Chinese entities to invest abroad. An offshore structure usually means a holding or intermediary company in Hong Kong, the BVI, the Cayman Islands and so on. For cross-border product sellers, the more common setup is an ODI/outbound direct investment route plus Hong Kong/US operating layers, not a VIE by default.
When a Chinese resident individual sets up or controls an offshore special purpose vehicle, possibly with round-trip investment back into China, a foreign exchange registration is required. Once a structure includes individual offshore holdings, a red-chip setup or round-tripping, Circular 37 must be checked. Fixing it only at fundraising or IPO due diligence costs more and carries more uncertainty.
It depends on fundraising plans, sales tax and platform requirements, whether shareholders are individuals or companies, and whether profit will be kept in the US before distribution. Platform sellers usually first solve "we need a US entity", then compare pass-through treatment and double taxation in a tax model. This diagnostic suggests which layers you need, not the final entity type.
No. Based on the markets, channels, size, entities and goals you selected, it ranks the layers and explains what each does, so you can align your thinking. The actual agreements, shareholding, ODI/foreign exchange, transfer pricing and bank accounts still need a plan built on the full business facts.