Incorporation in China
Investors may establish enterprises or offices in China.
Foreign investment should be in line with China's
industrial developing policies and concrete requirements
in China. The project proposal will be submitted for
examination and approval before the enterprise is to be
formed. Each different form has different
characteristics, especially the ownership, import &
export of products, and the rights of domestic sales,
etc.
- Foreign Joint Venture / Cooperative Venture
- Foreign Wholly-Owned Enterprise
- Processing factories in form of Compensation Trade,
Processing and Assembly on Order and Leasing.
- Foreign investors may setup Representative Office (RO)
in the main cities in China (mostly in ShenZhen,
GuangZhou, Shanghai and Beijing) for business
connection, products introduction, marketing, technology
exchange and consulting services. However, direct
business activities in RO are not allowed.
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Wholly
Foreign-Owned Enterprise (WFOE)
Download Details (PDF English version )
A wholly foreign-owned enterprise is a business entity
formed in China entirely with foreign capital. It is
totally under foreign control and does not have any
formal Chinese ownership participation. For a foreign
company to be able to issue receipts and export goods
from China, it must be able to legally registered as a
local company or a WFOE. A WFOE is set up as limited
liability entity and represents separate legal persons
and is taxed according to local legislation.
WFOE’s can generally control their own governance
through the articles of association and the normal
minimum paid up share capital starts from 1 million RMB
(approximately US$140,000), however some provinces offer
lower capital requirements in order to attract more
foreign investment. Many foreign investors find this
type of company attractive because of the full control
and 100 percent ownership.
WFOE PROCEDURE
Documents Required:
- Bank Statement of the Credit
- Project Proposal (purpose, business scope, period,
investment amount, among others)
- Certificate of Registration and Testimony
- Statement on the Products and Technologies
- Duplicate of Confirmation Letter of the 3 Applied
Company Names
- Report on Feasibility Study
- Memorandum & Articles of Association
- A Name list of the Board and Senior Executives
- List of Equipment to be Provided (if any)
- Passport or Residential Card of the Legal Person
- Lease Agreement or Purchasing Contract of Company
Premises
- Lease of the office or factory
- Authorization Documents for the Board and Senior
Executives
- Other Documents (relevant authorities may require
additional documents as per specific cases)
Setup requirements:
Authorized capital:
Besides, to prevent the certificate of approval from
becoming invalid automatically, the first installment
shall be made with no less than 15% of the total amount
within 90 days from the day when the business license is
issued.
Joint
Venture (JV)
A Joint Venture 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 Chinese authorities encourage foreign investors to
use this form of company in order to obtain exposure to
advanced technology and new management skills. In
return, foreign investors can enjoy low labour costs,
low production costs and a potentially large Chinese
market share. Joint Ventures are sometimes the only way
to register in China if a certain business activity is
still controlled by the government, for example
restaurants, bars, building and construction, car
production, cosmetics etc.
PROCEDURES OF THE PEOPLE’S REPUBLIC OF CHINA FOR THE
REGISTRATION AND ADMINISTRATION OF CHINESE-FOREIGN JOINT
VENTURES
(Promulgated by the State Council on and Effective as of
July 26, 1980)
Article 1.
In accordance with the provisions of the Law of the
People’s Republic of China on Chinese-Foreign Joint
Ventures, these Procedures are formulated in order to
carry out the registration and administration of
Chinese-foreign joint ventures and to safeguard their
lawful operations.
Article 2.
A Chinese-foreign joint venture that has been approved
by the Foreign Investment Commission of the People’s
Republic of China shall, within one month after
approval, register with the General Administration for
Industry and Commerce of the People’s Republic of China.
The General Administration for Industry and Commerce of
the People’s Republic of China shall authorize the
administrative bureaus for industry and commerce of the
provinces, autonomous regions and municipalities
directly under the central authority to handle
registration procedures for Chinese-foreign joint
ventures within the areas under their jurisdiction, and
business license shall be issued after examination and
approval by the General Administration for Industry and
Commerce of the People’s Republic of China.
Article 3.
A Chinese-foreign joint venture that applies for
registration shall present the following documents:
(1) The document of approval issued by the Foreign
Investment Commission of the People’s Republic of China;
(2) Three copies each of the Chinese and foreign
language texts of the joint venture agreement and
contract signed by the parties to the joint venture and
its articles of association; and
(3) A copy of the business license or other documents
issued by the competent department of the government of
the country (or region) from which the foreign joint
venturer(s) come.
Article 4.
When a Chinese-foreign joint venture applies for
registration, it shall fill out three copies each of a
registration form in Chinese and a foreign language. The
main items of registration shall be: the name of the
venture, the address, the scope of production and
operation, the form of production and operation, the
registered capital and the proportion to be provided by
each party to the joint venture, the chairman and vice-
chairman of the board of directors, the president and
vice-presidents or the factory manager and deputy
factory managers, the number and date of the document of
approval, the total number of staff and workers and the
number of staff and workers of foreign nationality.
Article 5.
From the date it is issued its business license, a
Chinese-foreign joint venture shall be regarded as
formally established, and its legitimate production and
operation activities shall be protected by the laws of
the People’s Republic of China.
Unregistered enterprises shall not be permitted to go
into operation.
Article 6.
A Chinese-foreign joint venture shall, upon presenting
its business license, open an account with the Bank of
China or a bank approved by the Bank of China and
register with the local tax authorities for the payment
of taxes.
Article 7.
When a Chinese-foreign joint venture desires to move to
a new site, change its line of production, increase,
decrease of assign the registered capital or extend the
contract period, it shall, within one month after
approval by the Foreign Investment Commission of the
People’s Republic of China go through procedures for
registering the changes with the administrative bureau
for industry and commerce of the province, autonomous
region or municipality directly under the central
authority where it is located.
When there are changes in other registered items, they
shall be reported in writing at the end of the year to
the administrative bureau for industry and commerce of
the province, autonomous region or municipality directly
under the central authority where the joint venture is
located.
Article 8.
When a Chinese-foreign joint venture registers or
modifies its registration, it shall pay a registration
fee or a fee for modification of registration, the
amount of which shall be stipulated by the General
Administration for Industry and Commerce of the People’s
Republic of China.
Article 9.
A Chinese-foreign joint venture, upon the expiration of
the contract period or upon termination of the contract
before the date of expiration, shall go through
procedures for nullifying its registration by presenting
the document of approval, issued by the Foreign
Investment Commission of the People’s Republic of China,
to the administrative bureau for industry and commerce
of the province, autonomous region or municipalities
directly under the central authority where it is located
and, after examination and approval by the General
Administration for Industry and Commerce of the People’s
Republic of China, hand in its business license for
cancellation.
Article 10.
The General Administration for Industry and Commerce of
the People’s Republic of China and the administrative
bureaus for industry and commerce of the provinces,
autonomous regions and municipalities directly under the
central authority have the right to supervise and
inspect the Chinese-foreign joint ventures within the
area under their jurisdiction. Violators of these
Procedures shall be given a warning or a fine in
accordance with the seriousness of each case.
Article 11.
These Procedures shall go into effect on the day they
are promulgated.
(The English translations are for reference only)
Representative
Office (Rep. Office)
The simplest and most cost effective method of
establishing a useful business presence in China is the
Rep Office. The choice for an initial Rep office will
normally be determined by basic market and product
research in China. The high profile cities of Shanghai,
Beijing, Guangzhou, and Shenzhen are the most likely
choices for the Rep office. It should be noted that more
than one Rep office can be established in China by a
foreign entity.
A Rep. Office is an entity involved in business
activities, which do not result in direct profits being
made by the office. They are not allowed to operate as
partnerships or sole proprietorships in China as they
are not recognised as legal persons. However, they are
allowed and encouraged to conduct ‘indirect operational
activities’ such as liaison for business purposes,
introduction of products, market research and technology
exchange. These activities should be preparatory and
supplementary activities, market research on the local
market, providing business information and supplying
sales for the headquarters.
Documents required
Applicant companyˇs
- Certificate of Incorporation
- Membersˇ Register
- Directorsˇ Register
- Last filed return to Company Registry
- Last filed return to Tax Department
- Company / business profile and reason of setting up RO
- Minutes of Board Meeting to setup RO
- Minutes of Board Meeting to authorize Chief
Representative
- Bank reference letter
Chief Representativeˇs
- Passport copy
- Photos
- Resume
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