Start business in China, Starting a business in China, How foreign company start business in China, Starting a new business in China, Starting business in China as Foreign Investor
Lower Cost & higher service quality
Contact information:
Email: contact@sfconsultingbd.com
Service area:
- Foreign company registration ( 100 % foreign owned share, Joint Venture, Branch/ Liason/ Virtual office)
- Legal
- Accounts Audit
- Income Tax
- Company Secretarial
Types of Business Presence in China:
Before starting up a
business in China, you have to know what the options are. Foreign Investors
generally establish a business presence in China in one of five ways: 1. Wholly
Foreign Owned Enterprise (WFOE); 2. Partnership Enterprise (PE) 3. Representative Office; 4 . Joint Venture; and
5. Hong Kong company.
Company Registration Services:
RMB 100,000~ RMB 500,000
(approx. 10,000 ~ 50,000 EURO) is the minimum registered capital for Consulting,
Service or Hi-Tech WFOE registration
in Shanghai, Beijing, Shenzhen. Different cities of China have different
policies on minimum registered capital, please contact a Path To China office
at the bottom of the page for practical advice if you are planning to
incorporate a WFOE in
China.
Advantages of WFOE in China
The
advantages of incorporation a WFOE, compared with other types of enterprises,
include, but not limited to:
- Independence
and freedom to implement the worldwide strategies of its parent company
without having to consider the involvement of the Chinese partner;
- Ability
to formally carry out business rather than just function as a
representative office and being able to issue invoices to their customers
in RMB and receive revenues in RMB;
- Capability
of converting RMB profits to US dollars for remittance to its parent
company outside of China;
- Protection
of intellectual know-how and technology;
- For
Manufacturing WFOE, no special requirements for Import / Export license
for its own products;
- Full
control of human resources
- Greater
efficiency in operations, management and future development.
Business
Scope
According to
WFOE regulations, "Foreign investors are permitted to setting up a 100%
foreign owned enterprise in industries that are conducive to the development of
China’s economic benefits, and not prohibited or restricted by China
government." The Catalogue of Guidance to Foreign Investment" categorises
fields of potential investment as "prohibited,"
"restricted" and "encouraged". It is advisable to fully
comprehend the interpretation of these categories. In China, Business scope of
a business is a "one sentence description" covering all of the present
and future activities of the WFOE; it is essential this encompasses every
envisaged scope of future activity. The WFOE can only conduct business within
its approved business scope, which ultimately appears on the business
licence.One of the most important issues in WFOE application is business scope.
Any amendments to the business scope require further application and approval.
Business scope of a company in China is not as broad and general as in other
countries. Generally business scope includes investment consulting,
international economic consulting, trade information consulting, marketing and
promotion consulting, corporate management consulting, technology consulting,
manufacturing, etc. After China's entry into WTO, more and more business is
open to WFOE especially in Trading, Wholesale and Retail business, check the
Catalogue of Guidance to Foreign Investment which was Amended in 2007.
Registered
and Paid up Capital
Registered
Capital: USD$140,000 is a good idea for all kinds of WFOE, with USD$ 140,000
investment it's easy to get approved. Initial Paid-up would be 20% of the
registered capital, the balance should be remitted within 2 years.
Registered
capital is the amount that it's required to run the business until it can break
even - the 'registered capital' is a guideline only. If you do looking for a
minimum registered capital, for instance RMB 30,000 (which is impossible to
establish a WFOE in China) this means you will run out of money pretty soon,
which leads to increased costs in reapplying for permission to increase
capital, additional licensing fees and renewals of business licenses and so on.
The WFOE needs funding via it's registered capital until it's about to support
itself from it's own cash flow.
However the
amount of registered capital is dependent upon factors like Scope of Business
and Location. In reality local authorities will review the feasibility study
report (and check the lease contract) approve the investment on a case-by-case
basis; reduced registered capital could be negotiated in some cases.
The minimum
registered capital guides for various industries according to our practice in
China, for instance Beijing, Shanghai[100k RMB registered capital Sample], Guangzhou, Shenzhen, Hangzhou,
Dalian, Ningbo are given below:
Consulting WFOE
|
RMB 100,000 ~ RMB 500,000
|
Service WFOE
|
RMB 100,000 ~ RMB 500,000
|
Hi-Tech WFOE
|
RMB 100,000 ~ RMB 500,000
|
Trading WFOE / FICE/ Retail
|
RMB 500,000 ~ RMB 1 million
|
Food &
Beverage WFOE
|
RMB 500,000 ~ RMB 1 million
|
Manufacturing WFOE
|
RMB 1 million or USD 140,000
|
Office address of WFOE [Very important]
Before
submit the application forms of forming a WFOE in China, the foreign investor
must rent a plant(manufacturing WFOE) or an office in advance(ridiculous? ),
the office of WFOE can't be in a residence building nor residence and commerce
(R&C) combined building. **Virtual address is not allowed to be registered
a WFOE there although it's widely existing for local companies. Anyway, a
normal office building in China will be OK for register a WFOE.
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