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China market entry

Introduction

With over 1.3 billion people, the People's Republic of China (China) is the world's fourth largest country and the world's fastest-growing economy. Developing effective and profitable operations in China is undoubtedly the greatest single opportunity for companies today. Since 1978, when China opened its doors to the outside world, the country has enjoyed tremendous annual economic growth. It is now the second largest economy in the world and the world's single biggest recipient of foreign direct investments among developing countries. China's accession to the World Trade Organization is widely expected to trigger a further wave of inward investment from foreign companies as the terms of entry to new sectors of the China economy are progressively liberalized.

China is a dynamic market, and international investors and buyers can find a wide range of quality products at very competitive prices. China is a major producer of textiles, apparel and footwear; raw materials, metals and chemicals, toys and handicrafts, and foodstuffs, among others.

Besides the obvious potential for selling consumer goods, China has a requirement for a wide range of agricultural and industrial raw materials, high-tech components, capital goods and services. Due to the rapid development of the Chinese economy, it offers sellers ample opportunity to place goods in this fast growing economy. Many top brand names from across the world can now be found in the local high streets of most major Chinese cities.

For manufacturers, China has the ability to provide a skilled workforce and in some areas, so-called Special Economic Zones offer special incentives for specific production sectors. Through our extensive network of contacts in China, we are able to assist clients in finding the most tax-advantageous and cost-effective solution for their business.
RICHFUL is able to assist its clients in the complete registration process of their business entities. Our other services include:
Obtain a detailed credit report on a Chinese company
Introduce possible joint-venture partners
Market research and feasibility studies
Attend to corporate and personal tax registrations
Assist in finding office space
Staff recruitment
Opening bank accounts in local and foreign currencies
Bookkeeping and arrange for the auditing of accounts
We will be happy to provide a quotation upon receiving further details regarding the activities of the proposed company, such as estimated turnover, number of staff to be employed, location of company and proposed size of factory.

Business Matching

Business Matching is an innovative service to assist you in finding and meeting potential business partners in China and Hong Kong. We will help you find who is interested in your products or services; who is looking for partners and joint ventures; who is looking to sell their existing business; who has technology and licenses to offer; or who is providing just the products, services, components and materials you need.

We will help you identify potential partners from our database of over 250,000 business contacts, covering Hong Kong and the whole Chinese Mainland.

Setting up in China

Establishing a presence in China is still a challenging experience for unwary organizations, however, with our experience and expertise we can smooth the way for prospective market entrants. China has three recognised forms of business organisations available to foreign investors who wish to register their companies. These are the Joint Venture, Wholly Foreign-Owned Enterprise and Representative Office.

Joint Venture ("JV")

A Joint Venture is a business arrangement in which the participants create a new business entity or official contractual relationship and share investment and operation expenses, management responsibilities, and profits and losses.

The Chinese authorities encourage foreign investors to use this form of company in order to obtain exposure to advanced technology and new management skills. In return, foreign investors can enjoy low labour costs, low production costs and a potentially large Chinese market share. Joint Ventures are sometimes the only way to register in China if a certain business activity is still controlled by the government. e.g. restaurants, bars, building and construction, car production, cosmetics, etc.

Wholly Foreign-Owned Enterprise ("WFOE")

A wholly foreign-owned enterprise is a business entity formed in China entirely with foreign capital, it is totally under foreign control and does not have any formal Chinese ownership participation. For a foreign company to be able to issue receipts and export goods from China, it must be able to legally register as a local company or a WFOE. A WFOE is set up as a limited liability entity and represents separate legal persons and is taxed according to local legislation.

WFOEs can generally control their own governance through the articles of association and the normal minimum paid-up share capital starts from 1 million RMB (approximately US$140,000). However, some provinces offer lower capital requirements in order to attract more foreign investment. Many foreign investors find this type of company attractive because of the full control and 100 percent ownership.

Representative Office ("Rep. Office")

The simplest and most cost effective method of establishing a useful business presence in China is the Rep. Office. The choice for an initial Rep. Office will normally be determined by basic market and product research in China. The high profile cities of Shanghai, Beijing, Guangzhou, and Shenzhen are the most likely choices for the Rep. Office. It should be noted that more than one Rep. Office can be established in China by a foreign entity.

A Rep. Office is an entity involved in business activities which do not result in direct profits being made by the office. They are not allowed to operate as partnerships or sole proprietorships in China as they are not recognized as legal persons. However, they are allowed and encouraged to conduct "indirect operational activities", such as liaison for business purposes, introduction of products, market research and technology exchanges. These activities should be preparatory and supplementary activities, such as market research on the local market, providing business information and supplying sales for the headquarters. The foreign enterprise applying for the Rep. Office must have been legally registered in its country of origin for at least 12 months.


Hongkong Tel : +852-2537 7886 Fax : 2537 7780   Add : 21F, Lippo Centre Tower 2, 89 Queensway, Admiralty, HK
Beijing Tel : +86-10-5979 7566 Fax : 5885 7463 Shanghai Tel : +86-21-6252 4952 Fax : 6091 7720
Tianjin Tel : +86-022-5829 8755 Fax : 5867 5735 Nanjing Tel : +86-25-8467 1161 Fax : 8467 1194
Guangzhou Tel : +86-20-2208 2580 Fax : 2208 2579 Shenzhen Tel : +86-755-8270 1877 Fax : 8270 1875
Hangzhou Tel : +86-571-8788 6788 Fax : 8607 5868 Ningbo Tel : +86-574-8772 9255 Fax : 8772 9216
Dalian Tel : +86-411-8250 6091 Fax : 8250 6094 Qingdao Tel : +86-532-8090 2580 Fax : 8090 2590
Xiamen Tel : +86-592-3299 299 Fax : 3299 199 Fuzhou Tel : +86-591-8389 1762 Fax : 8389 1752