China Foreign Investment Enterprise Establishment Procedures

If you would like to invest in China, first please investigate which place is the best for your business in China, then follow the steps below with the help of a professional local business consultant.

1. Project Establishment

Investors (or partners) should consult with the Foreign Economy & Trade Department first of all about the project and then apply to the Commercial & Industrial Administration for approval of enterprise appellation.

As for joint project with total investment below USD 3million and sole investment project with total investment below USD 30 million, investors should apply to the Foreign Economy &Trade Administration directly for approval. As for joint project with total investment above USD 3million and sole investment project with total investment above USD 30 million, the Development Planning Administration is responsible for approval of feasibility study report and the Foreign Economy &Trade Administration responsible for approval of its contract and charter as well. And the technology innovation project should be approved by the Foreign Economy &Trade Administration.

As for sole investment project with necessity to build up factory buildings by foreign investors, the Land Utilization Certificate issued by the Land & Resources Administration is required, which should be submitted to the Foreign Economy &Trade Administration for approval. As for environment pollution project, the Environment Impact Report must be stipulated by the Environment Protection Department, which should be submitted to the Foreign Economy &Trade Administration for approval.

2. Approval of contract and charter

Following contract and charter signature, investors should bring along all required documents to the Foreign Economy &Trade Administration for approval.

Documents under approval include as follows:

A. Application for foreign investment enterprise establishment filed by competent departments

B. Project related documents: contract, charter and feasibility study report required by joint & cooperative project; charter, feasibility report and application form required by sole investment project

C. Factory building or land utilization certificate

D. Enterprise appellation preliminary approval notification

E. Name list of the Board of Directors of Enterprise

F. Operation License from the Chinese party (photocopy)

G. Creditability Letter for the Chinese party provided by bank

H. Both parties' registration certificate (photocopy)

I. Commercial registration certificate of foreign party (photocopy)

J. Creditability Letter for the foreign party provided by bank

K. ID cards for legal representatives from both parties (photocopy)

3. Obtain the permit certificate

As soon as the investor receives the Enterprise Legal Person Code Notification issued by the Technology Supervision Administration of Changsha (or local city), the Foreign Economy &Trade Administration should issue the Permit Certificate that day to accept the applied project.

4. Handle the commercial & industrial registration procedures

Upon receiving the Permit Certificate, the investors should visit the Commercial & Industrial Administration to apply for the Operation License within 30 days, which should be issued within 3 workdays (30 workdays as set forth in the national laws and regulations) for foreign investment enterprise with complete documents. Otherwise than newly-added approval documents and permit certificates, documents required by approval are almost the same for different enterprises.

5. Apply for Confirmation

As for projects in accordance with taxation exemption conditions for imported equipments, apply for the Confirmation for Domestic or Foreign Projects Supported by the State from the Economy & Trade Committee of Hunan (or other provinces) , the Planning Committee of Hunan (or other provinces) or the Economy & Trade Department of Hunan (or other provinces) .

As for export project with 100% support, the Provincial Committee of Hunan (or other provinces)  assigns the Foreign Economy & Trade Administration to issue following documents listed below:

A. Application Form for Confirmation of Foreign Investment Project Supported by the State

B. Approval of exclusive contract or sole foreign investment project charter

C. Project contract or charter for sole foreign investment enterprise (photocopy)

D. Permit Certificate and Operation License (photocopy)

E. Imported equipments List of project

F. Description of Foreign Investment Enterprise's Business Scope

6. Foreign exchange registration and account setup

Within 45 days after obtaining the Operation License, the investors should visit the Foreign Exchange Control Administration for foreign exchange registration and then the appointed bank for foreign exchange account setup. As for required documents, refer to as follows:

A. Approved Document, Permit Certificate

B. Operation License
C. Signed documents involving this project
D. Legal Representative Code Certificate

7. Taxation Management

Within 30 days after completing the industrial & commercial registration, the investors should get through the taxation registration in the local branch of Taxation Administration. Documents required include as follows:

A. Approval Document

B. Operation License (photocopy)
C. Signed documents involving this project
D. Legal Representative Code Certificate
E. ID cards for legal representatives (photocopy)

8. Customs Registration

Get through the customs regulation procedures within half a year since the enterprise is approved to establish.

Documents required include as follows:

A. Approval Document
B. Permit Certificate (photocopy)
C. Signed documents involving this project
D. Operation License (photocopy)
E. Project Confirmation

 

 

How to invest in China?

China, the second largest economy in the world, has kept more than 8% economic growth rate annually for last three decades. Investing in China and sharing the booming of the China economy have been a smart choice for an investor. But, how to invest in China while you are still not familiar with China market?

1. If you are running a non-financial company, you can invest in a varieties of industries, from a service industry to a manufacture industry, at a varieties of provinces, from south to north, and from coast area to inland area, from an economic Development Zone to a tax preference zone, in China.

 2. If you are a financial institution investor, you have a varieties of options to invest in China. You can invest in the China's capital markets by the the program of QFII ; You can invest in the China's financial industry by buying the stake of a small and medium-sized of regional bank (or credit union), or an insurance company, or an investment bank;

3. If you are a venture capitalist or a private equity investor, your approach is more flexible than any other investors for sharing the economic growth of China.

4. If you are an individual investor, you can invest in a Greater China Area mutual fund in Canada or in the United States; or you can buy a stock of the company who is running business in China; or you can buy a stock of a Chinese company which is listed in the Toronto Stock Exchange, or listed in the NASDAQ, or listed in the New York Stock Exchange, or listed in the Hong Kong Stock Exchange.

No matter what industries or sectors you will invest in, you can choose a right place to start, not necessarily in the biggest city in China, say, if you’re a firework businessman, you’d better invest and live in Liuyang city, the so-called ‘ home of fireworks’, where there are more than 400000 people directly or indirectly engaged in this product in China. In this case, do not forget to do a market survey first or hire a professional business consultant from STIN (www.chinabizservices.com) to learn more resources information first before you invest anything in China. Local experts can save you lot of time, cost and energy etc in doing business in China. .

  As an investor outside China, you have many options to take; but do you know which option you will take when making a decision to invest in China? To invest a business is to try to share the profit of the business, which means that the business in your expectation will grow up, in the future. How do you know a business in China will grow up? There are still a handful of cases of the bankruptcy of business even the economy of China has grown up at the average of 9% yearly since 1980. This is the risk of investment. How to get rid of the risk of investment in China? You have to do a research on the economy of China, and the investment policy, tax policy, and the macro economic policy of China. You have to make sure you choose a right industry, or a right area, or a right partner, or a right company for you to invest in order to share the booming economy of China. STIN professional business consultant can smooth your investment in China: www.chinabizservices.com

 

Forms of Foreign Investment

Chinese-Foreign Equity Joint Ventures, China-Foreign Contractual Joint Ventures, Wholly Foreign-Owned Enterprise are the three main forms of Foreign Direct Investment in china for absorbing foreign capital. Other investment terms include Share Company with Foreign Investment, Foreign Invested Holding Company, Joint Exploitation, BOT, etc. 2.1 Chinese-Foreign Equity Joint Ventures Chinese-Foreign Equity Joint Ventures anew also called as Share Company with Foreign Investment. They are enterprises jointly established within Chinese territory companies, enterprises, and other economic entities on the other side. An equity joint venture shall be invested and operated jointly by both foreign and Chinese investors, who shall share the profits and losses, as well as risks, in proportion to their respective shares in the registered capital. Chinese-Foreign Equity Joint Ventures are Limited Liability Company, and possess the status of Chinese legal person.

In such an enterprise, the proportion of the investment contributed by the foreign party shall in general not be less than 25% of the total. The partner could offer cash, or other kinds of things instead such as building, workshop, machinery, industrial property right, special technique, and field utilization right The profits and other legal interests that foreign investors have shared can be remit out or reinvest China. 2.2 Chinese-Foreign Contractual Joint Ventures Chinese-Foreign Contractual Joint Ventures are enterprises jointly established within Chinese territories by foreign companies, enterprises, other economic entities of individuals and Chinese companies, enterprises or other economic entities, according to their cooperative conditions. The both parties to a contractual joint venture should prescribe in the contract their respective conditions, lights, obligations, incomes distribution, responsibilities for risks and debts, the company management and negotiations on the property transaction at the expiration.

 

When establishing China-Foreign Contractual Joint Ventures, the foreign party provides land, factory buildings, certain usable machines and facilities, and in some cases a certain amount of capital as well. Chinese-Foreign Contractual Joint Ventures may posses the status of conventional person or not. 2.3 Wholly Foreign-Owned Enterprise Wholly Foreign-Owned Enterprise is invested entirely by foreign companies, enterprises, other economic entities or individuals within Chinese territory in accordance with the related Chinese laws. Wholly Foreign-Owned Enterprise usually takes the form of limited liability companies, and do not include the Chinese Branch of foreign company or other economic organization. 2.4 Share Company With Foreign Investment Share Company with Foreign Investment are stock limited companies set within China's territory by foreign companies, enterprises, or other economic organizations with Chinese companies, enterprise or other economic organizations, which is established according to the principle of stock.

 

All principal of Share Company with Foreign Investment is made up of equal amounts of stocks, every stockholder would take certain responsibility for company in accordance with his amount of stocks, and the company is responsible for debts with all estate. It is a form of foreign-invested company, which fits with relative regulations of national laws and statutes on foreign investment company.
2.5 Foreign Invested Holding Company Foreign Invested Holding Companies are Chinese-Foreign Equity Joint Ventures or Wholly Foreign-Owned Enterprise within Chinese territory that deals with direct investment usually in the form of limited liability companies. Foreign investor, who applies to establish an Foreign Invested Holding Company must possess great assets and good reputation, establish a certain mount of companies within China, and own over $30 million of actual-paid part of registration principal. Upon the approval of the Chinese government, Foreign Invested Holding Company could enjoy a broader field of managing than other ordinary companies, in an attempt to encourage big overseas companies to carry out their series of investment plans.

At present foreign invested Holding Company can invest in the fields of industry, agriculture, infrastructure and energy that the county encourages and permits. 2.6Joint Exploitation Join Exploitation refers to Chinese company and foreign company sign venture contract to carry out a joint exploration on inland and offshore petroleum, and mineral resources. It is a widely used from of economic cooperation in the field of natural resources exploration throughout the world. The main features of the joint exploration are high risks, high input, and high return. Joint exploitation is usually carried out in three phases: exploration development and production.

 

How to carry out a professional sourcing service in China?

 What is a Professional Sourcing service?
Professional Sourcing refers to the sourcing service carried out in a very professional way. Some buyers only search online or simply attend a general commodity trade fair, which is regarded NOT professional enough sometimes.

How to conduct a Professional Sourcing service?

First of all, Professional Sourcing means product proficiency; you have to be very proficient with the product itself, covering the product name, specifications, descriptions, application and market price etc. You have to try to be an expert in this field.

Second, Professional Sourcing indicates the proficiency of related manufacturing bases. In China, almost every city or province has their own pillar industries, esp for some special items, say, ceramics, chemicals, fireworks etc.

Actually Canton Fair is not the best place for you to meet and find out some qualified suppliers in China. There are 90% of them are trade companies, individuals or even scammers.

The best place for you to meet and find out some qualified suppliers is the manufacturing bases. For example, if you're looking for 'fireworks', you have to go to Liuyang city, which is called 'home of fireworks', where there are 400000 people directly or indirectly engaging in this business in China. 'Liuyang -- made' fireworks account for more than 60% global market at present. This is the same to other products; almost every product has their unique manufacturing bases in China. This is why there are more and more clients booking our 'professional sourcing' service in China.

This is the same situation to other products, say, Zhuji for socks, Yiwu for general commodities, Xintang for jeans, Wenzhou for ties and shoes, Anji for bamboo products, Liling for ceramics etc, Yongkang for hardwares, Shenzhen for electronics, Guangzhou for clothes, Xuchang for hair products, Changzhou for floorings etc. Of course some products may have more than two or three manufacturing bases as China is too big. For example, in North China people to go to Tianjin to buy steel banquet chairs while in South China, Shunde is the largest manufacturing base for those items. 

Third, Professional Sourcing means that you have to attend professional trade fair instead of the general trade fairs. Say, if you’re buying furniture you can have a try on Furniture China (www.furniture-china.cn), and this is the same for other product sourcing,

Door industry -- www.door-expo.com, Lock industry -- www.lock-china.net and Tube industry -- www.tubechina.net etc. More professional fair information, please have a look at: http://www.chinabizservices.com/news/2013/0701/41.html

Lastly, Professional Sourcing needs professional verification skills, you have to be able to check out their export or import qualifications and obtain their full registered information in order to avoid future business scams in China. Some professional sourcing service company like STIN offers FREE basic verification service on their suppliers after the client books their sourcing service in China.

Why do you need a professional sourcing service in China?

STIN sourcing service is becoming more and more popular among our clients worldwide due to following reasons:
First we can save you lot of time, cost and energy etc in China.
Second we are able to find out the truth and check out any of your suppliers with local officials in person.
Third we are local experts and we are very familiar with the industry clusters or manufacturing bases all over China.
STIN professional sourcing service is one of the best in China:www.chinabizservices.com

 

Benefits of operating business in China

Since its open-door policy of the late 1970s, China has rapidly become a rising global economic power. more and more foreign investors start to do business in China mainly in high-tech, agricultural, forestry, telecommunication and energy industry. China's WTO entry marks a watershed in its ongoing reform and modernization program, seeing the country adapt its legal and regulatory framework of foreign trade and investment in line with its WTO commitments. as a major emerging market which embraces new business opportunities and challengers, foreign investors are more likely to start doing their business in China. The advantages in doing business in China: Major emerging market; Large trained labor pool; Favorable business atmosphere; Dynamic fast-growing economy; Rapidly increasing consumer wealth; Very low employment costs; Furthermore, as a dynamic market and international investors and buyers can find a wide range of quality products at very competitive prices to start their business. for instance, lots of investors start doing business in China in producing 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 to expand their worldwide business. many top brand names from across the world can now be found in the local high street of most major Chinese cities. STIN (www.chinabizservices.com) Service is aiming to help you invest in China smoothly with their professional services: Market Survey, Consulting, Biz Investigation, Incorporation Service etc.. Our mission is to save you more and reduce the risks in your business in China!