Recently updated on April 15th, 2021 at 03:00 am
As per the laws and regulations in the P.R.C., it may take 3 to 6 months to finish the procedures of establishing a trading company with foreign capital invested, let alone miscellaneous procedures and multiple various documents demanded to submit. After the establishment, different taxes will be required for any business income of the company. Furthermore, foreign shareholders have to fulfill intricate proceedings to have their profits remitted out of China. Hence, in the event that the trading amount is not huge, hiring an import & export agent to work on the transactions is suggested, rather than setting up a foreign-funded corporation.
Edward Liu: I just want to establish a representative office with foreign partner.
Petula Parris: Hi Edward. A Representative Office can’t be a joint venture (also, as a Rep Office is a branch of an overseas company, there is a rule that the parent company must have been established for two years). That leaves you with two main options. First, you can set up joint venture company in China. For this, the Chinese shareholder must be a company (not an individual), although the foreign shareholder can be either. The second option is to set up a company with your foreign partner in Hong Kong (both shareholders can be individuals or companies), and then use this company to register a WOFE (Wholly Foreign-Owned Enterprise) in China. A Hong Kong company can be set up in a couple of days, and is very inexpensive. Hope this helps! Petula
Menno Aartsen: Same thing foreigners in most countries have done for the past 100 years or so – hire a lawyer, and an accountant, and figure out where your favorite hotel is.
Kelly Harel: So if a Hong Kong company (100% foreign owned) wanted to set up a small manufacturing facility in China using 100% Chinese work force with foreign management what is the process, how long does it take and what would be the approximate costs? 100% of the products made at this factory would be for export.
xiaoyan shao: It is much easier to have an office in china shanghai pilot trade zone now specially for foreigner company, last week I was there to acquire information about establishing a company in pilot trade zone, there are some polices to simplify the workflow and lower taxes. Maybe you can get some info there. Here is the info link en.shftz.gov.cn
Petula Parris: Hi Kelly. What you want to achieve is possible with a WFOE (Wholly Foreign-Owned Enterprise). A WFOE will allow you to open a facility in China, and employ foreign management and Chinese staff (it entitles you to apply for visas for your foreign management). There are several different types of WFOE, one of which is specifically for manufacturing (called, unsurprisingly, a manufacturing WFOE!). To register a manufacturing WFOE, you need a minimum capital requirement of CNY500,000 (the capital can be used to run the company and can be paid up in installments over a 24-month period). You usually need to allow around 3 months to finalize everything, including applying for the various permits, opening your bank accounts and verifying your capital.
Stephen Zheng: Hello Kelly,
Like Petula said, WFOE is permitted as per laws in China. But for a manufacturing facility, it depends on what sector you decide to have, since foreign investments are not allowed to enter some industries in China. Also, the approval period differentiates among local governments. Literally the location of your manufacturing tells different time consumption and government charges.
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