China Foreign-Invested Commercial Enterprise
How to expand your business to China by setting up foreign-invested enterprise (FIE)
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What is a Foreign-Invested Commercial Enterprise?
The FICE is a Limited liability company set up for agencies, Retail Businesses, and Franchise businesses.
Foreign-Invested Commercial Enterprise is a foreign company that does not concentrate on production in China but on import and export. A FICE is a Wholly Owned by Foreign Enterprise (WOFE) with import and export rights. Like a WOFE, a FICE could be wholly financed by foreign investment, and a Chinese partner is not required. Exceptions are products like books, sugar, salt, oil, etc. For these products, a Joint Venture with a Chinese partner is required. Generally, a FICE has no rights for tax advantages and is being taxed like a Chinese-invested company. This means that tax planning at the pre-incorporation stage must be part of the investment structuring process.
A FICE’s incorporation procedure differs from a WOFE because a FICE needs the pre-approval of Chinese import and export authorities
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Foreign-invested Commercial Enterprise introduction
A foreign-invested commercial enterprise is a foreign-invested enterprise that engages in the following areas:
Agency with the commission: selling other owned goods and providing related services by sales agency of goods, broker, auctioneer, or another wholesaler based on the contract between the parties.
- Wholesale: selling goods and providing services to the ailer, industrial user, commercial user, organizational user, and other wholesalers.
- Retail: selling goods and providing services to individual or collective consumers in fixed locations or using television, telephone, internet, and automat.
- Franchise: license trademark, t, ade name, and business model by entering into a contract with others for returns and license fee.
Wht can a China FICE be used for
A China FICE is the optimum way for a foreign company to distribute its products in China. There are two main types of China FICE as follows:
A China Foreign-Invested Commercial Enterprise is a foreign company that does not concentrate on production in China but on imports and export. A FICE is a Wholly Owned by Foreign Enterprise (WOFE) with import and export rights. Like a WOFE, a FICE could be entirely financed by foreign investment, and a Chinese partner is not required.
- Wholesale China FICE – a wholesale China FICE may conduct commodity wholesale; commission-based agency activities; import and export of commodities; warehousing services; marketing services; product installation and after-sales services; indirectly engage in retail activities via franchisees.
- Retail China FICE – a retail China FICE may conduct commodity retailing activities; import merchandise; source and export Chinese products; conduct TV and telemarketing, mail order sales, Internet sales, and vending machine sales. A proposed shop must conform to the city’s urban and commercial development plans to open a shop when establishing the retail China FICE. If applying to open a store after the setup of the retail China FICE, in addition to meeting the requirements, the enterprise must also have undergone annual inspection on time and have received the registered capital from its investors.
Required documentation for registering a Foreign-Invested Enterprise (FIE)
The process of setting up a FICE
A FICE’s incorporation procedure differs from a WOFE because a FICE needs a pre-approval of Chinese import and export authorities.
The registration of a FICE Company takes 30 working days to establish. The t use can vary among many different operations in China. In most cases, the ideal way to register your company is as a Limited-Liability type comForeign-investing invested Commercial Enterprise, abbreviated as FICE, imWOFE, or foreign-invested enterprise (FIE). A WOFE is a standard used as the investment vehicle for mainland China-based businesses
A foreign-invested commercial enterprise in retail can engage in the following Businesses upon appropriate approval:
- Retail/Import of self-operation goods
- Purchase and export of domestic products/other related services.
- A FICE in wholesale may engage in the following businesses upon approval: Wholesale/Agency with the commission.
- Import and Export or other related services.
Foreign-invested commercial enterprises (FICE) may be capitalized by foreign investors and operated without the need for Chinese partners or employees. It will give you greater control over your business’s operations, revenue, and profit targets. A FICE is a favorable option for individuals and overseas company that wants to enter the Chinese market.
Foreign invested enterprise China establishment can be 100% owned and be funded by foreign direct investment.
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 where local companies can transfer Chinese RMBs is necessary.
- Corporation China can Guarantee a Bank Account for all our clients.
Advantages & Disadvantages ofForeign-Invested Commercial Enterprise
Advantages of a China FICE
Unlike a China WOFE (Wholly-Owned Foreign Enterprise), a China FICE can open and operate branch offices anywhere within China. Furthermore, a China FICE can be 100% foreign-owned.
A China FICE can carry out various activities, including wholesale, retail, and franchising trade activities in China. This is thanks to the updated policy of trading and distribution rights made in 2004, as these sectors were previously closed or restricted for foreign companies.
Foreign investors planning on setting up a China FICE should note that there are no annual turnover or minimum asset requirements. Previous regulations required an annual average turnover of at least US$2.5 billion three years before the application and a minimum asset value of US$300 million in the year before the application.
Investors planning to further their business scope in China can upgrade their China representative office to a China FICE
Setting up a China FICE can take up to 3 months if all supporting information and documents are available.
A China FICE must inject a minimum of 20% of the paid-up capital into a corporate bank account within the first month of incorporation. The 80% balance is injected into the account in installments within two years of incorporation. The minimum registered capital required for; trading rights is RMB1 million (US$145,700),wholesale distribution rights is RMB500,000 (US$72,800) and for retail distribution rights it is RMB300,000 (US$43,700).
China company law regulations allow foreign companies to undertake manufacturing activities in China. A manufacturing FICE is similar to a WOFE but with an import/export license. Furthermore, wholesale China FICE must obtain approval from the Ministry of Commerce in Beijing and the authorities in the province it intends to set up. On the other hand, a retail China FICE must obtain approval only from provincial authorities to open a retail store in China.
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