Source: Xinhua | 2016-12-13
when your business is booming up and has a bright future in China, it's time to set up an office or a company here. But the process is very complex, and many fields are prohibited or limited by government, how can you make this much easier and quicker? Now, you need a local professional partner to help you to finish all the works.
What we can provide you:
The scope of our service is: Trading Company, Foreign Representative Office, Consultant Company, Manufacturing Company, Logistics Company, Branches of Foreign Enterprises,Registration of Trade Mark and Logo, etc. During setting up a new company, we can provide the services including:office and tax registration, all official applications ie, bank account opening, bank account application, work permit, residence visa, tax consulting service, tax application, business license application, etc.
How we do:
All our partners in this field are specialized Business Registration agencies certified by the Chinese business bureau. We offer courteous Business Registration service to private foreigners and staff of business organizations. After many years of operations, our company is familiar with the application procedures and the applicable domestic law. Now we are the expert of arranging business registration and related services.
Setting up a company in China can be very difficult if you are not familiar with the Chinese legislation and requirements of different authorities. Our professional consultants will help foreign companies to set up company in China in the most cost effective way.
Representative Offices in China
Representative Offices (ROs) are established by foreign companies to engage in business liaison, product promotion, market research, exchange of technology and other permitted activities in China.
ROs are not allowed to directly engage in operational and revenue related activities. The AIC usually specifies in the Business Scope, as shown in the Business License of ROs, that a RO should not engage in direct operational activities. Therefore, ROs are not a form of foreign investment in China. However, some ROs are engaged in operations in a lawful or tacitly permitted way and constitute one of the direct foreign Investment forms in China.
The tacitly permitted way is applicable to those industries that do not require special material conditions or environment for their operations. For example, a consulting business does not need manufacturing equipment and raw materials. It only needs offices, employees and office articles. These physical conditions are necessary for other ROs as well. In practice, many ROs that are established by foreign consulting companies directly engage in consulting activities. Chinese government does not prohibit them in practice and this is reflected by the fact that the tax authorities collect business tax from these Representative Offices (RO).
The lawful operational activities engaged in by Representative Offices (RO) refer to those business activities permitted pursuant to the bilateral treaties between China and other countries. In the event that a bilateral treaty provides that certain types of Representative Offices (RO) are permitted to engage in operational activities, these bilateral treaties should prevail over Chinese domestic law. For example, according to the Sino-US Civil Aviation Transportation Agreement, ROs established by American civil airlines may sell civil air transportation services provided by American civil airlines, as well as engage in administration, inquiry and other business activities.
It should be noted that up to now, only Representative Offices (RO) of foreign airlines are allowed to engage in direct operational activities in China under bilateral treaties. No other ROs of foreign companies are so permitted.
Representative Offices (RO) are important means by which foreign companies conduct business liaisons or engage in business and operational activities in China. In this respect, foreign companies refer all companies incorporated outside China, and those incorporated in Hong Kong, Macau and Taiwan.
A Representative Office may only engage in non-profit making activities, It can carry out the following functions:
1. Conduct research and survey for its parent enterprise in the local market;
2. Liaise with local and foreign contacts in China on behalf of the parent enterprise;
3. Conduct research and provide data and promotional materials to potential clients or trading partners;
4. Act as a coordinator for the parent enterprise's activities in China;
5. Make travel arrangements for parent enterprise representatives and potential Chinese clients;
Under no circumstances may a Representative Office do the following:
01 Directly engaged in any business for profit;
02 Sign contracts or deals on behalf of the parent enterprise;
03 Represent any firm other than its parent enterprise;
04 Collect money or issue invoice within China for services or products;
05 Buy property or involved in import trading
Features of a Representative Office
1.1 Legal Status of a Representative Office
The Representative Office is a non-legal entity operating representing its parent company. A representative office is not allowed to engage itself in business activities, issue invoices on its own, remitting outward, signing sales or purchase contracts, or receiving income from services performed but may act as a liaison and promotion office for its parent company.
The name of the Representative office should be in the form of "Name of the Enterprise + Name of the City + Representative Office (or Office)".
1.3. Business Address
At the beginning of setting up the Representative Office, it is advised to decide the place and building where office is going to be located first, as the address of the proposed office will have to be mentioned in the application for approval.
Note: the business address must be located in commercial buildings approved by the government.
Feel free to contact us if you have any question or need of any assistance as Busiunion is the expert in setting up of Representative office.
Joint VentureA Joint Venture (JV) is a business arrangement in which the participants create a new business entity or official contractual relationship and share investment and operation expenses, management responsibilities, and profits and losses.
The Wholly Foreign Owned Enterprise (WFOE) is a Limited liability company wholly owned by the foreign investor(s). In China, WFOEs were originally conceived for encouraged manufacturing activities that were either export orientated or introduced advanced technology. However, with China's entry into the World Trade Organization, these conditions were gradually abolished and the WFOE is increasingly being used for service providers such as a variety of consulting and management services, software development and trading as well.
The registered capital of a Wholly Foreign Owned Enterprise (WFOE) should be subscribed and contributed solely by foreign investor(s). A WFOE does not include branches established in China by foreign enterprises and other foreign economic organizations. The Chinese Laws on WFOE do not have a clear definition of the term of "branches". The term of "branches" should include both the branch companies engaged in operational activities and representative offices, which are generally not engaged in direct business activities. Therefore, branches and representative offices set up by foreign enterprises are not WFOE.
DIFFERENT TYPES OF WFOE
Following are different types of WFOE. Commonly:
(1) If the WFOE only be allowed to manufacture here, we can say it's manufacture WFOE.
(2) If the WFOE is allowed to do Consultancy & Service, we call them Consultancy Service WFOE.
(3) If the WFOE is allowed to do Trading, Wholesale, Retail or Franchise in China, we call them Trading WFOE or FICE (Foreign-Invested Commercial Enterprise).
ADVANTAGES OF WFOE
The advantages of establishing a WFOE, compared with other types of enterprises, include, but not limited to:
(1) Independence and freedom to implement the worldwide strategies of its parent company without having to consider the involvement of the Chinese partner;
(2) 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;
(3) Capability of converting RMB profits to US dollars for remittance to its parent company outside of China;
(4) Protection of intellectual know-how and technology;
(5) No requirement for Import / Export license for its own products;
(6) Full control of human resources
(7) Greater efficiency in operations, management and future development.
One of the most important issues in WFOE application is business scope. Business scope needs to be defined and the WFOE can only conduct business within its approved business scope, which ultimately appears on the business license. Any amendments to the business scope require further application and approval. Inevitably, there is a negotiation with the approval authorities to approve as broad a business scope as is permitted.
With China's entry into WTO, more and more business is open to WFOE especially in Trading, Wholesale and Retail business.
REGISTERED AND PAID UP CAPITAL
Investment Capital: USD$140,000 is a good idea for all kind of WFOE, it's easy to get approved.
GENERAL TAX INFORMATION
The corporate tax rates range from15% to 31%, depending on the places where the company is registered. Shanghai is among the lowest in the region. All enterprises are required to report to the Tax Administration Department monthly. You are welcome to contact us for more information.
Any limited companies in Shanghai should submit annual return to the relevant authorities. The annual cost is about USD300. Any company will be subject be to a fine if the Annual Return is not submitted in a timely manner.
TERMS AND TERMINATION
In China, terms of 15 to 30 years are typical for a manufacturing WFOE (although some may have a longer term). It is also possible to obtain extensions of the WFOE's duration. For projects in which the amount of investment is large, or the construction period is long and the return on investment low, projects producing sophisticated products using advanced or key technology provided by the foreign partner, or for projects producing internationally competitive products, the term of WFOE may be extended to 50 years. With special approval from the State Council, the term may be even longer than 50 years.
The WFOE may be terminated under certain conditions. For example, the inability of the WFOE to operate due to heavy losses, or in the occurrence of an event of force majeure, etc.
Feel free to contact us if you have any question or need of any assistance.
Documents required for Registration
Documents required for WFOE Registration:
1. Copy of Business License of parent foreign company which was certificated by Chinese Embassy (if it's personal investor, then passport copy certificated by Chinese Embassy is enough)
2. The last annual audit report from the parent foreign company. The audit report should be in the format as prepared by a Certified Public Accountant (CPA)
3.2 Credit letters from foreign company banker to declare a good credit within at least current 6 month
4. The resume, copy of the passport and 8 pieces of passport size photos of the Legal Representative of the WFOE
5. The parent company's legal representative's passport copy
6. Business scope and how long the WFOE is going to do business in China
7. Brief introduction of the foreign investor(s) including name, address and telephone number
8. Total investment and registered capital and the make up of investment
9. Registered address, leasing contract, certificate of real estate, and certificate for leasing ( We can provide free virtual address for the registration upon your request, no need to rent an office in advance)
The above document is enough to register a Trading & Consulting WFOE, but if you want to register a Manufacture WFOE, you have to prepare following extra documents:
1. Purpose and estimated investment
2. WFOE's operational structure and number of employees
3. Permission for land use, environment evaluation report
4. Products, size of production, detailed list of equipment, and business plan
5. Environmental protection measures
6. Requirement for utilities such as power and water supply
Documents required for Joint Venture Registration:
1. Project Proposal and Application Form for Project-Establishment
2. The Credit Certificate given by the bank where an investor has opened an account
3. 2 copies of the IDs of the Chinese and foreign investors
4. 2 copies of the investors' legal Certificates of Business (Business License)
5. Contract and appendix
6. Constitution of the company and the appendix
7. Name list of the directors of the board
8. List of equipments and accessories need to be imported
9. Other documents are subject to the requirement of the government
Documents required for Representative Office Registration:
You are responsible for the preparation of the following information and documents:
1. A set of incorporation documents of the applicant company, including Certificate of Incorporation and Business Registration Certificate, if any; The whole set of incorporation documents together with the bankers' reference letter shall be legalized by Chinese Embassy or Consulate General in the country where the parent company is incorporated;
2. Original copy of bankers' reference letter issued in the name of the applicant company and addressed to Shanghai Industry and Commerce Administrative Bureau
3. 2 copies of original Tenancy Agreement (lease agreement) of the office premise to be used by the Representative Office; the lease term should not be less than 12 months; the tenancy agreement should be registered with Shanghai House Management Bureau;
4. Photocopy of the Certificate of Property Owner evidencing the landlord owning the property;
5.A brief summary of the operations and business of the applicant company, such as the principal business activities, registered address, contact phone number, name of the applicant company; the address and contact number of the managing director of the applicant company;
6. The resume, 8 pictures, passport copy, contact number of the Chief Representative and the address where the Chief Representative will be staying while she/he is China;
7. If there is(are) Representatives to be stationed in China in addition to the Chief Representative, the resume, 2 pictures, passport copy, contact number of the Representative and the address where the Representative will be staying while she/he is China.
Contact: Newyork Liu
Add: No. 351, Tianshanxi Road, Changning District, Shanghai, China