Chengdu is the capital
of the Sichuan province and is situated on the Western edge of the Sichuan
Basin. This capital city serves as the economic, financial and commercial
center of Southwest China. More than 15 million people live in Chengdu. The
province of Sichuan is known to tourists for its spicy food. Chengdu is famous
for their cute habitants: The Panda. Economically, it is ranked as the 15th most
competitive city in China. The ranking will probably move up quickly, as
experts estimate that Chengdu will soon be upgraded from a Tier 2 to Tier 1
city. The growth which makes the Tier upgrade possible, is fueled by
infrastructure and connectivity investments like the OBOR initiative and the
Chengdu – Poland railway connection.
WFOE stands for wholly foreign owned enterprise, which is a limited
liability company wholly owned by either a foreign legal entity or a foreign
natural person. The foreign investors may be foreign enterprises or individuals.
Wholly owned
foreign entities (WOFEs) are the vehicle of choice for most people and companies
doing business in China. It is less complex than a joint venture (JV) and
allows you to concentrate on what your employees are up to as opposed to your
partners. It is required to register as a legal person who is restricted to
certain businesses. The enterprise is able to implement strategies that
effectively conform to the interests of the parent company aboard. Moreover,
technology and know-how are given better protection.
No. minimum registered capital is required for WFOEs with scope of business of consulting, Trading, retailing, information technology etc. in China. There are minimum registered capital still required for some industries for instance: Banking, Forwarding etc Since China still maintains foreign currency control policy, it's still advisable to choose registered capital within RMB 100,000 ~ RMB 500,000 as the minimum registered capital. Companies can now determine how much capital will be required to maintain their operations and must simply ensure that they meet those targets within a period of 10 years.
Advantages of WFOE
1. Independence and freedom to implement the worldwide strategies of its parent company without having to consider the involvement of the Chinese partner;
2. Ability to formally carry on business rather than just a representative office function;
3. Issue invoices to their customers in RMB and receive RMB revenues. Convert RMB profits to US dollars for remittance to their parent company outside.
4. cheap labor, which can lower your cost;
5. not required to share profits with Chinese counterpart;
6. Greater efficiency in its operations, management and future development.
The procedure to Setting up WOFEs in Chengdu
China
Stage 1: Preliminary approval - Project
Proposal
The application procedure for setting up
a WOFE is simpler. The project proposal will be prepared by the foreign
investors and submitted directly to local authorities. The foreign investor may
appoint a local agent to liaise with the government. To do so, he has to sign
an authorization letter stipulating the agent’s scope of services, responsibility
and fees.
Generally, the authority will give an
official reply within 30 days upon receipt of the proposal and other relevant
documents. The approval or rejection letter will be issued to the foreign
investor. If a favorable reply is received, the foreign investor can proceed to
register the company’s name at the local AIC.
The report must contain information
regarding the objectives of the WOFE, business scope, scale of operation,
products to be produced, technology and equipment to be used, land area
required, conditions and quantities of water, electricity, gas and other forms
of energy resources required, and requirements for public facilities.
Stage 2: Formal approval - Articles of
Association
After the foreign investor receives a
written reply from the relevant government authorities, a formal application
supported by all the required documents should be filed with the local Ministry
of Commerce at a county, municipal or provincial level. After receiving the
formal approval, the foreign investor should apply to the Ministry of Commerce
again for an approval certificate by presenting all the necessary documents.
The required documents include the
application letter for establishing the WOFE; a feasibility study report (if
any), articles of association, list of legal representatives (or Board of
Directors), the foreign investor’s legal papers and credit report, a list of
materials to be imported, written replies from the local approval authorities
at county level or above, application for registration of the name of the
enterprise approved by the provincial or municipal administration AIC, comments
on the project by various government departments such as environmental
protection, fire services, health and land administration. In the case where two
or more foreign investors are involved, copies of the contracts signed by them
should be submitted to the approval authority for their records.
Stage 3: Business License
Upon collection of the approval
certificate, an application for a business license has to be filed with the
provincial or municipal AIC within 30 days. The local AIC will issue the
business license within 10 working days to projects that have passed the
examination. Likewise, the date the business license is issued will be
considered the official date of the establishment of the enterprise.
Having acquired the business license,
the WOFE has to finish up with procedures such as applying for an official seal
and enterprise code, opening a bank account, and registering for tax payment
and customs declaration with the local public security, technical supervision,
taxation, customs, finance, foreign exchange administration, banking, insurance
and commodity inspection departments.
Compared to registering a business in
most Western countries, registering a business in China is challenging work
filled with paperwork and bureaucratic red tape. It is practically impossible
to properly complete the registration process without a qualified agency. Be
sure that the agency is qualified and the agency has good connections and
relationships with the various local authorities, and that they possess
comprehensive knowledge about the numerous important aspects involved with
legally and properly registering a WFOE
Tommy China BusinessConsulting has direct
connections in the local government
Since 2006, TCBC has been focusing on consulting services for our clients to invest in Chengdu China. We are specialized in establishment of wholly foreign owned enterprises (WFOEs), setting up of offshore companies, trading services, tax minimization Assist in obtaining government approvals and certificates for running business, negotiate and draft various legal documents provide legal advice, negotiate government officer for Land acquisition,Advising on formation of WOFE and business structures ,managing and controlling WOFE in Chengdu China, , drafting privacy policies and structuring commercial transactions. TCBC will manage all aspects of incorporation to get you a business license in Chengdu China. We offer a range of company formation services including helping you to set up:
Since 2006, TCBC has been focusing on consulting services for our clients to invest in Chengdu China. We are specialized in establishment of wholly foreign owned enterprises (WFOEs), setting up of offshore companies, trading services, tax minimization Assist in obtaining government approvals and certificates for running business, negotiate and draft various legal documents provide legal advice, negotiate government officer for Land acquisition,Advising on formation of WOFE and business structures ,managing and controlling WOFE in Chengdu China, , drafting privacy policies and structuring commercial transactions. TCBC will manage all aspects of incorporation to get you a business license in Chengdu China. We offer a range of company formation services including helping you to set up:
-Wholly Foreign Owned Enterprises (WFOE )
-Representative Offices
-Joint Ventures (Equity/Co-operative)
-Foreign Invested Partnership Enterprises (FIPE)
-Hong Kong Holding Company
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