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Integrated Accounting Between Hong Kong and China: A Comprehensive Overview

Updated: Jun 24

Client Profile


After successfully setting up the Hong Kong company and the WFOE in Mainland China, the client now operates in multiple jurisdictions. As transaction volumes increased, the need for transparent, compliant, and interconnected accounting across both entities grew.


Overview of the Full Expansion Strategy

This case outlines the fourth step in a multi-phase international setup:


  1. Company Formation in Hong Kong

  2. WFOE Creation in Mainland China

  3. VAT Registration in France

  4. Integrated Accounting Across Jurisdictions

  5. Opening a Corporate Bank Account in China

  6. Monday.com

  7. Sourcing Optimization and Supply Chain Management


Each phase is designed to provide a clear view of how ASC Consulting supported the client through every operational layer.


Context & Objectives


Unified Financials

The client required a unified view of their financials in both Hong Kong and Mainland China. This involved:


  • Legal and tax compliance across jurisdictions.

  • Real-time visibility over purchases, sales, intercompany charges, and profit margins.

  • A system that could support audits and growth without shortcuts or grey areas.


Our Intervention – ASC Consulting and Integrated Accounting


Xero Setup (HK)

We created a detailed chart of accounts in Xero for the Hong Kong entity. We linked local bank feeds and custom financial dashboards to facilitate easy tracking.


PRC Accounting Setup (CN)

We collaborated with a licensed Chinese accounting partner. This ensured that the WFOE’s accounts complied with Chinese GAAP and tax law.


Transaction Reconciliation

We established an intercompany invoicing process. This reflects the flow of services and goods between HK and CN, including necessary transfer pricing documentation.


Monthly Closing & Consolidation

We designed a workflow that aligns Chinese and Hong Kong monthly closings. This allows for a clear group-level profit view.


Compliance First

All revenue, costs, and tax flows were documented and structured. We ensured full compliance with local laws, audits, and tax inspections.


We connected financial indicators to operational workflows, including quotes, invoices, shipping documents, and payment statuses.


Results


The client now has a centralized and real-time view of their financials across China and Hong Kong, achievable only through Integrated Accounting Between Hong Kong and China.


Tracking and Reconciliation

All intercompany flows are tracked, reconciled, and audited. This ensures that there are no hidden liabilities or tax exposures.


Compliance Structure

We provided a compliance-first framework. This avoids aggressive shortcuts while still optimizing margins, transfer flows, and supplier terms.


Jurisdiction Linkage

Each purchase and sale is linked to its proper jurisdiction. VAT, CIT, and audit risks are fully managed and under control, leading to stability and credibility.


Key Pillars for Growth

The business gained stability, credibility, and transparency—key pillars for scaling sustainably and maintaining investor and regulatory trust.


Suggested Next Steps


Strategic Planning

  • Implement quarterly group financial reports for better strategic planning.

  • Benchmark cost structures across suppliers and entities.


Financial Statements Preparation

  • Prepare group-level financial statements for future investors.


The journey to successful integrated accounting between Hong Kong and China is ongoing. As a business scales and grows, adapting to new regulations and market demands is crucial.


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