The Legal Differences Between Hong Kong, Macau, and Mainland China
Special administrative regions (SARs) like Hong Kong and Macau hold a unique position within China. In some respects, the two SARs are as much a part of China as Beijing and Shanghai. When it comes to most practical purposes, though, they are separate jurisdictions—and companies doing business in them must be mindful of this.
This can be confusing for businesses, who might mistakenly assume Hong Kong and Macau function identically to Mainland China. This post aims to clarify the key differences between Hong Kong and Macau on the one hand, and Mainland China on the other, and to thereby help businesses navigate these separate jurisdictions effectively.
Historical Background
Hong Kong was a British territory until 1997, when it was handed over to China under the terms of the Sino-British Joint Declaration of 1984. Macau was a Portuguese territory until 1999, when it was transferred to China under the terms of the Sino-Portuguese Joint Declaration of 1987.
Hong Kong and Macau were handed over to China under separate agreements, with the understanding of “One Country, Two Systems.” This principle allows the SARs to maintain their own legal and economic systems, distinct from Mainland China.
Hong Kong and Macau Autonomy
Despite being part of China, Hong Kong and Macau have significant autonomy in various aspects:
- Currency Hong Kong has its own currency, the Hong Kong Dollar (HKD), while Macau uses the Macanese Pataca (MOP). This differs from the Renminbi (RMB) used in Mainland China.
- Postal Systems: Both SARs have independent postal systems.
- Border Controls: Hong Kong and Macau maintain separate border controls from Mainland China.
- Official Languages: English and Chinese are the official languages in Hong Kong, while Portuguese and Chinese are the official languages in Macau.
Trademark Registrations
Trademark registrations in Mainland China do not automatically extend to Hong Kong or Macau, and vice versa. Each jurisdiction has its own trademark system, meaning a trademark registered in Mainland China offers no protection in Hong Kong or Macau solely by virtue of its Mainland China registration.
For example, if you plan to sell your products or services in China, Hong Kong, and Macau, you should apply to register your brand name (and possibly your logo as well) in all three jurisdictions to ensure comprehensive protection.
Differing Legal Realities
The immigration regimes in Hong Kong, Macau, and Mainland China differ significantly. For instance, it is generally easier to get local Hong Kong (and/or Macau) staff across the border for a meeting in Mainland China than vice versa, due to differing entry requirements. However, many foreigners, even those based in Hong Kong or Macau, require a visa for even a short visit to Mainland China.
Needless to say, companies operating in both Mainland China and one (or both) of the SARs need to heed these legal realities.
Contract Considerations
Companies should be careful when entering into contracts that touch on both Mainland China and one (or both) SARs, or just both SARs. Companies should be cautious when entering into agreements that require them to provide services in multiple jurisdictions, as it will mean complying with multiple sets of laws and regulations.
Likewise, when entering into distribution agreements or other business arrangements, companies should carefully evaluate requests by a prospective business partner to include multiple jurisdictions. Taking a distribution agreement, for example, just because someone is well-placed to be your distributor in, say, Mainland China, it does not mean that they are also well-qualified to distribute your products in Hong Kong.
Conclusion
Regular readers will know that this is not the first time that we issue a PSA on this topic. Yet we continue to see misunderstandings about the relationship between China, Hong Kong and Macau.
While the SARs are part of China, it is essential to recognize the ways in which they differ from Mainland China. Businesses operating in Hong Kong, Macau, and Mainland China need to understand these distinctions to navigate the differing legal and regulatory landscapes.
