Knowledge built on first mover advantage (hktdc.com)


	Following in his father's footsteps, Sven Koehler leverages Hong Kong to help businesses access the Chinese mainland

German entrepreneur Klaus Koehler was among the first wave of pioneers in Hong Kong to realise the huge potential of the Chinese mainland market back in the 70s.

After many years of international consulting and trading activities with Hong Kong and China, he set up a services company in Hong Kong in 1979, providing consultancy for incorporation, accountancy and taxation. The services have quickly expanded into other areas like recruitment, quality control and inspection for overseas firms who wanted to access and benefit from the Chinese market.

Using the first mover advantage for growth, Klako Group opened offices in Beijing, Shanghai and Shenzhen besides its Hong Kong headquarters.

More than 25 years later, Klako now has nearly 100 employees in its four offices. The Hong Kong office is headed by son Sven, the Shanghai office by daughter Kristina, while founder Klaus oversees the family business as the managing director.

Global mix

"When my father first started the firm, about 90 per cent of our clients were from Germany but now it is a global mix. Nowadays, about 30-40 per cent our customers are German, while the rest come from the US, Canada, Australia and Europe including the UK, France, Italy," explained Sven, who joined the family firm six years ago.

Generally, Klako's clients already do business in China, or are at the stage of entering the market.

"Our customers either want to buy, sell or manufacture in China," added Sven.
One thing remains constant: Klako always advises overseas companies to make use of Hong Kong's advantages and set up a base in the city to access the mainland market.

"For many international businesses, structuring investments into China via Hong Kong can make a lot of sense. Concerns over direct exposure to China liabilities, ease of a future sale of a China investment, and certain tax planning and profits distribution capabilities can make the insertion of a holding company as part of their China strategy an interesting option," advised Sven.

Cultural edge

That is where a service provider like Klako comes in. It has client managers able to converse with the clients in their own languages. "In Hong Kong, we provide a complete outsourcing solution whereby our clients set up a holding company for their Chinese investments with our address and they avoid fixed costs like rent, staffing, etc. Our staff handle the accounting, as well as for more active trading companies their banking, letters of credit, shipping and if necessary, product inspections," explained Sven.

Since its inception in 1979, business has been steady. "Most people are of the opinion that in order to stay competitive in their own markets, they have to include China in their business strategy often as soon as possible. But our advice to them is to start slowly and take a phased approach. People tend to go in too quickly in all sectors. In China, it is not so easy to have a profitable business. Many companies do not set up their structures properly from the beginning and will then have to restructure," advised Sven.

There is an important role for service providers like Klako in China and Hong Kong as more and more overseas firms enter the China market. "We offer them experience, expertise and a hassle free approach," said Sven.