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Hong Kong is located in the South China Sea 100 miles south east of Guanzhou (formerly known as Canton). As of the 1st July 1997 under the Sino-British Agreement of December 1984 Hong Kong becomes a Special Administrative Region (HKSAR) of the People's Republic of China. The Basic Law, which is the Constitution of the HKSAR, is intended to maintain the HKSAR and the PRC as separate governmental, legal and economic systems. This is known as the "One Country, two Systems" concept. MapHong Kong is governed by a Chief Executive and a Provisional Legislature. The Chief Executive is voted in by an electoral college and endorsed by the Preparatory Committee the latter also approving candidates for the Provisional Legislature. One of the major tasks of the Provisional Legislature is the devising of the electoral system for future elections to the first Legislative Council.

The legal system of Hong Kong is English Common Law supplemented by locally enacted Ordinances. Under the Basic Law the UK court system and UK law, except that a local Court of Final Appeal will replace the Privy Council in London, are guaranteed to remain in place for 50 years unless the matter in question involves a threat to PRC national security. There is now a bilingual legal system with Ordinances being translated into Chinese but English will continue to prevail. There are an excellent range of professional services available as Hong Kong serves as the major business centre for the whole of the Far East. This is unlikely to change in the foreseeable future.

The local currency is the Hong Kong Dollar which is freely interchangeable but has a pegged exchange rate against the US Dollar. There are no exchange controls.

One of the major advantages of utilising a Hong Kong company is that there is no immediate suggestion that the company is a tax avoidance vehicle as Hong Kong is major trading entity in its own right. Hong Kong is the world's eighth largest trading economy calculated in terms of total value of trade undertaken. It is the world's seventh largest importer and the world's ninth largest exporter and the vast majority of the 50,000 Hong Kong companies incorporated annually are local trading companies doing real business in the region.

It is possible to create a Hong Kong registered corporate entity in two different ways:
(1) by incorporating a new Hong Kong company;
(2) by registering an existing foreign company in Hong Kong under Part XI of the Hong Kong Companies Ordinance.

This latter procedure, although initially more expensive, can have substantial advantages and these are summarised in later pages.