Start your Business in China!
8 Steps in starting a business in China in 2022.
How to start a business in China?
Most of companies nowadays are somehow directly or indirectly connected to China.
One of the many incentives created to boost the Chinese economy is that foreigners are able to enjoy their own special business category designed to attract foreign investment into China: which is called WOFE. Basically, a WOFE or also called WFOE, is a registration category full with benefits made to perfectly fit all types of activities you decide to do in China.
Corporation China’s goal is to make sure your registration process is done securely, correctly and under the right structure for your business.
How to start a business in China?
Start your China Wholly Foreign-Owned Enterprise Today!
8 Things you need to know before start a business in China as a WFOE.
1. What is a China WFOE?
The most obvious way for foreigners looking to do business in China is to set up a Wholly Foreign Owned Enterprise, abbreviated as WFOE or WOFE.
A Wholly Foreign Owned Enterprise is a limited liability company, also know as LLC, that is fully owned and capitalized by foreign investors and operated without a local Chinese partner. This provides you with greater control over your businesses operations, revenue and profit targets. A WFOE is the favorable option for an both individuals or overseas company that wants to enter the Chinese market.
2. Types of WFOE categories?
China Trading WFOE.
China Manufacturing WFOE.
China Consulting WFOE.
China Food & Beverage WFOE.
3. What are the Advantages and Disadvantages of Registering a WFOE?
Advantages of registering a WFOE?
In one hand, the majority of companies coming to China brainstorm on the sales strategy part of the plan of how to explore and conquer such a huge market. But on the other hand, some might overlook the fact that in order to successfully operate the new company, choosing the right structure is crucial to truly achieve a solid expansion. To better help on your decision process, here is a list with some of the key factors that makes a WFOE one the best options in China..
In addition, no need of minimum registered capital, no need of office rented, and no need to physically come to China to start it.
Here are some of the potential disadvantages
4. How Does a WFOE Compare to Other Types of Companies?
Setting up a WFOE in China means independent control of management and the ability to carry out worldwide strategies. In addition, it provides a legal status to protect know-how and technology, full control of human resources, great efficiency in operations, and self-financing…
If your business strategy in China just covers market survey, technology communication, and other indirect business activities, then a Representative Office is a more suitable option in your case. Unlike a WFOE, a RO is not considered to be a separate legal entity from the parent company and thus cannot carry out direct revenue earning business activities. Since it cannot enter into purchase/sales contracts and cannot receive payment for products or services, it cannot generate any income by itself, issue invoices or repatriate money overseas.
Another way to enter the Chinese market is via a Joint Venture (JV). In China, a JV is a form of enterprise created through the partnership between foreign and Chinese investors. The joint venture partners share the profits, losses and management of the JV. If you want to acquire the intangible assets of a JV (such as brand, etc.) and marketing channels, then a Joint Venture in china is also the right choice for your business.
How Does a WFOE Compare to Other Types of Companies.
5. WFOE Registration Process.
China WFOE Registration Steps.
6. Requirements to Register a WFOE in China.
7. WFOE Registered Address.
Why use a Registered Address?
8. WFOE Registered Capital.
The time when China used to require minimum registered capital for WFOEs is gone. Everything in China is now being shaped to promote foreign investment, this means regulations are constantly being changed and improved to enhance the business environment. Since March 1, 2014, the statutory minimum was waived for almost all types of WFOEs. Certain high-profile business scopes still have statutory minimum registered capital amounts. For instance, financial companies must have at least US$10M in registered capital. However, if you fall under a normal consulting company or if your business is import/export related, then you have nothing to worry about.
Nevertheless, is important to mention that after regulations changes in 2014 the new rules eliminated the minimum register capital requirement, but is still highly recommend, also common sense, that you to keep the amount of registered capital close to a realist assessment of the company’s operational proportions.
You will not be required to immediately make a deposit for the full amount of registered capital. The new default is that the registered capital can be paid within 30 years of the business license being issued.
China Payroll Services.
When we talk about income taxes in China its important to clarify the difference between Corporate Income Tax and Individual Income Tax. The assessment of these two categories is based on profits generate by entities during a given period, and salaries earned by individuals. All individual income taxes in China vary from 5% to 45%, exceeding more than RMB3500 for local staff and RMB 4800 for expatriate staff. The corporate income tax rate is fixed at 25%, based on the net profit.
Turnover taxes include Value-Added Tax and Consumption Tax. VAT percentages are usually 17%, 13%,11% ,6%, 3% and 0, being defined according to the company category and tax payer status.
Not much can be done when it comes to Custom Duties, regulations are pretty clear on this matter. Therefore all goods and articles imported into and exported out of the territory of the People’s Republic of China are entitled for duties.