China Partnership Enterprise Formation

When setting up a  company in China, there are numerous things to consider and hence it is important to seek appropriate legal help. Corporation China has developed an unparalleled expertise in this area and can provide you with everything necessary to set up your consulting company.  Corporation China offers first class solutions to all of the following requirements.

• Corporation China is the Largest Foreign Direct investment firm is Asia Pacific.  [wikipedia]

Location

In China, prospective clients and business partners will often ask you where is your company located in China. Hence, a good location is an asset. At Corporation China, we offer excellent solutions for this through our Virtual Office System China Presence™ or our China Virtual Entity™ system.

• With offices in 44 locations across China, our closed office is never far away.

Bank Account

Due to existing restrictions on international money transfers in China, your mainland-based clients will only be able to pay you within China. Therefore, a bank account in which local companies can transfer you Chinese RMBs is necessary. 

• Corporation China can Guarantee a Bank Account for all our clients.

The Advantages of Establishing a PE

• No corporate income tax for partnership enterprise;
• No requirements on minimum registered capital;
• Fewer procedures comparing with Wholly Foreign Owned Enterprise or Joint Venture
• The capability of converting RMB profits to US dollars for remittance to its parent company outside of China;
• Foreign Enterprise or Individual is allowed to establish a Partnership Enterprise with Chinese individual (While Chinese individual is not allowed to have Joint Venture with a foreign investor)
• The profit distribution of a PE could follow an informal negotiated agreement or abide by the scheme adopted in the partnership agreement (While for LLC, profit distributions is according to the percentage of investment of shareholders)

The Disadvantages of Establishing a PE

• Unlimited liability; A partnership must pay all its debts with property contributed to the partnership by the partners. If the partnership is a general partnership then the partners bear joint and several liabilities;
• Limited business names options: Can’t have a business name with “Company” in it, eg, can’t have name lie XYZ Co., or XYZ Co., Ltd. and could only choose names like XYZ Firm (PE), XYZ center (PE)
• Property rights of partnership enterprise are difficult to be transferred to a third party as according to the Partnership Enterprise Law: the property rights of partnership transfer MUST be agreed by all partners in a PE;
• China has not adopted Natural Person’s Bankruptcy system, the credibility of the partners would be hard to maintain if PE involves into a hard situation
• As for the trading business of a PE, since PE is not a general taxpayer, PE can’t get VAT status, and can’t apply for VAT rebate accordingly