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  • Creating a company from outside the U.S.

    What are your thoughts on (legally) creating and basing a company outside of the U.S. for tax and manufacturing reasons?

    I am considering starting a Chinese business in order to cut down costs and taxes, etc.

    Thoughts?

  • #2
    Re: Creating a company from outside the U.S.

    My husband had worked for a software house organized and established by a Japanese in the Philippines. The main client is that Japanese's company in Japan who gets the projects, mostly programming work, and pass on the project to the company here in the Philippines that they pay so little. That is a good outsourcing trick because they had saved a huge amount considering that labor is expensive in Japan, much more the skilled people like programmers and systems analysts. They also saved a lot in taxes because they pass on the taxes here in the Philippines thereby somewhat freeing the Japanese company of the tax burden.

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    • #3
      Re: Creating a company from outside the U.S.

      I think it is a perfectly reasonable decisions since as a business owner your main goals are to spend as little as possible and make as much as possible off of your investments. If proper plans are laid out and possible challenges can be for seen and minimized then I think it would be a wise decision. Personally I don't think it would make much sense to risk more than what you have to as long as you can assure yourself that the alternative path is manageable.

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      • #4
        Re: Creating a company from outside the U.S.

        I wouldn't take it in a so positive side. Yes, some business does it, but you also got to be under other laws that you control less, know less, and where your lobbying is less present. Finally, the management of outsourcing is more complicated without many contacts.
        While doing something outside of US isn't necessarily bad, it depends of what you do, of the transport costs, on the environmental costs that, sooner or later, you will either pay or have to pay, the taxes you pay at customs rather than the one you pay in country. Many peoples goes through a gray area and can be profitable, but it is a gray area. If ever, someone finds something unfair here, you will have to adapt. So think about it, it is not only good things.

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        • #5
          Re: Creating a company from outside the U.S.

          I have never been a fan of it. I am an American, so really, it would be counter-intuitive of me to create something that is outside of my homeland(which is where I currently live).

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          • #6
            Re: Creating a company from outside the U.S.

            Originally posted by AtlantaSports View Post
            I have never been a fan of it. I am an American, so really, it would be counter-intuitive of me to create something that is outside of my homeland(which is where I currently live).
            Well, if you are going to cover the United States, yes, the dilemma seems pretty simple when you already have an opinion on it and it is not driven only by money in the short term. But in complex cases it gets...obviously, more complex.

            What case I case think about is a company that has to make deliveries across North America, Europe and Australia. How the company should handle it? The company can manufacture the final produce in-land at US, and then deliver the product directly via boat or plane to Europe & Australia. But environmentally-speaking, and in the cost perspective for, you are doing the thing really wrong. So, what you got to do?

            If you export high volume, you would better manufacture some parts in the US, and then finishes them up in Europe & Australia, and these parts would be chosen to take the less space possible. This is the case for example with bottle of any drink, where they'll rather give the plastic and the drink inside a kind of "tank" so you pay less for delivering more bottles, so you avoid round trips and the environmental impact is less bigger.

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            • #7
              Re: Creating a company from outside the U.S.

              I am sort of half and half on the situation. My job outsourced after reassuring us that the new office that was opened in Dominican Republic would not effect our jobs 5 months later we all got laid off. On the other hand as an aspiring business owner I do understand the cost factor. So I do understand and see both sides to it.

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              • #8
                Re: Creating a company from outside the U.S.

                @mscaver86, the primary reason of putting up a company in another country is to avail of the cheap labor. So you can expect some employees to be laid off in favor of the outsourced in that other country. On a business point of view, it is a good move since the company will be on the advantage. However, the sense of nationalism seems to be waning since the number of hired employees abroad may be equal to the number of employees laid off in the mother company. It is happening since a long time ago. One company is Marks and Spencers of London with factories in Thailand.

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                • #9
                  Re: Creating a company from outside the U.S.

                  Originally posted by kirachan View Post
                  What are your thoughts on (legally) creating and basing a company outside of the U.S. for tax and manufacturing reasons?

                  I am considering starting a Chinese business in order to cut down costs and taxes, etc.

                  Thoughts?
                  well, what business are you running ? or want to set up in china. i am chinese with over eight years experiences in foreign trade.
                  we can talk about this topic
                  thanks
                  Cassin

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                  • #10
                    Re: Creating a company from outside the U.S.

                    Originally posted by mscaver86 View Post
                    I am sort of half and half on the situation. My job outsourced after reassuring us that the new office that was opened in Dominican Republic would not effect our jobs 5 months later we all got laid off. On the other hand as an aspiring business owner I do understand the cost factor. So I do understand and see both sides to it.
                    It really is unfortunate that these decisions have to affect employees but as you've mentioned it's just unavoidable sometimes. I think you have a great way of looking at things though and surely it will be a very helpful tool for you in your career since not all employees are able to see the bigger picture and see things from the perspective of the company.

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                    • #11
                      Re: Creating a company from outside the U.S.

                      My husband used to work in a Japanese software house. It employes 8 project managers and an equal number of programmers plus some trainees. All employees are Filipinos except for the 2 vice presidents who are Japanese. The company here has a counterpart in Japan which gets projects. And instead of doing the programming in Japan, the Philippine office does that job and the Japan office just handles the final testing. I'm sure that company earns a lot because the pay in Japan is high and they only pay the Filipinos a small salary.

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                      • #12
                        Re: Creating a company from outside the U.S.

                        Originally posted by Corzhens View Post
                        My husband used to work in a Japanese software house. It employes 8 project managers and an equal number of programmers plus some trainees. All employees are Filipinos except for the 2 vice presidents who are Japanese. The company here has a counterpart in Japan which gets projects. And instead of doing the programming in Japan, the Philippine office does that job and the Japan office just handles the final testing. I'm sure that company earns a lot because the pay in Japan is high and they only pay the Filipinos a small salary.
                        I think a lot of businesses do this and I can understand why and if I were in the same position I would probably decide it the same way. It really is difficult to pass up a good bargain, even when it is a big company is concerned. As long as the pay is fair for each person's respective location and demographic then I guess it is alright.

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                        • #13
                          Re: Creating a company from outside the U.S.

                          Originally posted by Norm View Post
                          I think a lot of businesses do this and I can understand why and if I were in the same position I would probably decide it the same way. It really is difficult to pass up a good bargain, even when it is a big company is concerned. As long as the pay is fair for each person's respective location and demographic then I guess it is alright.
                          The Philippine government and those involved in the business industry are letting that to happen - foreign companies hiring workers on a temporary basis but with high salaries - because their main agenda is the technology transfer. Filipino workers earn and at the same time learn the trade. There are Filipino animators now crowding the studios in the US because they are good at it. And they learned animation when foreign companies hired them to do a project for a particular movie. Now those animators are being offered permanent jobs in the US.

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                          • #14
                            Re: Creating a company from outside the U.S.

                            That's not a bad idea if your concern is cheap labor and high productivity then China is the place to go. However, they have strict requirements and start-up companies that wish to establish manufacturing firms there would need to haggle for their place. So long as you follow the rules and requirements set by the Chinese government, then you're all set before you know it.

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                            • #15
                              Re: Creating a company from outside the U.S.

                              Originally posted by Corzhens View Post
                              The Philippine government and those involved in the business industry are letting that to happen - foreign companies hiring workers on a temporary basis but with high salaries - because their main agenda is the technology transfer. Filipino workers earn and at the same time learn the trade. There are Filipino animators now crowding the studios in the US because they are good at it. And they learned animation when foreign companies hired them to do a project for a particular movie. Now those animators are being offered permanent jobs in the US.
                              Not sure if I am understanding you correctly but are you saying it is a bad thing? Anyway, I don't think it is that bad as long as the Filipinos are earning well enough for the standard of living here, even if the japan office is earning way more, because ultimately it is their client and their project and expenses are much higher there too anyway so it's understandable for them to want to take more of the cut, in my opinion.

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