Today was focused on getting banking facilities established for RedStores BVI and RedStores HK. My objective was also to learn on how build credit facilities and to learn what HSBC needs.
Bottom line, HK is tax free haven – so it’s a good place to recognize revenue and profit – however to make it tax free, annual audits have to be filed with proof that the profit has not been derived in HK territory. If you cannot prove that, then the profit is subject to 16.5%.
So, basically, to build credit facilities in HK, the HK company needs to recognize profit in HK and further prove this during the annual audit by submitting the contracts and backup to prove that profit hasn’t originated in HK territory. Easy enough. With a proper corp. structure, proper contractual relationships between various corporate entities – it should be relatively easy to develop credit facilities here.
So, the bad news is that PearlsOnly hasn’t done this so far – another words – there was no focus to date in building credit facilities – so although we have been in business for now 5 years – in terms of building credit we are at day 1.
But, the good news is that I now know what is needed – I’m not in need of credit facilities right now – and I know what I need to do to get these facilities in place for the 1 or 2 years ahead – when they may be needed.
Understanding this, also helps me ensure that the corporate structure is focused on HK – and that I designate it as the place to recognize profits. Together with a CFO we can make a tax planning strategy for worldwide operations – with one of the goals being to develop credit facilities in HK.
One of the services that HSBC offers is a relationship manager that can get to your business and then work with a business – so that banking and business work hand in hand. Bad thing is that I though we had a Relationship Manager BUT actually we didn’t. So, big shame that 5 years have gone by, and we are still at day 0. But, knowledge is power – so will get this fixed moving onwards.
Was up at 6am, so had a chance to go for an early morning walk – very nice. But it wasn’t till the afternoon that really saw HK – it’s quite an amazing place. A blend of China and ultra-shopping – wouldn’t want to live here – BUT definitely WILL be coming here more. The shopping is amazing – food – energy – prices. I can’t believe that I have been so close to HK for so many years but only now made it.
Late evening got a SMS for Genie from Germany – M… wanted a conf call this evening but I pushed it out to Monday for when I’m back in Beijing. He is still in Spain, so given that we where not able to move forward face to face – I imagine it would be even more difficult to get traction via 4 way Spain-Germany-Hong Kong call – with all parties in different locations. Actually, what I need to do is have a one on one with M… first. So, in a way I’m pulling my engagement level on Genie back – to make sure that I don’t loose focus on existing initiatives. A bit of mental torture for me, to be honest, but I’m running a business, so need to make sure that face the brutal facts – and understand project Genie for what it is – and how it will be.