Dual-layout in EU and Southeast Asia: How to Design Corporate Entity Structures? | Trailblazers of Global Expansion

Introduction:

Looking globally to explore the second growth curve has become a definite direction, yet how to go global still tests the wisdom and courage of every Chinese enterprise. Brand globalization, supply chain globalization, cross-border e-commerce... there are numerous paths, but no one-size-fits-all solution exists; North America, Southeast Asia, the Middle East, Latin America... the markets are vast, each with its own storms and challenges. Behind every long expedition lies the in-depth exploration of Chinese enterprises; on every distant coastline, more presences from China are emerging.

The "Global Trailblazers" column aims to profile outstanding global enterprises across different sectors, dissect practical cases from a professional perspective, distill methodologies through shared consensus, and uncover new possibilities amid diverse scenarios.

Focusing on the full lifecycle needs of enterprises expanding overseas, covering "pre-planning, mid-stage implementation, and post-operation", the Zhejiang Enterprises Globalization Comprehensive Service Port has introduced over 40 leading service institutions in fields including law, finance and taxation, finance, and human resources, enabling one-stop handling for enterprises' overseas expansion.

To provide more practical, referable examples for enterprises that are planning to go global, we will showcase successful cases of how outstanding service providers support enterprises in their overseas expansion. In this issue, we bring you the case of U&I GROUP supporting a commercial vehicle parts manufacturer in its "Dual-Track Global Expansion".

01

Enterprise Case Showcase

In September 2025, a domestic enterprise engaged in the manufacturing and sales of commercial vehicle spare parts planned to establish production bases in both Hungary and Malaysia simultaneously, to cover the EU and Southeast Asian markets respectively. The total investment amounted to RMB 100 million, fully owned by the Chinese party.

Hungary falls under the EU's investment regulatory framework, where foreign-funded factory construction requires completion of EU industrial reviews, local environmental permits, and labor permits. Malaysia follows ASEAN investment regulations, which impose mandatory requirements on foreign equity ratios, local employee proportions, and rules of origin. Enterprise registration and tax declaration in the two regions are completely independent. The enterprise lacks a dedicated international professional team and cannot uniformly coordinate the two sets of declaration documents. The enterprise was unclear about which entity to use for the initial investment, how to legally and compliantly transfer funds overseas, and how to proceed if equity adjustments are needed in the future.

At the same time, the enterprise was facing time pressure: it was right in the window period for the new energy vehicle industry chain to go global. A delayed launch might mean missing out on an order cycle from complete vehicle manufacturers.

Against this backdrop, after understanding the client's needs, U&I GROUP put forward the following three suggestions:

[Top-Level Structure Design] It is recommended to use a Hong Kong company as the regional overall control platform, with the Hong Kong company holding stakes in the Malaysian joint venture and the Hungarian subsidiary respectively. This is because Hong Kong has double taxation avoidance agreements with both regions, so the tax cost when repatriating profits in the future is controllable; capital flows in and out of Hong Kong conveniently, facilitating unified deployment; if equity adjustments or exits are needed in the future, operations at the Hong Kong level are more flexible.

[Compliance Process Coordination] It is recommended to regard the investments in the two countries as an overall plan under the enterprise's unified strategic deployment, promote the declaration work in a coordinated manner, prepare documents simultaneously and submit them in parallel, effectively avoiding the superposition of process cycles and shortening the declaration period.

[Synchronized Implementation] Launch the registration procedures for the Hong Kong company, the Hungarian company, and the Malaysian company simultaneously to ensure the structure is legally completed on schedule.

Finally, with the assistance of U&I GROUP, the enterprise completed the registration and establishment of the Hong Kong holding company and the two overseas subsidiaries.

02

Dialogue with the Service Provider

When this client first approached you, what was the core problem they were facing?

U&I GROUP: This is a manufacturing enterprise producing commercial vehicle parts, planning to build factories in Hungary and Malaysia at the same time. Their needs are very clear: they want to enter both countries. But the problem is that the laws, taxation, and compliance processes of the two countries are completely different. The enterprise had no idea which entity to use for the initial investment, how to transfer funds overseas, and what to do if they need to adjust equity in the future.

Then how did you help them analyze this problem?

U&I GROUP: The first thing we did was to help them clarify the different positioning of the two destinations. Hungary is targeted to cover the EU market, while Malaysia is focused on Southeast Asia and low-cost production. The investment methods and paces for the two destinations are different, so a standard structure cannot be applied to both.

What was the structural suggestion you finally put forward? Why did you make such a suggestion?

U&I GROUP: We suggested using a Hong Kong company as the overall control platform, with the Hong Kong company holding stakes in the Malaysian joint venture and the Hungarian subsidiary respectively. There are three reasons for this design:

First, Hong Kong has signed double taxation avoidance agreements with both Hungary and Malaysia, making the tax cost more controllable when repatriating profits in the future.

Second, as an international financial center, Hong Kong facilitates convenient capital flows, making unified deployment easier in the future.

Third, if the enterprise needs to adjust equity or exit in the future, operations at the Hong Kong level are far more flexible than direct operations in the target country, with simpler procedures.

How was this structure finally implemented?

U&I GROUP: The implementation was carried out simultaneously along two lines. One line is the overall strategy, advising the enterprise to regard the investments in the two countries as a strategic community, integrating the preliminary preparation and implementation of all matters, documents, and plans. The other line is overseas company registration, launching the registration procedures for the Hong Kong company, the Hungarian company, and the Malaysian joint venture simultaneously to ensure the structure is legally completed on schedule.

03

Service Provider Introduction

Headquartered in Hong Kong, U&I GROUP is a professional service group focusing on cross-border supporting services in business, law, finance, and taxation. It holds licenses and has professional teams including CPAs, lawyers, secretaries, and registered agents in cross-border relevant jurisdictions. As one of the earliest professional teams providing comprehensive offshore services in China, it has been deeply engaged in supporting the overseas development needs of enterprises and entrepreneurs for 20 years. Leveraging more than 20 branches at home and abroad and a service network covering over 160 countries and regions worldwide, it provides professional cross-border services to clients with an international vision and professional dedication.

* All opinions expressed are from the interviewed institutions or individuals and are for reference only.

This article is from the WeChat Official Account "Zhejiang Enterprises Globalization Comprehensive Service Port", author: Zhejiang Enterprises Globalization.