China Company Registration
China Company registration process
The China company registration process differs depending on which type of company the investor wishes to set up. WFOE Wholly Foreign Owned Enterprise is a Limited liability company that is solely owned by foreign investors, unlike setting up joint ventures where there will be a Chinese partner.
WFOEs were intended for encouraging exports to China and introducing advanced technology. It is used by many service providers with consulting and management services, software development and trading. Any company in China that is owned 100% by a foreign company is called a WFOE. The information contained below will offer you some insight into how business in China works. Corporation China is committed to helping its clients through the entire process of setting up.
The benefits of a China company registration
Businesses that want to set up in China can expect an increased number of sales as the Chinese market thrives. China is the world’s second largest economy and largest population in the world. You have access to clients in other parts of the world such as Asia which is another large market. China has a growing demand for high-end devices and services. Many companies choose to transfer the manufacturing part of their business to China. Wages are lower compared with other western countries, therefore, are cheaper. That means that companies can reduce costs and increase materials needed for production. Companies from the US can reinvest their earnings into China-based companies without tax implications. Chinese companies that import goods enjoy import duty concessions.
Business registrations in China
Starting up a business in China may take around 30 working days to set up as the companies must go through a pre-approval process. Markets are expected to prepare a feasibility study which must be approved by the State Administration for Industry and Commerce (SAIC). The government tends to favor Wholly Foreign Owned Enterprise Chinese business over the foreign overseas trade in disputes. However, Corporation China will help its clients through the process, making things simple, timely information and stress-free for them.
Why Invest in in China?
Following China’s entry into the World Trade Organization (WTO), most industries in China want to invest in foreign companies. WFOE was the first option, instead of a Representative Office or joint ventures, for foreign companies to invest in China. However, due to business license and income taxes, many investors use Hong Kong as a holding company to invest in Chinese cities. Companies from all over the world can benefit from the vast opportunities presented by China. Since the country is the worlds second largest economy and an important trading partner for many countries, China is the obvious choice for those looking to expand their business overseas. It is one of the world’s largest manufacturers and is worth trillions of dollars. The rewards of setting up a WFOE in China are great, and many companies around the world have had much success from expanding their business.
Advantages of a WFOE
There is a wide range of benefits to setting up a WFOE in China. Below are just a few of them:
- You have the independence and freedom to implement the same strategies of the parent company. You do not need to worry about involving the Chinese partner in these decisions.
- You can personally carry out business instead of just being a representative office. You can also issue invoices to customers and receive revenues.
- You will be able to convert the money you make to dollars and transfer it to the parent company which is outside of China.
- Total control of human resources
- Greater efficiency on how the business operates, how it develops and how it is managed
- The parent company does not have to be established for more than two years unlike with a Representative Office. Their parent company is required to be developed for more than two years.
Business scope in China
An important issue regarding the WFOE application is the business scope. Foreign investors need to identify where they will be conducting business and this must be included in the WFOE application and ultimately on their business license. The request for amendments to their business scope and its approval can easily be made with the assistance of Corporation China with their headquarters based in Shanghai China
Business scope includes investment consulting, international economic consulting, trade information consulting, marketing and promotion consulting, corporate management consulting, technology consulting, manufacturing.
What are the best uses for a China Company
China is an excellent location for setting up a company that has manufacturing operations because raw materials are easy to access, as well as workforce and equipment. Manufacturing companies also receive several tax incentives. People wanting to set up a trading company in mainland China will benefit from the broad market space and consumer base. China is a viable platform for foreign-owned businesses because:
- It has a population of 1.41 billion people.
- The Chinese economy has high-quality workers who make things easier for employers setting up in China.
- Setting up a bank account in China
- With companies like Corporation China, you don’t need to stress about setting up your business. The firm will handle all your legal matters and make the transition as smooth as possible for its clients.
Many clients may not want to travel for opening up a bank account in China, and they are recommended to open an account with one of the following banks:
- DBS Bank
- OCBC Wing Hang
These banks offer international services including savings accounts, debit/credit cards, fixed-term deposits and checking accounts which are recognizable by foreign investment companies.
What documents for company incorporation in China?
Except the standard personal and corporate verification reports of clients wanting to set up an office in China, they also need:
- A legal representative
- Power of attorney granting authority to the legal representative
- A copy of the lease agreement
- Detailed business plan
Foreign investors cannot submit their application documents for a WFOE on their own. They must enlist the help of a Chinese entity that is permitted to act as an registration agent on their behalf. The China Registration agent will then arrange to submit the relevant documentation to the approval authority. Corporation China is one of the largest company Formation Firms in China and also the most affordable at present.
Some of the procedures needed for setting up a WFOE in China include:
- Name registration with State Administration of Industry and Commerce (SAIC)
- Organization Code License by Technical Supervision Bureau (TSB)
- Tax Certificate by Taxation Bureau
- Registration and Approval with State Administration of Foreign Exchange (SAFE)
- Open foreign currency and RMB bank account
- Inject capital from investor’s overseas bank account
- Capital Verification Reports by Certified Public Accountant (CPA)
- Apply for permanent Business License with SAIC
- Financial certificate registration
- Import/Export license (applicable for Trading & Manufacturing WFOE)
Success in the Chinese market
Many well-known brands have had much success following taking their brand to China. The following are just two examples of successful trade in China:
Apple iPhone – Consumers amounted 33% of all iPhone users across the world. There were approximately 243 million iPhone users in 2017.
Tesla – American automotive and energy company Tesla is currently planning to open up a plant in Shanghai where they hope to manufacture 500 000 vehicles a year. The company made $2 billion in China last year.
Set up your business in China
The information contained above offers a clear and concise explanation of how WFOE businesses are set up in China and provides some perspective into the overall process. The Chinese government offers support to help foreign investors enter the Chinese market. In the last five years, the Chinese private risk capital has started to mature and thus there is a wide availability of money in the market. The policies and regulations for foreign investors in China are constantly changing and upgrading. Therefore new opportunities could be on the horizon. In addition to this, the Chinese consumer market is growing, and businesses have more room to grow in China that in many other countries. It is relatively easy for business owners to scout partners, resources and investors in China and Corporation China will facilitate and help you expand your business.
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