We offer Business registration service in China
We offer complete business registration service in China, including consulting, providing all applications forms, guiding you to fill them correctly, get the registration documents from the local authorities, opening the bank account, company annual audit and accountant service, hiring staff, consulting in taxation optimization.
Foreign Investors generally establish a business presence in China in one of five modes: Wholly Foreign Owned Enterprise (WFOE); Representative Office; Joint Venture, Partnership Enterprise (PE) and Hong Kong company, the definition difference between each of these are summarized below.
Types of business presence in China:
Wholly Foreign Owned Enterprise (WFOE) is a Limited liability company wholly owned by the foreign investor. WFOE requires registered capital and it's liability of equity, can generate income, pay tax in China and its profit could be repatriate back to investor's home country. Any enterprise in China which is 100% owned by a foreign company or companies can be called as WFOE.
Representative Office (RO) is a Liaison Office of its parent company. It requires no registered capital. It's activities would be: product or service promotion, market research of its parent company's business, Quality Control liaison office etc in China. RO generally is prohibited to generate any revenue nor generating contracts with local businesses in China.
Joint Venture (JV) is a Limited liability company formed between Chinese company investor and Foreign investor. The parties agree to create an entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise. JV usually been used by foreign investor to engage the so called restricted in areas such like: Education, Mining, Hospital etc.
Hongkong offshore company usually been used as a Special Purpose vehicle (SPV) to invest Mainland China. Hong Kong is one of the quickest locations to Incorporate a business. Although a HK company is not a legal entity in Mainland China, especially investors from Europe and North America still chose to setting up a Hong Kong company as SPV to invest China.
Partnership Enterprise (PE) for Foreign Investor is a new type of business presence in China, it's carried out since March 1, 2010. It refers to: a). 2 or more Foreign enterprises or individuals establish a Partnership Enterprise (PE) in China; and b). Foreign enterprise(s) or individual(s) with Chinese individual, company establish a Partnership Enterprise (PE) in China. It's a new type of business entity in China, and this might take some time for local authority to finger it out how to compliance with other types of business entity establishment.
Comparison Chart for 4 businesses modes in China
Comparison of Business Operations in China: Shanghai, Beijing, Hangzhou, Hong Kong
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ITEMS
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WFOE/ JOINT VENTURE
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REPRESENTATIVE OFFICE
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HONG KONG COMPANY
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PARTNERSHIP ENTERPRISE
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Minimum Capital
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Starts from 100K RMB
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Not capital required
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1 HKD
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No minium capital required
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Business Scope
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Specific Industry: Trading WFOE; Consulting WFOE, Manufacturing WFOE(*1) etc.
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Liaision; Quality Control; Factory Visiting
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All business activities offshore; General Trading
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Specific Industry according to Foreign Investment Industrial Guidance Catalogue
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Office
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In an office building which could register business
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Shanghai: Grade A building; Beijing: office building
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Virtual address in HK
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In an office building which could register business
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Working Visa
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1 year multi-entry Visa(*2)
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1 year multi-entry Visa
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Couldn't have work visa in China and HK
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1 year multi-entry Visa(*2)
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Recruiting Staff
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recruiting staff directly
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Through Local HR agency: FESCO, CIIC
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Can't recruiting staff in China
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recruiting staff directly
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Taxation
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Turnover tax; Income tax, Dividend tax (3*)
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approx. 10%-15 (4*)on expenses; individual income tax
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Corporate Income tax: 16.5%. No dividend tax
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Turnover tax; individual Income tax, Dividend tax (3*)
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Maintenance
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Monthly; Quarterly; Annually
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Monthly; Quarterly; Annually
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Annual: License renew; audit report
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Monthly; Annually
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Bank Account
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access & receive money; pay bill; issue cheque; withdraw cash in China; RMB account and Foreign Currency
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Could only receive money from parent company; Could only pay for expenses; Can't pay for products
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Online banking; Withdraw cash in HK; Withdraw cash with debit card in China if applicable
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access & receive money; pay bill; issue cheque; withdraw cash in China; RMB account and Foreign Currency
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Invoicing
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official invoice in China
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Can't issue invoice or receipt
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Customized A4 size receipt
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official invoice in China
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Receiving payments
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World Wide
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Not allowed to receive payments from clients
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World Wide (*5 )
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World Wide
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Liability of equity participants
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Limited to amount of registered capital
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Parent company. Parent Company must be established over 2 years (*5)
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Limited to amount of equity participation
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Unlimited liability or limited liability in an limited partnership enterprise
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(*1) WFOE/ Joint Venture can only conduct business within its approved business scope, which ultimately appears on the business license. Any amendments to the business scope require further application and approval. Please check point 5 at www.wfoe.org for more details.
(*2) Check the details of residence permit in China at www.pathtochina.com/visa.htm
(*3) There are 2 major taxes for WFOE and Joint Venture in China: Turnover tax (which including Business tax and VAT tax etc.), Income tax (corporate income tax, individual income tax) For Business tax: Based on turnover, it's 5-6% applies to the service oriented business; VAT tax: Based on Value added part of the products, applies to trading and manufacturing businesses; Corporate Income tax: based on gross profit, it's 25% national wide (Since Jan. 1st, 2008) except High technology businesses with tax incentives in Special economic zone, and encouraged industries in middle-western China (Starts from Jan. 1st, 2009). Other taxes including dividend tax: it's 20%. As for public listed company, the dividend tax is: 10% since June 13th, 2005.
(*4) Rep. office's tax used be based on 9% on expenses. Since March 2010, it has been changed over to approx. 11% according to new regulation from local taxation bureaus in Shanghai, Beijing and Shenzhen.
(*5) Some local Chinese companies don't have foreign currency account, can't send money abroad (including to Hong Kong) Make sure your China clients could T/T to Hong Kong.
(*6) According to State Administration of Industry and Commerce's file: Gong Shang Wai Qi [2010] No.4, parent company must be established for more than 2 years.
